During the time he was drafting collective bargaining legislation for the National Industrial Recovery Act in July 1933, Leon Keyserling wrote to his father:
Under a capitalistic society, the same people who profited by the anarchy are likely to work most of the controls, and in the same stupidly selfish and self-destructive manner. Without revolution which transfers power to the workers and sets up a socialized state, little will be gained. But the establishment of controls and the centralization of authority make the revolution more likely, because the excesses of the capitalists will become so great and their abuses so violent that the reaction will be terrific.
In February 1934, he wrote the following in a letter to his father:
I am very much afraid that the country is recovering too rapidly. A few more years of depression would have promoted violence, and without violence fundamental reform is unlikely. However, I see considerable hope in the certainty of even more serious depressions in the near future.
In yet another letter in June of that year, Keyserling elaborated on his theoretical assumptions:
...there is no chance for lasting gains to either farmer or laborer save by revolution, and the only materials for revolt are the industrial workers. The farmers in this country show not the slightest sign of class consciousness or the collective spirit. They are all individualists. Even in Russia (which was predominantly agrarian while we are predominantly industrial) the revolution was engineered by the proletariat, and after two decades has not won over the farmers.
Luckily for Leon, his letters home didn't come to light when the House Un-American Activities Committee and the Senate Internal Security Subcommittee investigated him on suspicion of having once had politically incorrect thoughts. Historian Landon Storrs quoted the previously unknown letters in The Second Red Scare and the Unmaking of the New Deal Left, which chronicles the early political views and subsequent investigations of Leon Keyserling and his wife, Mary Dublin Keyserling.
To be sure, Keyserling may have been showboating in his letters to his father. Undoubtedly, whatever his political views might have been in the 1930s, they would have evolved along with his meteoric career advancement. What didn't appear to have evolved, though, was his callousness and cynicism -- no doubt fueled by his somewhat justified conviction that he was smarter than everybody else.
In spite of youthful cheerleading for a violence-inducing depression, I would grant that by the late 1940s, Keyserling's commitment to full employment as a priority policy objective was genuine. But by then the political climate was not receptive to New Deal style initiatives. Edmund Wehrle summed up the bleak situation in "‘Aid Where it is Needed Most’: American Labor’s Military Industrial Complex":
The postwar years posed grave challenges to both Roosevelt's New Deal coalition and to organized labor in general. Mainstream trade unionists and liberals demanded "full employment" policies after the war. The very term "full employment"—the call for aggressive Keynesian spending in both good and bad economic times to promote high levels of employment and economic growth—took on an almost magical connotation for laborities and liberals. But a wave of postwar strikes generated limited results and stoked public anger against labor. A conservative resurgence allowed for the passage of the antilabor Taft-Hartley Act in 1947. Meanwhile, President Harry S. Truman's Fair Deal initiatives to expand the New Deal met with defeat in Congress.
In 1949, things took a turn for the worse. A sharp economic downturn spoiled the high hopes generated by Truman's surprise 1948 victory, which saw the Democrats retake Congress. By the Fall of 1949, the unemployment rate, which had remained steadily under 4% since the war, shot upwards to 8%. Organized labor had real reason to fear that much-dreaded Depression conditions were poised to return. President Truman, in the face of the downturn, with labor's support, proposed that federal procurement and spending be directed to those areas hardest hit by unemployment. But the program, which never involved defense spending, had little support in Congress and died quickly. Hopes that the new Democratic Congress might adopt Fair Deal programs, such as public works projects and national health insurance, also evaporated.
In the face of mounting challenges, mainstream organized labor sought, as best it could, to protect gains and meet the growing material needs of its rank-and-file. While dreams of expanding New Deal era programs were dead, the emergence of the Cold War—an enterprise in which the anti communist wing of American labor was an active participant—offered opportunity. Compared to the perceived threat of expanded New Deal programs, business leaders were infinitely less hostile to military Keynesianism. "Military spending doesn't really alter the structure of the economy. It goes through the regular channels.. . . But the kind of welfare and public-works spending that Truman plans. . .creates new institutions. It redistributes income," opined Business Week in 1949. Planners in the organized labor movement, however, hoped and plotted to turn Business Week's equation on its head—to harness defense spending as a vehicle for addressing pressing economic and social problems.
Opportunity to push ahead came in the form of the Korean crisis beginning in the summer of 1950. The expansive increase in military outlays already called for in the NSC-68 plan, drafted in part by labor-friendly Council of Economic Advisors Chairman Leon Keyserling, had won strong support in the labor movement.
If I may be excused for repeating the point, in NSC-68 Leon Keyserling had justified increased armaments spending in part on the grounds that they would "pay for themselves" through higher revenues on an expanding economy stimulated by the arms build up:
...if a dynamic expansion of the economy were achieved, the necessary build-up could be accomplished without a decrease in the national standard of living because the required resources could be obtained by siphoning off a part of the annual increment in the gross national product.
In retrospect, that commitment to a tripling of arms spending may look like the original sin of creating the permanent military-industrial complex. But remember, "the unemployment rate, which had remained steadily under 4% since the war, shot upwards to 8%. Organized labor had real reason to fear that much-dreaded Depression conditions were poised to return."
Ironically, the purpose of "harness[ing] defense spending as a vehicle for addressing pressing economic and social problems" in 1950 was to forestall precisely the pre-revolutionary conditions that Keyserling had longed for in 1934.