In this scenario, the Democrats become the pro-business, conservative, free trade party with a base in the South. They never grow to dominate the black vote and they attract laissez-faire people like Barry Goldwater. The Republican nominee would pursue an agenda similar to the New Deal, with less ties to unions and more emphasis on racial and gender equality given the lack of Southern Democrats to appease. The laissez-faire, classical economic consensus of the past was destroyed in the Depression, replaced by the Keynesian one. The progressive Republicans will dominate in 1932 and steer the party in a more interventionist direction.
I’m not sure I agree. Its one possibility, but I don’t think its the most likely. First, the Republicans had just governed with two very laissez-faire administrations through the 20s and had done very well. In my scenario, the common wisdom will be that Hoover only lost due to a cultural scandal, rather than any repudiation of the GOP’s pro-business background.
Further, the Dems are still the more pro-union party in this scenario, as they have been for some time - unless you suggest them supporting some anti-union policies in the face of the Depression, which I find unlikely. I could see them accepting that in exchange for some other concession, perhaps.
Ultimately, I think this scenario results in both parties “owning” the Depression, since the Democrats have the White House when Wall Street crashes, but the GOP has Congress and had the White House for the previous 8 years. I think, because of this, the parties might converge a bit on economic matters; see how both parties supported Free Trade after WW2, historically. I think the GOP might be a tad more Keynesian than they historically were, and the Dems quite a bit less Keynesian than they historically were.