Progessivism's Ossification

The current political, economic and social system in the United States was formed in the Progressive era. There were some additional changes in the Depression era, notably introduction of some pro-labor legislation and the abolition of the gold standard, but Roosevelt, Taft and Wilson established the basic outline of today's political economy. The argument for reforming the 19th century approach to American government, which was not laissez faire because of the spoils system and involvement of local government in the economy, was that economic evolution leads to the need for new approaches to government. In particular, it was believed that the rise of big business changed the relationship between the state and business enterprise because big business was capable of abuses that needed to be regulated. In addition, there were arguments that the federal government needed to provide guidance and expertise to big business. As well, the Progressives believed that credit markets needed to be managed.

Without treating the claims that Progressives made, the question is, why do we still have, 90-100 years on, the same economic system that the Progressives developed? Have business processes not changed? Have labor relations not changed? Do the supposed threats that Standard Oil and US Steel posed in 1911 remain the same today? Have economic processes and technology not changed? If so, then why do we have the same system of regulation today that Woodrow Wilson considered to have been evolutionary in 1914?

The model of business regulation has proceeded as follows:

government support for business (19th century) ---> regulation and selective support(Progressive era) ----> attack and hyper-support (New Deal era) ----> ossification and increasing special interest power; inability of corporate/government system to increase net living standards ---->de-modernization, increasing income inequality and social stratification.

The problem is that Progressivism failed to anticipate evolution, despite its claim to be founded on evolutionary economics. The Progressives did not understand that government policies did not necessarily lead to rational decision making, and even if they did were going to become outdated. When they do become outdated, they are far more difficult to change. Thus, the Progressives' mainstream, statist model (and I include all three presidents, Taft, Wilson and Roosevelt) led to inflexibility and inability to evolve. This has led American society to become less imaginative, innovative, progressive and equal than it could have been. Mainstream academics, who see their role as supporting the liberal-big business consensus via Marxist and state liberal ideologies, have appeared increasing retrogressive and out of touch with developments in world business. For instance, no academic of importance advocated quality management before it became a critical competitive issue in the 1970s and no academic of importance has offered a coherent explanation for declining real wages since the 1970s.