On August 31, 1910, in Osawatomie, Kansas, Theodore Roosevelt gave a speech titled, "The New Nationalism." To a greater degree than most of Roosevelt's speeches, although all had the theme to some degree, "The New Nationalism" detailed what he meant by progressivism. It was not, as the conservative Republicans feared or the radical Democrats hoped, a version of socialism. It was, instead, a third way based on justice between, even above the two extremes of capitalism and socialism.
Perhaps it was because he spoke with a fire fueled by Taft's betrayal. Maybe it was the realization that the conflict he had fought so hard to avoid appeared to be ready to break out again. Whatever his motivation, Roosevelt had had forced on him the realization that the danger to the country was again imminent. As Herbert Knox Smith summarized the issue,
"The original question, 'Shall the Government control business?' gave place to the ultimate question: 'Shall the citizen control his Government?'" (Herbert Knox Smith, "Introduction," Social Justice and Popular Rule, by Theodore Roosevelt, New York: Charles Scribner's Sons, 1926, xiii.)
This summarizes the essential difference between progressivism as Roosevelt understood it, and populism, even the non-socialist remnants of populism. Roosevelt viewed the State as the last resort for a people with no other recourse. Regulation and control of industry and commerce by the government was necessary only when the institutions of the common good could not do the job adequately, and the exercise of liberty and property by a few infringed on the exercise of those same rights by the many.
Even then, Roosevelt made it abundantly clear that even State control or regulation must be imposed only without prejudice to the underlying natural rights held by every human being. There must be no "tit-for-tat," where those whose rights were previously infringed upon imposed disabilities or denied the rights of their presumed former oppressors:
"[I]n the interest of the working man himself we need to set our faces like flint against mob-violence just as against corporate greed; against violence and injustice and lawlessness by wage-workers just as much as against lawless cunning and greed and selfish arrogance of employers. If I could ask but one thing of my fellow countrymen, my request would be that, whenever they go in for reform, they remember the two sides, and that they always exact justice from one side as much as from the other. (Theodore Roosevelt, "The New Nationalism," Social Justice and Popular Rule, op. cit. 18.)
This appeared to be Roosevelt's chief quarrel with populism. Populism viewed the State as the only effective means for controlling big business, big finance — big anything . . . conveniently forgetting that the specialized tool of the State, when permitted to grow beyond its legitimate sphere, inevitably becomes bigger and more powerful — and less susceptible to control — than even the biggest corporation or trust.
Worse, populism tended to dismiss natural rights such as liberty and property if their exercise interfered with a desired goal. The tendency to see only one side of the issue, and to "throw the baby out with the bath" was anathema to a man who sought to return America to its true roots and ensure that the efforts of Abraham Lincoln were not in vain: "I have small use for the public servant who can always see and denounce the corruption of the capitalist, but who cannot persuade himself, especially before election, to say a word about lawless mob-violence." (Ibid.)
Not that Roosevelt ever forgot that concentrated wealth was itself a danger: "I have equally small use for the man, be he a judge on the bench, or editor of a great paper, or wealthy and influential private citizen, who can see clearly enough and denounce the lawlessness of mob-violence, but whose eyes are closed so that he is blind when the question is one of corruption in business on a gigantic scale." (Ibid.)
The populists tended to put the State before all individual rights in their quest for justice. Roosevelt knew that, unless the people somehow controlled the State, State control of anything was dangerous. The problem was that, without an effective means to control the State, there could be no real resolution of the conflict between capitalism and socialism.
As Roosevelt made clear, however (and which was confirmed in a series of articles by Judge Grosscup), the only effective check on State power is widespread direct ownership of capital. The abolition of private property in capital as the socialists and, increasingly, the populists advocated, would do nothing other than make everyone a permanent dependent on the State. The problem was that there was no effective means whereby ordinary people without sufficient existing savings to purchase capital could afford the increasingly expensive new capital instruments.
This left Roosevelt, in a sense, hanging out to dry. He had the right principles, but no effective way to implement them. In contrast, the individualist/capitalists and the collectivist/socialists had what they believed to be the answer, and the weight of experience and common sense behind them.
As far as the individualists and collectivists knew, it was impossible to finance new capital formation without first cutting consumption and accumulating money savings. For both camps, this meant that only a small elite (the wealthy for the former, the State for the latter) could control capital. This was believed to be essential, for only by concentrating ownership of capital would there be sufficient savings to finance new capital.
This premise would be proved completely false within a generation by Harold G. Moulton, president of the Brookings Institution, in his book, The Formation of Capital (1935). That did not help Roosevelt, however. The capitalists believed that only by maintaining absolute exercise of property could the world advance, or even maintain its position — a position with which the socialists, paradoxically, agreed . . . except that they wanted control in the hands of a State that had become their creature, not a management elite at the beck and call of the upper one percent.
The supreme irony in both the capitalist and the socialist position is that in both cases the instrument by means of which the capitalist or "the people" were to control capital — the management elite of capitalism, the State of socialism — has become itself the master. Property in everyday life, as Louis Kelso pointed out, is control.
Regardless who has legal title, whether capitalist or "the people," it's whoever controls the wealth who can truly be said to "own." Since "power naturally and necessarily follows property," as Daniel Webster reminded us, concentrated control is the same as concentrated ownership, "property" being not the thing owned, but the rights and powers over the thing, as well as the natural right to be an owner. As Roosevelt insisted,
"The true friend of property, the true conservative, is he who insists that property shall be the servant and not the master of the commonwealth; who insists that the creature of man's making shall be the servant and not the master of the man who made it. The citizens of the United States must effectively control the might commercial forces which they have themselves called into being." (Ibid., 11.)
A superficial understanding of this principle gave the socialists their greatest weapon and most persuasive argument. As the socialists argue, if the earth was made for everyone, what right do a few have to monopolize its goods? Yes, control of capital must be concentrated — or there wouldn't be any capital! — but it must be administered so as to benefit everyone. This means State control or outright ownership. This is because private owners, impelled by their own self-interest, cannot be trusted to administer their wealth for the benefit of all. Private property has to be abolished for the good of humanity.
Thus, by being partly right, both the capitalists and the socialists managed to be completely wrong. Roosevelt, at least, by his insistence on maintaining individual natural rights as far as possible as well as what would later be described as the universal destination of the world's goods, managed to be wholly, but (unfortunately) incompletely right. What Roosevelt lacked was some means whereby ordinary people without savings or the ability to cut consumption could become owners of capital.
That being said, however, Roosevelt's principles were sound, and appear to have been fully consistent with the Just Third Way. We see this in the correlation in his speech on the New Nationalism with the three principles of economic justice as well as the four pillars of an economically just society.
The three principles of economic justice are participation, distribution, and harmony. The four pillars of an economically just society are, 1) A limited economic role of the State. 2) Free and open markets as the best means of determining just wages, just prices, and just profits. 3) Restoration of the rights of private property, especially in corporate equity. 4) Widespread direct ownership of capital.
In a phrase that has become a virtual trademark of Roosevelt's program, he declared, "I stand for the square deal. But when I say that I am for the square deal, I mean not merely that I stand for fair play under the present rules of the game, but that I stand for having those rules changed so as to work for a more substantial equality of opportunity and of reward for equally good service." (Ibid., 10.)
Roosevelt was fully aware that full participation in the economy requires ownership of both labor and capital. In a technologically advanced economy, widespread and direct ownership of capital is essential if each individual's economic welfare is to be adequately maintained. Admittedly, Roosevelt had no effective means to recommend whereby people could own capital as well as labor, but that did not stop him from stating the truth without equivocation:
"I believe in shaping the ends of government to protect property as well as human welfare. Normally, and in the long run, the ends are the same; but whenever the alternative must be faced, I am for men and not for property, as you were in the Civil War. [Roosevelt gave "The New Nationalism" speech before the "GAR," the "Grand Army of the Republic," an organization of Union war veterans.] I am far from underestimating the importance of dividends; but I rank dividends below human character. Again, I do not have any sympathy with the reformer who says he does not care for dividends. Of course, economic welfare is necessary, for a man must pull his own weight and be able to support his family." (Ibid., 20.)
The principle of "harmony" is that, when flaws are found in our institutions, the proper response is not to destroy the institutions or, worse, people in or who use the institutions. Rather, we are to exercise "social charity," that is, to love our institutions as we love ourselves. This requires that we learn the true nature of our institutions, identify the flaws, and organize and work to correct the flaws.
Theodore Roosevelt appeared to be fully in agreement with this third principle of economic justice. Since the object of our concern is our institutional environment — the common good — we can also call the principle of harmony, "social justice." Institutions must be reformed so that they perform their functions adequately and serve the needs of everyone. As Roosevelt explained,
"National efficiency has many factors. It is a necessary result of the principle of conservation widely applied. In the end it will determine our failure or success as a nation. National efficiency has to do, not only with natural resources and with men, but it is equally concerned with institutions. The State must be made efficient for the work which concerns only the people of the State; and the nation for that which concerns all the people." (Ibid., 18-19.)
A Limited Economic Role for the State
Roosevelt walked a path, a third way, that outraged extremists at both ends of the political spectrum. Both the Old Guard Republicans and the populist Democrats sought to use the State to control others and secure their own positions. While Roosevelt, lacking a feasible program of empowering ordinary people with capital ownership, turned to the State to a degree that we believe to be unjustifiable, he stood firm on his principle that the State should be the servant, not the master. No where was this more true than in his struggle against those who, as is the case today, used the coercive power of the State to secure their own special privileges and wealth. As Roosevelt explained his position,
"One of the fundamental necessities in a representative government such as ours is to make certain that the men to whom the people delegate their power shall serve the people by whom they are elected, and not the special interests. I believe that every national officer, elected or appointed, should be forbidden to perform any service or receive any compensation, directly or indirectly, from interstate corporations; and a similar provision could not fail to be useful within the States." (Ibid., 21.)
Needless to say, Roosevelt was opposed to any and all campaign contributions from corporations: "It is necessary that laws should be passed to prohibit the use of corporate funds directly or indirectly for political purposes; it is still more necessary that such laws should be thoroughly enforced. Corporate expenditures for political purposes, and especially such expenditures by public-service corporations, have supplied one of the principal sources of corruption in our political affairs." (Ibid., 11.)
Free and Open Markets
The conservatives tried to paint Roosevelt as the enemy of property and free enterprise. Nothing could be further from the truth:
"The absence of effective State, and, especially, national restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise. We grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows." (Ibid., 13.)
Restoration of Private Property
Then as now, conservatives insist that the rights of property must be regarded as sacred. There is nothing new in that claim. It is a claim made in justice, as political commentators and religious leaders through the ages have insisted.
The problem is that, within the current flawed social order we inhabit, ownership of capital — the "property" in question — is extremely concentrated, even more so than in Roosevelt's day. It's not a question of maintaining the rights of private property for the few, but of ensuring equal access to the means of acquiring and possessing private property for the many:
"[O]ur government, National and State, must be freed from the sinister influence or control of special interests. Exactly as the special interests of cotton and slavery threatened our political integrity before the Civil War, so now the great special business interests too often control and corrupt the men and methods of government for their own profit. We must drive the special interests out of politics. That is one of our tasks to-day. Every special interest is entitled to justice — full, fair, and complete — and, now, mind you, if there were any attempt by mob-violence to plunder and work harm to the special interest, whatever it may be, that I most dislike, and the wealthy man, whomsoever he may be, for whom I have the greatest contempt, I would fight for him, and you would if you were worth your salt. He should have justice. For every special interest is entitled to justice, but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office. The Constitution guarantees protection to property, and we must make that promise good. But it does not give the right of suffrage to any corporation." (Ibid., 10-11.)
Widespread Capital Ownership
Roosevelt's stand on widespread ownership, while limited to landed capital (for he saw no feasible way to spread out ownership of commercial, industrial and financial capital without violating private property), nevertheless earned him accusations of being a socialist. This is difficult to understand, for socialism, properly defined, is the abolition of private property in capital, not its broad diffusion among the people. As Roosevelt related, in a clear reference to Abraham Lincoln's 1862 Homestead Act,
"I believe that the natural resources must be used for the benefit of all our people, and not monopolized for the benefit of the few, and here again is another case in which I am accused of taking a revolutionary attitude. People forget now that one hundred years ago there were public men of good character who advocated the nation selling its public lands in great quantities, so that the nation could get the most money out of it, and giving it to the men who could cultivate it for their own uses. We took the proper democratic ground that the land should be granted in small sections to the men who were actually to till it and live on it." (Ibid., 15-16.)
In light of his adherence to the three principles of economic justice and the four pillars of an economically just society, it should come as no surprise that, faced with a resurgence of the twin evils of capitalism and socialism, Roosevelt concluded that the country was once again in serious danger — and he was right. The American Republic was again threatened with a deep split along ideological lines, with the supreme irony being that neither camp, the capitalists nor the socialists, were in conformity with the founding principles of the United States. As Herbert Knox Smith related,
"The underlying motive of the man — so deep that it was rather an instinct than a formulated position — was this unity of America, the fabric of the commonwealth. He dealt with a unity, not superficial but profound — not merely between geographic sections, but a unity of spirit and the bases of life. Statesmanlike, he knew that there can be real unity in a democracy only if there is equality of opportunity, easy passage across all class boundaries, no accepted dividing line drawn on inequality of privilege, or any dividing line other than those self-contained in each man's own character and intellect.
"He saw that only such essential unity can be enduring. All the details of his action, the specific policies that he stated, arise from this underlying purpose for the Union. The supremacy of law and government; the destruction of unfair industrial advantage; the conservation of forest, mine, and water power for the common use, were all factors of equality of opportunity, and he established them." (Smith, op. cit., xvii-xviii).
The battle had been joined.