THE URBAN
INSTITUTE
Antistatism and
Government Downsizing:
An Historical Perspective
THE FUTURE OF
THE PUBLIC SECTOR
Mary O. Furner
A series on
the long-term
forces affecting
U.S. social policy
I
n recent years the size and role of govgood ahead of private gain. Advocates of
ernment have become by far the most
republicanism viewed government as the
important issues facing the electorate.
instrument for articulating and implementing
Lending focus to a broad-based dissatisfaction
the collective purpose. Traditional liberalism,
with government, antistatists have made
as opposed to modern welfare liberalspecial targets of the national
ism, elevated individual autonomy
Politicians,
bureaucracy and the escalating
above all other values, counted
pundits, and citizens
cost of the welfare state. In
on the market to supply the
1996, for the first time since
needed regulation, and counseem to agree that a more
the origins of the federal
or less continuous growth of seled against relying on
welfare state during the
government.
Although
national government has
New Deal, both houses of
Adam
Smith
defined
jusfinally been reversed. On the
Congress overwhelmingly
tice,
defense,
basic
infrabasis of the historical record,
passed, and a Democratic
structure, trade, and educahowever, nothing could
president signed, welfare
tion as matters for the state,
be further from the
reform legislation repealing a
the most extreme libertarians
truth.
federal entitlement. Partly due to
see even this much government as
budget constraints and partly to a lack
a source of tyranny. Reflecting the
of trust in the national government,
historic tension between civic republican
Congress over time has been trimming federal
and liberal values, our polity has been subject
regulations and devolving control over expento recurrent episodes of antistatism.
sive social programs to the states.
History reveals a sequence of movements
Politicians, pundits, and citizens seem to
to cut the size and scope of government, and to
agree that a more or less continuous growth of
devolve—or transfer functions and power from
national government has finally, and for the
the central state to lower levels of government
first time, been reversed. On the basis of the
or to the private sector. Prior to the current
historical record, however, nothing could be
devolution, there have been five major cycles
further from the truth.
of revulsion against government, each of them
related to an earlier period of government
growth. Periodic reversals in the size and scope
Cycles of Antistatism and
of government and changes in the balance of
Government Downsizing
power between the state and national governA fundamental bipolarity in our political
ments define us as a people.
traditions dating back to the American
Resisting Hamiltonian Centralization
Revolution makes us highly ambivalent about
the state, and leaves the federal relationship
The first assault upon the central state was
perpetually contested. Our political culture is
the Jeffersonian crusade against Treasury
an uneasy mixture of ideas about how to
Secretary Alexander Hamilton’s late 18th cenachieve a just and prosperous society. On the
tury centralization of power and authority in
one hand, republicanism—in its original, nonthe national government. The Jeffersonians
partisan sense—is a commonwealth tradition
considered small government and an expandthat stresses the importance of civic virtue,
ing market the best basis for preserving a
defined as a willingness to place the public
democratic republic. They dismantled
No. 9, December 1996
No. 9
THE FUTURE OF THE PUBLIC SECTOR
2
Hamilton’s plan for a major national
government role in promoting economic development. They devolved authority over banking to the states, canceled
an industrial policy intended to promote manufacturing, and acquired
Louisiana to open new land for expansion of an agrarian economy that would
not require extensive government.
also created the first national-level
welfare programs to aid the four million freed slaves of the former
Confederacy in the transition to freedom. Much like a modern social welfare agency, the Freedmen’s Bureau
distributed food and clothing, helped
freedmen negotiate fair work contracts
with their former masters, set up
schools for teaching reading, numbers,
and citizenship, and helped African
Americans to register and vote.
These efforts provoked hostility
toward federal activism on the part of
both states-rights southern conservatives and business interests within the
Republican Party, eager to get on with
national reunification and economic
expansion. Seeking accommodation
on the race issue, a new Republican
policy effectively devolved control of
race relations to the states. President
Grant withdrew most federal troops
action to redistribute income, discipline
corporations, guarantee a “living
wage,” regulate factories and housing,
and provide social insurance against
dependency. Following this agenda, the
national government regulated business and finance through the Federal
Reserve, the Federal Trade Commission, and a rebuilt Interstate Commerce Commission and banned child
Unleashing Market Forces
labor. During World War I, government
Following a reinstatement of
implemented many statist progressive
some of the old nation-building polipolicies when it took control of war
cies by Jefferson’s more nationalistic
mobilization.
successors, liberal, monopoly-hating
After World War I and until the
Jacksonian Democrats once again
Great Depression of 1929, Herbert
attacked the state in an effort to
Hoover (as commerce secretary and
restore what they saw as a virtuous
president) was among those who guiddemocracy of small farmers and indeed a reversal. America’s railroads,
pendent artisans. Defining governnationalized for the war effort, were
ment as the source and protector of
quickly returned to private hands.
monopolies, they dismantled the
Steeply progressive and mildly redisSecond Bank of the United States,
tributive individual and corporate
slashed tariffs, stopped
income taxes were slashed.
national
subsidies
for
Government pressure for
A fundamental bipolarity in our political union recognition and colimproving transportation,
and squelched a Whig plan
traditions dating back to the American lective bargaining ended. A
to use tariff and land revof antitrust reguRevolution makes us highly ambivalent relaxation
enues to promote economic
lation inspired a massive
about the state, and leaves the federal rela- wave of mergers, which
development. After a rash
tionship perpetually contested. Prior to the effected a private reorganiof bankruptcies requiring
taxpayer bailouts, state legcurrent devolution, there have been five zation of the economy.
islatures outlawed the use of
major cycles of revulsion against govern- Repealing the New Deal
government debt to finance
ment. Periodic reversals in the size and Order
railroads and canals, a pracscope of government and changes in the
tice previously common,
Antistatism returned in
and privatized existing
balance of power between the state and the late 1940s, after a major
facilities. To eliminate the
national governments define us as a people. expansion of government in
corruption involved in spethe Great Depression and
cial chartering of banks and
especially during World
railroads, state legislatures
War
II.
Conservative
passed general incorporation laws,
from the South, and after 1876 the
Congresses curbed the power of the
reducing political control over the
Republicans abandoned the effort to
National Labor Relations Board, shut
flow of investment.
protect the black vote. Coming just as
down agencies involved in economic
a new class of entrepreneurs was movplanning, and stopped expansion of the
Undoing Big Government after the
ing mass production into high gear,
welfare state. Responding to investors’
Civil War
this devolution left the emerging corconcerns about inflation and excessive
porate-industrial order largely unreguThe next assault on government,
statism, conservative legislators
lated until the turn of the century.
in the 1870s, aimed at undoing the
defeated a popular movement to make
explosive growth of national authority
the national government responsible
Targeting Early 20th Century
that came with the Civil War. Lincoln’s
for maintaining full employment.
Statebuilding
then new Republican Party was a bigDuring the Eisenhower years, governgovernment party. In power, the
The next rollback of government,
ment resumed the “corporate liberal”
Republicans not only preserved the
in the 1920s, targeted what antistatists
strategies of the Hoover era (in which
union, they resurrected the prodeveldefined as the excessive state-building
government’s role was mainly to proopment projects of the antebellum
efforts of the turn-of-the-century
mote self-government of the economy
Hamiltonians and Whigs, taxed
Progressive Movement. Concerned
by American business), which had
incomes to support the war, and broke
about economic instability and rising
been discredited by the Great
new ground by legislating protections
inequality, some “democratic statist”
Depression. Rather than requiring that
for American workers. Lincoln’s party
progressives favored government
public spending be sufficient to main-
dramatically since World War II. Faith
in the capacities of the individual states
apparently runs deep.
Moreover, this round of antistatism has not turned as previous ones
often did against the centers of
organized private power. Antimonop-
THE FUTURE OF THE PUBLIC SECTOR
theoretical systems, full of suggestions
for public policy. Neoclassicism’s
companion piece in political theory,
rational choice, is challenged only by
the “new communitarianism.” This is a
highly diffuse public philosophy that
calls for a return of civic virtue, is
tinged with localism, tends to
Where Are We
romanticize community, and
Now?
The present trend toward smaller national is notable for its lack of ecocontent.
Between the 1950s and
government might be longer lasting than nomicNonetheless,
if the pro1970s, for the first and perprevious
episodes.
.
.
.
we
are
unlikely
to
jected
combination
of devohaps last time the United
see
an
era
of
aggressive
national
statelution
and
privatization
fails
States achieved a fairly stable
to
promote
economic
growth,
building soon because there is now no
balance of liberal and repubmiserably in dealing
lican, corporatist and statist
widely credited economic theory, as there flops
with
welfare
needs, or hurts
elements. Government, corwas
in
the
Progressive
Era
or
the
Age
of
the
politically
active middle
porations, and big labor
Keynes,
to
support
a
new
expansion
of
class,
we
will
eventually
see
unions united to spread
the
basis
for
yet
another
government.
American goods and invest“return to the state.” This
ment across the globe.
would result in a continuation
Government took significant
of the historical dynamic
steps toward creating a
between
American
liberal and republiolism, a traditional reason for turning
socially just state, committed to
can
values
vis-à-vis
the proper size and
back to the state, is not present in the
expanding opportunities to formerly
■
role
of
government.
current movement. Instead, today’s
excluded or disadvantaged groups. In
antistatism is fueled by a corrosive
the early 1970s conditions supporting
skepticism about the intentions and
this blend of corporate liberalism for
RELATED READING
capacities of government. Even more
the economy and moderate statism for
than in the 1920s and the 1950s, the
Barber, William J. 1996. Designs
society collapsed, undermined by
within Disorder: Franklin D.
new conservatism looks to giant corgrowing fiscal constraints, loss of ecoRoosevelt, the Economists, and the
porations for leadership in the quest for
nomic primacy, deindustrialization,
Shaping of American Economic
national competitiveness and individand social divisions. The rise of a new
Policy, 1933–1945. New York:
ual efficiency. Strongly entrepreneureconomic and cultural conservatism
Cambridge University Press.
ial, it affirms the movement toward
paved the way for a return in the
Furner, Mary O., and Barry Supple,
deregulation since the late 1970s and
1980s and 1990s to another cycle of
eds. 1990. The State and Economic
demands a great deal more.
antistatism and devolution.
Knowledge: The American and
British Experiences. New York:
Perhaps more important, we are
Cambridge University Press.
unlikely to see an era of aggressive
Where Do We Go From
Hawley, Ellis. 1992. The Great War
national statebuilding soon because
Here?
and the Search for a Modern
there is now no widely credited ecoOrder. 2d. ed. New York: St.
Given this country’s historical
nomic theory, as there was in the
Martin’s Press.
swings between statism and antistaProgressive Era or the Age of Keynes,
Sandel,
Michael J. 1996. Democtism, it would be foolhardy to specuto support a new expansion of governracy’s
Discontent: America in
late where the current devolution
ment. Previous eras of statebuilding
Search of a Public Philosophy.
might lead. However, it seems that the
have occurred in connection with the
Cambridge, MA: Harvard Unipresent trend toward smaller national
collapse of authoritative economic theversity Press.
government might be longer lasting
ories, such as classical economics in
than previous episodes. Today’s devothe 1870s–1890s and neoclassical ecoMary O. Furner is Professor of
lution is more narrowly focused and is
nomics in the 1920s–1930s—which
History at the University of
taking place absent some of the factors
predicted that market forces could be
California, Santa Barbara. Her pubthat motivated previous statist moverelied upon to generate prosperity and
lications include “The Republican
ments. Unlike earlier eras, the devolusocial harmony. Today a new, more
Tradition and the New Liberalism:
tion of the 1990s has been highly
potent and sophisticated version of
Social Investigation, State Building
selective, designed primarily to shrink
neoclassicism reigns practically
and Social Learning in the Gilded
Age,” in The State and Social
the federal deficit and scale back the
supreme, validating a highly individuInvestigation in Britain and the
welfare state portrayed as feeding it.
alistic approach to social problems.
United States, eds. Michael Lacey
Most current proponents of devolution
There is no alternative theory as there
and Mary O. Furner. Cambridge
have not attacked the size of state-level
was when American institutionalism
University Press, 1993.
government, which has been growing
and Keynesianism were vibrant
No. 9
tain adequate investment and growth,
the national government used fiscal
and monetary tools to stabilize the
business cycle while leaving decisions
regarding investment, pricing, and production in private hands.
3
No. 9
Other Briefs in the Series
No. 1. Declining Economic Opportunity in America,
Isabel V. Sawhill and Daniel P. McMurrer
No. 2. Whither Federalism? Martha Derthick
No. 3. Growing Income Inequality: Roots and Remedies,
Edward M. Gramlich and Mark Long
No. 4. Reforming Employment and Training Policy,
Paul Osterman
No. 5. The Public Can Make Hard Choices, Susan Tanaka
No. 6. When to Devolve, Paul E. Peterson
No. 7. The Challenges for Policy Research in a Changing
Environment, George Galster
No. 8. Domestic Reforms: The Importance of Process,
Stanford G. Ross
Among Future Topics
n
n
Middle-of-the-Road Federalism
Trends in Local Governance
This series, funded in part by the
Ford Foundation, focuses on challenges for policymaking in the 21st
century.
Advisory Board
C. Eugene Steuerle
Christopher Edley, Jr.
Edward M. Gramlich
Hugh Heclo
Pamela Loprest
Demetra S. Nightingale
Isabel V. Sawhill
William Gorham
Published by
The Urban Institute
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Copyright © 1996
The views expressed are those of
the author and do not necessarily
reflect those of the Urban Institute,
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