Annual EBHS Conference, 39th Annual Economic and Business History Society Conference

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Confronting Decline: The Political Economy of Deindustrialization in Twentieth-Century New England
David Koistinen

Last modified: 2014-03-10

Abstract


The demise of established manufacturing sectors—deindustrialization—presents major social and economic challenges.  Authors have looked at various policy responses to deindustrialization, but there has been no comprehensive account of the impact of industrial decline on policymaking and the broader political economy.  This paper presents such a picture.  Summarizing the findings of a recently published book, the paper considers events in the New England region of the northeastern United States, where textiles and other sectors downsized in the period 1920-1960.  Industrial decline in New England led to three responses, each backed by a different interest group.  Business organizations had a large role in formulating responses to the region’s deindustrialization. 

New England industrialists, particularly in textiles, responded to industrial decline by pushing for cutbacks in taxes and social legislation.  Manufacturers insisted that such steps were necessary to restore the competitiveness of struggling industries.  New England capitalists had little success in securing retrenchment in the mid-twentieth century years—a striking contrast to the business-friendly tilt of policymaking in recent decades.  As industrial downsizing continued in mid-twentieth-century New England, taxes and social legislation stayed constant, or even increased. 

Labor unions responded to industrial decline in New England by seeking stronger government action.  During the 1930s, textile unions sought comprehensive federal government regulation of labor standards.  The measures would have equalized production costs at New England firms and their low-wage competitors in the southeastern United States, allowing the remaining New England firms to stay in business.  After World War II, unions sought federal aid for areas hit by industrial downsizing.  Union efforts to secure comprehensive federal labor standards in the 1930s failed.  But after the war, federal officials took a number of steps to aid deindustralized locales, culminating with the Area Redevelopment program set up in 1961. 

Service-sector companies such as banks, electricity providers, and railroads responded to industrial decline in a third way.  Reliant on the overall level of prosperity in New England, these firms sought to develop new area industries to replace those in decline.  The service-sector companies organized a regional business association that mounted a wide-ranging, decades-long push for growth.  The development drive aided the New England economy in small ways and helped Boston’s Route 128 emerge by the 1960s as a major center of technological entrepreneurship.

The three-part pattern of responses to deindustralization seen in New England applies more broadly.  Similar types of activity can be seen elsewhere in the United States and in other developed countries where established industries have downsized.