The horizon is not so far as we can see, but as far as we can imagine

How Jefferson and Hamilton Designed the Republic for Labor

(This article is by Tony Wikrent)

What is our system of government supposed to be? A republic. But a republic is so ill-defined that even John Adams famously wrote “the word republic, as it is used, may signify anything, everything, or nothing.”

According to historian Gordon Wood:

The sacrifice of individual interests to the greater good of the whole formed the essence of republicanism and comprehended for Americans the idealistic goal of their Revolution…. To eighteenth-century American and European radicals alike, living in a world of monarchies, it seemed only too obvious that the great deficiency of existing governments was precisely their sacrificing of the public good to the private greed of small ruling groups. [1]

Just as important: Are there principles and policies of political economy that are supposed to distinguish a republic from other forms of government, i.e., monarchies, oligarchies, plutocracies, dictatorships, etc.?

Since it became clear that President Obama was unwilling to directly confront the power of Wall Street, I have read deeply trying to answer these questions for myself.

Contrary to what many on the left believe, the US Constitution is NOT solely designed to protect the rich. Our system of government definitely has been twisted to that end, but I do not believe that was the intent of Hamilton, the founder most responsible for laying the foundation of the US economy. (And remember, Washington used Treasury Secretary Hamilton basically as a prime minister, and agreed with or acceded to literally all of Hamilton’s economic beliefs and policies. This was in no small part a function of their shared experience at the pinnacle of American military command during the Revolutionary War, when they both identified Britain’s major strategic advantage to be Britain’s ability to raise funds and float debt through its financial system.)

Culturally, the most important aspect of a republic is supposed to be equality, especially economic equality. This is of course contrary to the view that the government was set up solely to protect property and the accumulation thereof. It was not – at least, not by Hamilton.

Economic equality is basic to a republic because, the idea was, no person can be fully independent and be a good citizen if their livelihood depends to some extent or other on another person’s largess, benevolence, or tolerance. This was the basis of the fight between the Hamiltonians and the Jeffersonians. Jefferson believed that only farmers who owned their own land were independent enough to honestly exercise the duties of citizenship. Jefferson wanted to delay the advent of industrialization and subservient factory labor as long as possible. This is why Jefferson acceded to the Louisiana Purchase, which he would otherwise have opposed on the grounds that the federal government has no express power to acquire such territory. [2] With the Louisiana Purchase, yeoman squeezed out of the established eastern seaboard would be able to cross the mountains, and buy, steal, or somehow take the land of the Native Americans and set themselves up as independent farmers.

Hamilton, by contrast, understood that the economy could not be frozen in time and remain entirely agrarian. Industrialization HAD to not only proceed, but be encouraged [3], for the US to have any chance of resisting the intrigues and hostility of the European powers – which remained committed to eradicating the American experiment in self-government until the US Civil War. (France and Spain landed troops in Mexico and Caribbean at the beginning of the war; the Mexican republic was eliminated and Maximilian, younger brother of Austrian emperor Francis Joseph I, was installed as puppet emperor; and the British were preparing to land troops in Canada in 1862, but were deterred by the pro-US street fighting in London and elsewhere which was led by Garibaldi’s revolutionaries.)

Hamilton’s great insight was that economic development depended entirely on improving the productive powers of labor. This meant the development of science and technology, and the spread of machinery to replace muscle power. The correct view of Hamilton must be precise: It was not that Hamilton sought to encourage and protect wealth, but to encourage and protect the CREATION of wealth. (Read Section II, Subsection 2, “As to an extension of the use of Machinery…” in Hamilton’s December 1791 Report to Congress on the Subject of Manufactures, if you want something to read today.)

This is where Marxist analysis fails catastrophically. Yes, much of economic history is that of elites accumulating wealth through exploitation, fraud, and violence. BUT: How was that wealth, which is stolen, created in the first place? Thorstein Veblen, and his discussions of industrial organization versus business organization, are far more useful in understanding the COMPLETE economic story, not just the exploitation side of it. I believe that once you understand this, you can understand why Elon Musk is much more useful to society than Peter Thiel. Musk and Thiel are both rich: Should we therefore oppose and denigrate both because they are rich, and we dislike our system of government, which has been mutated and diminished in order to protect the rich? No. I admire Musk because he has used his PayPal lode to create new wealth (which takes the corporate forms of Tesla, SpaceX, and Solar City), while Thiel has used his PayPal lode to fund libertarian ideas which are fundamentally hostile to what America is supposed to be. In Veblen’s analysis, Musk is an industrialist, while Thiel is merely a businessman.

In the nineteenth century, it was generally understood that the system established by Hamilton was in opposition to the “classical economics” of Adam Smith, David Ricardo, Thomas Malthus, and the other apologists for the death and destruction wrought on entire countries by the British East India Co. and the British empire. In the 1820s, Henry Clay coined the term “American system” to distinguish it from the British system. Michael Hudson has pointed out that, in addition to these two systems of political economy, a third was developed in the nineteenth century: Marxism. [4]

It is easy to be confused by American history, because at the same time that the American system was being built and practiced, the British system was competing with it for control of domestic economy and polity. To the extent that people today mistakenly believe that the American economy was founded on the ideas of Adam Smith — it most emphatically was not, as Hamilton explicitly rejected the ideas of Smith — the British system is winning. Michael Hudson has written at least two excellent overviews of this fight within the US between the American and British systems. [5] For now, the simplified version is that the British system was dominant in the slave South, and fought for free trade in opposition to the American system’s protective tariffs.

Because Hamilton’s American system sees economic strength flowing from increases in the productive power of labor, labor naturally has a favored place in the system. Or, at least, it is not ignored and even denigrated as it is in the British system, which likes to focus more on such things as monetary aggregates, and physical hoardings of “wealth” such as gold or land. What made the New Deal work (and it should be understood that the GI Bill was one of the most important legal enactments of the New Deal, along with financial regulation and Social Security) was that it allowed labor to achieve parity with, if not superiority over, capital, represented by the financial system.

The development of the Eurodollar market in the 1960s allowed US banks to begin sidestepping New Deal regulations. This was augmented, and eventually dominated, by increasing flows of hot money from illegal narcotics and organized crime. In 1976, the pound sterling crisis allowed US financial interests, acting through the International Monetary Fund, to impose economic austerity on Britain, terminating the Labor Party’s policy focus on full employment. In the US, this shift in policy priority from full employment was imposed by the new Chairman of the Federal Reserve, Paul Volcker, who  pushed “interest rates up to record highs in order to break inflation and undermine the wage militancy of American workers…. This restoration of class power, underpinning the neoliberal political project, relied upon high interest rates, recession and market liberalization.” [6]

The slow destruction of the Democratic Party since the Atari Democrats (see Matt Stoller’s recent article on “How Democrats Killed Their Populist Soul”) and then Bill Clinton, is because Democratic Party elites have come to accept the neo-liberal fantasy that finance is more important than labor.


[1] The Creation of the American Republic, 1776-1787, by Gordon S. Wood, University of North Carolina Press, Chapel Hill, NC, 1969, page 53.

In February 1866, when Massachusetts Senator Charles Sumner delivered an epic speech urging the passage of the Equal Rights Amendment, his direct observations on republicanism covered twelve pages (pages 176 to 188). Sumner’s is as good a summary of what a republic is supposed to be as any you are going to find. It consists of carefully selected quotes from many of the founding fathers. In the 1850s, Senator Sumner was such a persistent and powerful critic of Southern slave holders that in May 1856, South Carolina Congressman Preston Brooks nearly killed Sumner on the floor of the Senate by beating him over the head with a cane. Brooks continued to beat Sumner even after Sumner had lost consciousness. Other Senators were prevented from stopping the attack by Virginia Representative Henry A. Edmundson and South Carolina Representative Laurence Keitt, who brandished a pistol. Sumner required three years to recover before he could return to his Senate seat, and suffered chronic, debilitating pain for the rest of his life. Two weeks after the attack, Ralph Waldo Emerson wrote: “I do not see how a barbarous community and a civilized community can constitute one state. I think we must get rid of slavery, or we must get rid of freedom.”

[2] Jefferson’s original instructions to his envoys to Paris contained no mention whatsoever of acquiring land for the United States, because their mission was to secure for Americans the right of free passage down the Mississippi River. It was the French who proposed the idea to sell the territory, motivated by the need to raise monies for their war with England.

[3] In one of the most remarkable passages in Hamilton’s December 1791 Report to Congress on the Subject of Manufactures, Section VII, Hamilton writes that “the apprehension of failing in new attempts” requires the government to take an active role in promoting and supporting the attempts of private entrepreneurs at “overcoming the obstacles inseparable from first experiments.”

[4] Michael Hudson on the American School of Political Economy

[5] Hudson, America’s Protectionist Takeoff 1815-1914: The Neglected American School of Political Economy, ISLET, 2010, which I quote extensively in HAWB 1791 – Alexander Hamilton rejected Adam Smith. Also by Hudson: Simon Patten on Public Infrastructure and Economic Rent Capture. Another very useful book is James L. Huston, Securing the Fruits of Labor: The American Concept of Wealth Distribution, 1765-1900, Louisiana State University Press, 1998.

[6] Jeremy Green, American Power and the Making of British Capitalism, 04 June, 2013. Green is referring to Sam Gindin and Leo Panitch, The Making of Global Capitalism: The Political Economy of American Empire, Verso, 2012.


Living in the Truth or Dying in Lies


If Trump Wasn’t Right that DC Elites are Fuckups, Trump Wouldn’t Be President-elect


  1. Ron Showalter

    No, the destruction of the Democratic party is due ironically/precisely for the same reasons that this author’s piece completely fails: it ignores/rewrites history.

    I guess we should just ignore Charles Beard’s et al work from the early 20th century esp. “An Economic Interpretation of the Constitution of the United States” that shows in detailed analysis how the US Constitution was INDEED EXACTLY a construct of the rich for the rich, huh?

    That we should instead concentrate on the mid-20th century rewrite of US history led by such conservative luminaries Forrest McDonald, et al (e.g., Wood) who had nothing but praise/rehabilitation for robber barons etc and who crapped all over the progressive trend in historical research?

    That we should really believe that the very human men that were the Founders were just altruistic high-minded saviors who didn’t have economic dog in the fight when they were making the rules, huh? That is was just a philosophical debate?

    Fine but don’t throw the red – in every sense of the word – herring of Marx into the debate.

    Maybe I should go see “Hamilton” for some more snappy fiction.

  2. Tony Wikrent

    Reply to Ron Showalter –

    I suspect many people who use Beard to dismiss the founders have not actually read An Economic Interpretation of the Constitution of the United States. At the very least, they have certainly overlooked what Beard wrote about Hamilton:

    “…an extensive augmentation of his personal fortune was no consideration with him. The fact that he died a poor man is conclusive evidence of this fact. That he was swayed throughout the period of the formation of the Constitution by large policies of government — not by any of the personal interests so often ascribed to him — must therefore be admitted.”

    In other words, yes, Hamilton at least was thinking and acting as an “altruistic high-minded savior,” to use Ron Showalter’s words.

    Now, I concede that this was not true for most of the other delegates to the Constitutional Convention. But it is exactly because Hamilton, Franklin, Washington, and a very few others were thinking and acting as “altruistic high-minded saviors” that their names are remembered today, and the names of the other delegates are not. Ask yourself this: would you want Donald Trump to be designing a new Constitution to replace the one you despise? Or Paul Ryan? Or any number of USA leading conservatives and Republicans? What do you think they would produce, compared to what Hamilton and his cohorts produced?

    And this is all the more crucial, because of the role Hamilton played in giving form to the government created by the Constitution. As Henry Adams wrote in his 1879 The Life of Albert Gallatin,

    “The true ground of Hamilton’s great reputation is to be found in the mass and variety of legislation and organization which characterized the first Administration of Washington, and which were permeated and controlled by Hamilton’s spirit. That this work was not wholly his own is of small consequence. Whoever did it was acting under his leadership, was guided consciously or unconsciously by his influence, was inspired by the activity which centered in his department, and sooner or later the work was subject to his approval. The results—legislative and administrative—were stupendous and can never be repeated. A government is organized once for all, and until that of the United States fairly goes to pieces no man can do more than alter or improve the work accomplished by Hamilton and his party.”

    And remember – it was not clear just what particular mechanisms, agencies, and departments of national government the Constitution prescribed or proscribed. Just look at the fight over the charter for the first Bank of the United States. Washington’s attorney journal Edmund Randolph joined with Secretary of State Jefferson in making the “enumerated powers” argument that the Congress was not given the power to create a bank. But President Washington chose to accept the argument of Treasury Secretary Hamilton that the Constitution included more broadly defined “implied powers.” And, of course, the First Congress agreed and granted the charter.

    If you think this history is not important because the Constitution was flawed to begin with, let me remind that today, USA conservatives and Republicans who argue Social Security and Medicare are unconstitutional and should be abolished, use the “enumerated powers” argument. If you want to fight them to preserve the USA safety net, I would think it behooved you to understand this stuff.

    But let us return to Beard, who so many leftists hold up as the foil to the flawed Constitution.
    Beard personally became very upset that many people argued thatAn Economic Interpretation of the Constitution of the United States proved or at least indicated that Beard was a closet Marxist. To address this issue, a decade later Beard wrote The Economic Basis of Politics. And I’m absolutely certain those people who champion Beard’s An Economic Interpretation of the Constitution have never read The Economic Basis of Politics. Because Beard explicitly addressed the issues of Marx and Lenin – “throwing into the debate,” as poor Ron Showalter writes “the red herring of Marx.” Beard compares the economic interpretations of history advanced by Marx, and Lenin, with the “political factions derived from economic interests” interpretations of Hamilton and Madison – and concludes that Hamilton and Madison are much closer to the truth, and hence far more useful.

    To quote from the introduction to a 2002 republication of The Economic Basis of Politics, by Clyde Barrow:

    “…Beard (1945, 62) concludes that “modern equalitarian democracy, which reckons all heads as equal and alike, cuts sharply athwart the philosophy and practice of the past centuries.” These themes are woven together in Beard’s claim that the central problem of contemporary political theory, as well as the motor of contemporary political development, is the contradiction between the ideals and institutions of political democracy and the reality of economic inequality (i.e., classes)…. The fact that neither capitalism nor communism had solved the problem of class conflict led Beard to the “grand conclusion” that it was Madison’s economic interpretation of history rather than Marx’s, that had withstood the greatest test of modern political history. Madison was correct to the extent that he identifies the problem of regulating class struggle, rather than eliminating it, as the central problem of political statesmanship and constitutional development, regardless of the mode of production or any particular distribution of wealth. There is no end to class struggle and, therefore, no end of history (or politics)….”

    So, yes, Ron, you really should go see Miranda’s play.

    Then please report back to us on whether any of these issues are included or mentioned.

  3. Ché Pasa

    As I said in my comment to Wikrent’s earlier version in Sterling’s Constitutional Crisis post, he’s put his finger on the crux of the problem and in my view the constitution is part of that problem, not the solution.

    Whatever the Founders’ ideals (scholars differ) the Republic they set up was a slave republic, not all that unique as slave republics go, and it advantaged a white male quasi or actual aristocracy — not unlike Washington, Jefferson and Hamilton themselves, come to think of it. It’s all still down on paper in the constitution. 

    The labor their Republic was purportedly “designed” for was the white male labor ground to dust in the industrializing north, and the yeoman labor of expansion which would be sent into the wilderness to seize territory from the Natives and serve to prepare the ground for the advance of the slave republic in the South and the industrial/agrarian republic in the North to be followed by an interloping aristocracy if one did not spontaneously arise among the so-called yeoman.

    Black chattel labor had no rights a white man was bound to respect, and white male labor was hardly “free” in any political or economic sense. Neither received the fruits of their productivity from the beginning of the republic, nor does labor receive the fruits of its productivity now.

    Neither form of labor was able to participate in the political life of the country in most jurisdictions, not unless they met citizenship, gender, race and wealth qualifications which few could.

    As time went on, some of the deeply embedded legal, customary and constitutional disabilities of labor were removed or modified, but much of the progress, such as it was, was purchased with a great deal of blood and sacrifice. And always, to this day, any advance of labor has been fiercely fought by an aristocracy of capital and finance. Always. As a rule, they win, labor does not.

    The Democratic Party knows how to exploit and utilize populist and even leftish sentiment, but it is at root an aristocratic party, and deeply conservative. Roots they have been reverting to for a generation.

    The Populist Party was actually populist, but what happened to it is instructive.

    The current iteration of populism in the Republican Party is a con.

  4. bruce wilder

    Excellent. Much appreciated.

    Institutions matter.

  5. Richard

    Che: Your summary is of little use even if we accept it considering that you do not offer a better realistic alternative while Tony at least offers something defendable.

  6. Jeff Wegerson

    “Designed the Republic for [owners of industrial] labor?” I get that is a bit Marxian.

    Thanks for alluding to Hudson. I respect him and as an appeal to authority it works and helps me.

  7. Duder

    I am not as well read as the author on the details of Hamilton and Jefferson’s economic visions but I do think the author is falling into the trap of American exceptionalism in this essay. It is clear that there are conflicting founding visions for US development between industrialists, white settlers, and free trade promoters (until the civil war almost exclusively slavers). That industrialists held sway for a brief period with Hamilton does not mean that the other strands were not as equally influential to the development of the US or the original vision of the US Constitution. The real deciding battle between industrialism versus free traders was the US Civil War and the ratification of the 13th amendment. This victory of industrial capital was also accompanied by a compromise with white settlers (Jacksonian/Jeffersonian vision) through the Homestead Act and the Indian Wars that dispossessed the remaining native nations of their territory. The author also makes a jump from Hamilton to the New Deal as if they constitute one single trajectory of “pro-labor” US politics. Nothing could be further from the truth.

    Also, I think the author is stereotyping the “British” position with exclusive references to British lassie faire intellectuals. There is also a parallel tradition of industrialists in Britain that were not always aligned with the imperial ambitions and visions of lassie faire. In the 19th century they were called “little Britianers”.

    The authors argument is also based on a conflation of industrial capital with industrial labor. Industrialists, while promoters of increasing labor production, were quite happy to suppress the living and wage conditions of actual labor. Pro-labor politics, in the modern sense of the word, only emerged with the organized labor and populist movements of the 19th century. I don’t think we should give Hamilton credit for the trade union movement. He likely would have been quite appalled.

  8. bob mcmanus

    I will re-read this but I am familiar with the American System in part from studying Japan and the couple years I think Henry (?) Carey spent there. Without more study, I have always presumed that the American System was straight out of Herder and List, a more rational form of mercantalism, and feverishly nationalist and imperialist as hell. And yeah, in its 19th century origins and the neo-mercantalist revival in post-WWII Asia.

    Likely efficient, neo-mercantalism is responsible for such wonders as the conquest of the Philippines and two Sino-Japanese Wars, so I’ll stick to Marx for now.

    Read a book about Marx vs List in their contexts, almost contemporaneous, but I don’t remember much.

  9. bob mcmanus

    In case I wasn’t clear, Meiji development was deeply indebted to List and the American System. Wikipedia isn’t bad on this, if you thread thru several entries.

    Yasujiro Ozu with some really subtle stabs, in Late Spring directly connects Friedrich List to authoritarianism. Also alludes to Roger Martin du Gard, but I have never gotten what that’s about.

  10. Richard

    Imperialism doesn’t have to be part and parcel with neo-mercantilism. The East Asian economies after WWII haven’t done badly being neo-mercantilist.
    Marxism has given the world plenty of horrors as well, if you haven’t noticed.

  11. Hugh

    I do not understand how this squares with the fact that those who had the franchise to vote on the Constitution comprised less than 10% of the adult population and with few or no exceptions had to own property to have the franchise.

    The Framers had a horror for the Mob, what we nowadays would call ordinary Americans. The system of checks and balances was not created, however, to restrain the power of ordinary Americans, the unpropertied, because they essentially had no power and no representation. The checks and balances were there to keep any one segment of the propertied class from dominating the rest of those with property. We have been struggling with this lack of democracy at the heart of our republic ever since.

    I am also unclear how Hamilton’s support of establishing a monarchy with Washington as king fits in.

    As for the First US Bank, my understanding is that a lot of former officers in the Revolutionary Army (Easterners) were made shareholders, as a kind of pay off to them. To cover their profits, Hamilton supported a tax on whiskey produced by new settlers (Westerners on the frontier) which led to the Whiskey Rebellion. Not sure how that fits into this narrative of the “increased productive power of labor.” It seems more like an example of rentier capitalism.

  12. Ché Pasa


    Being “realistic” has got us to this point. If there is to be a viable and lasting alternative, on the other hand, we should think outside the box, including the box labeled “The Founders.”

    Tony Wikrent makes an argument about — if you will — :original intent:. It’s well written, detailed, backed up with original and scholarly sources, all of which would be convincing if the ground truth wasn’t and isn’t what it is.

    In other words, what the republic actually was and is (to the extent we still have a republic) indicates it was not set up on behalf of or for labor at all. It was and is set up and operated for the exploitation of labor (slave and/or “free”) by an elite, what I call an aristocracy. It was also purpose designed to dispossess Natives from their land and to expand the republic into a domestic empire.

    In terms of labor, the United States of America was founded as a slave republic and as a republic of exploited “free” labor on behalf of a tiny elite. It still operates that way, though chattel slaves are no longer as common as they were at the founding.

    In order to discover a viable and lasting alternative, one has to deal with the reality of what’s happened as well as ideals.

  13. ultra

    Science and technology were almost elevated to the status of a religion by the Marxists. They were completely in favor of increasing the productivity of labor. Stalin industrialized Russia at a rapid pace. To further this goal, an excellent system of public secular education was set up, where there was strong emphasis on math and science.

    The portrayal of the economic system governing Great Britain is highly distorted. Great Britain was the first country in the world to develop a modern industrialized economy. It was not merely an economic system of wealth hoarders and monopolists (although it had some of those).

    Another problem in this analysis is the tendency to assume, on the part of Veblen and others, that finance capital and industrialization are incompatible with each other. In fact, large-scale industrialization is not possible without an abundance of finance capital. Industrialization projects require funding from pools of money that are supplied by banks, financiers who sell stocks, venture capitalists, and the like. Big government is also a common source of money for such development and industrialization projects (funding for early railroads, canals, road systems, space exploration, etc.), particularly when they are viewed as too risky by capitalists.

    There is a tendency, on the part of some American scholars, to deify many of the founding fathers and certain U.S. presidents. In Wikrent’s analysis, it is Alexander Hamilton who is being deified for his presumed role in promoting the productivity of labor. However, the industrialization process in the United States was the result of a multitude of actors, broader cultural trends, and the availability of natural resources on the unexploited North American continent.

    The role of the U.S. Constitution in the industrialization process is rather dubious, considering that it was heavily influenced by large landowners with slaves. The U.S. Bank, that Alexander Hamilton advocated, was opposed by both southern landowners and western pioneers along the frontier, not because they were against banks, but because they were against the creation of a monopolistic national bank that would enjoy an unfair advantage over local and regional banks that were more likely to loan money for various local and regional development projects in their areas. They thought (correctly) that such a bank would favor wealthy merchant-traders, industrialization projects, and development projects in the more heavily populated northeastern states along the seaboard. The U.S. Bank also meddled in U.S. elections, favoring Federalist and Whig candidates over Democrats (Alexander Hamilton was a Federalist). This is the reason Andrew Jackson destroyed the U.S. Bank.

  14. Tom W Harris

    As automation accelerates, the need for human labor declines almost to the vanishing point. How then do we acquire bargaining power? Are we witnessing/experiencing a global mass extermination similar in method to what we USIans inflicted on the Native American population?

  15. Richard

    Che: I still see no viable solutions in your writing.

  16. > I do not understand how this squares with the fact that those who had the franchise to vote on the Constitution comprised less than 10% of the adult population and with few or no exceptions had to own property to have the franchise.

    The did not require any property considerations, that was left of the states. it was therefore easy to fix it the states want it. Kentucky in 1792 was the first to have no restrictions.

  17. Ché Pasa

    @ Richard

    Tony only provides an argument for what ought to have been — but wasn’t.

  18. Ché Pasa

    @ Sterling,

    Kentucky was also a slave state. Ahem.

  19. Tony Wikrent

    Duder points out that my essay “jump[s] from Hamilton to the New Deal as if they constitute one single trajectory of “pro-labor” US politics.” Well, yes: I wrote a quick comment on a blog, not a fucking book. In other comments and other blogs, I have explored the rise and collapse of the Greenbackers, the Grangers, the Farmers Alliances, and the People’s Party in the nineteenth century. I have also explored the long history of government promotion of economic development, which I do again, below.

    He also mention the “little Britianers” faction in Britain. Yet the facts today are that the City of London dominates the British economy and polity every bit as much as Wall Street dominates USA’s. For me, this is a signpost that the problem is not solely the USA Constitution, for we find neoliberalism entrenched in parliamentary systems as well. What I think this fact points to is the immense power of ideas, which the neo-liberal thought collective, as Philip Mirowski calls it, fully understood and deployed in a deliberate campaign aimed at “educating” elites in targeted countries.

    This carries us to the question of motive: is Obama truly that full of malevolent intent? Is Hillary Clinton? Is Tim Kaine? What about the thousands of people who comprise what we can refer to as Democratic Party elites – Senators, Congressmen, governors, state party chairs, etc., etc.? Supposedly they have different values than Republicans regarding civil rights and participatory democracy and so on, but how is it that they come up with economic policies that are so similar in results to Republican policies (enriching the rich and growing inequality, privatizing government functions, “free trade” agreements, etc.)? If it is the prescribed by the nature of the USA Constitution, then how to explain the similar situation in Canada, in Britain, in France, in Germany, even in Sweden, which is the OECD country that has had the largest growth of economic inequality over the past few decades?

    Hugh writes that “The Framers had a horror for the Mob, what we nowadays would call ordinary Americans.” Well, I think it is very instructive to watch the reaction of Democrats and the left to the electoral victories of Trump and the Republicans. I do not see how it is different than the Framers’ “horror of the mob”; indeed, we now see one reaction being to seize on one of the original checks and balances and petition the Electoral College to respect the popular vote for Clinton and declare her President instead of Trump.

    We find the same rise of racist, nativist, wrong-wing extremism not just in USA, but in countries all around the world: LePen’s National Front in France, Golden Dawn in Greece, Law and Justice in Poland, Alternative in Germany, Jobbik in Hungary, Democrats in Sweden. All this proves is that the USA is not unique; its constitutional system is neither uniquely good nor uniquely bad, but exactly what Ian wrote the other day:
    “The warnings on climate change and about the rise of the racist right go as far back as the 80s, in my memory. Why? Because the evidence was already there for people to see. By the late 80s, we could see that the inequality data was going in a radically bad direction, for example, and people were already saying, “This will lead to the rise of bad people, like fascists.” This was not hard to predict. It was obvious. You did not need to be some sort of special genius, you just had to ask yourself “What happened last time?” “

    Ultra and others have argued that “The portrayal of the economic system governing Great Britain is highly distorted.” Actually, I was astonished at how critical the early American view of British industrialization was. Almost as astonishing was the reaction of Brits who traveled to the USA in the early 1800s and were amazed at how much higher was the living standard of American workers in the industrialized North compared to Europe. The actual condition of American workers in the first half of the nineteenth century completely contradicts statements such as “Industrialists, while promoters of increasing labor production, were quite happy to suppress the living and wage conditions of actual labor.” See, for example, Fisher, Marvin, Workshops in the Wilderness: The European Response to American Industrialization 1830-1860, Oxford University Press, New York, NY, 1967.

    Europeans who visited the United States readily saw the rapid industrialization that was occurring in America. More importantly, they saw that industrialization in the USA was of an entirely different character than industrialization in Europe. In Chapter VI, “An Answer to Jefferson on Manufactures,” Fisher quotes from letters and articles from a number of European visitors to America. They “recognized that in America industrialization was different… that New England factory towns looked nothing like Manchester, Birmingham, or Sheffield…. The found mechanizations of standard procedures further advanced than in England or on the Continent, but instead of brutifying the worker, mechanization seemed to alleviate the arduous and routine nature of factory labor. This nation, which Jefferson felt could never match European techniques, had by 1854 demonstrated in a variety of industries an unprecedented ingenuity in doing “everything that could be done to reduce labour in the movement of materials from one place to another…. This includes mechanical arrangements for conveying material on the same floor to another, carriages for conveying material on the same floor, and such like.” This praise… came from a somewhat surprised committee of English engineers and manufacturers who reported their findings to an even more awe-struck House of Commons. When Europeans stopped to thing what this foreshadowing of assembly-line production meant for Americans and their society, they found the directions and implications very different from what they saw in European industrialization.”

    “To visitors from abroad Lowell contrasted vividly with the factory towns of England and Scotland; consequently it was the best described and most admired example of American industry. They reported no child labor, little repetitive drudgery, great concern for health and morals, and encouragement for self-improvement, all of which fostered feelings of pride and security.”

    “As a result of what many foreign observers saw throughout the United States the individual concern with invention and improvement, the abundant resources which stimulated enterprise and activated industry, and the unprecedented record of past progress which foretold an almost limitless future-they were mightily impressed with the rate and nature of industrialization in the United States. On the one hand, here was opportunity, and on the other, an aggressive people, infused with principles of equality, who would literally take a back seat to no one. Social fluidity or mobility was guaranteed to all citizens, geographical mobility was facilitated by a fast-growing network of river and rail transportation, and economic betterment was almost a religious obligation. Such an atmosphere seemed particularly suited to developing a vast industrial system. To the American imagination, the varieties of rnechanization came to signify progress; and faith in progress made the individual American a chamber of commerce in whose mind every fall of water ought to turn machinery and produce profit.”

    It should be asked: How did so large and prosperous a middle class arise? I do not see any answer that affirms the “tiny elite of exploiters” thesis. But, this is not to deny that there was, in fact, exploiters and exploitation. American economic history is chock full of it. What I am trying to do is identify those parts of American history that actually account for the expanding scope of human rights (almost exactly a century ago, there was no universal suffrage anywhere – not in ANY country in the world) as well as widely shared economic prosperity.

    There was in fact, once an economic doctrine unique to USA, call the Doctrine of High Wages. HAWB 1800s – The Doctrine of High Wages – How America Was Built
    I suspect that very few people here have ever heard of it before. It has been written out of history and economics textbooks, just like the American System had been. People should stop and ask, “Why?”

    Finally, the actual history of USA technological and economic development disproves the thesis that USa “was founded as a slave republic and as a republic of exploited “free” labor on behalf of a tiny elite.” Where was the exploitation in the US government’s development of metal working machine tools and standardized parts production at the national armories that became the basis of modern industrial mass production? Where was the exploitation in the direct funding given to Samuel Morse to develop and build the first telegraph line? Where was the exploitation in the US Navy’s deliberate efforts to spread the most advanced steam engine design and building technologies into civilian industry in the late 1850s? Where was the exploitation in the US government’s efforts to understand, then prevent, cave-ins and explosions in coal mines? Where was the exploitation in USDA’s gathering of winter wheats from central Ukraine and Russia and their dissemination to the Great Plains of North America? Where was the exploitation in USDA’s discovery of light periodicity in plants in the 1920s? Where was the exploitation the Coast Surveys of the 1820s that discovered the deep water Geddes Channel, which allowed New York City to become the preeminent Atlantic coast port? Where was the exploitation in the Lake Surveys of the Great Lakes, which made much safer navigation thereon? Where was the exploitation in the efforts to develop the Weather Service? Where was the exploitation in the efforts of the Weather Service, the Navy, and the Lifeguard Service to promote the development of wireless radio? Where was the exploitation in the efforts to deliberately spread the new electronic technologies of computers developed secretly during World War 2 into civilian industries? Where was the exploitation in the effort to develop the Internet?

    Do all these examples fit the thesis that the original intent of the Constitution was to enable and perpetuate the exploitation of the suffering mass of humanity by a small, privileged elites? I view all this history – and there is much more – as the intended result of Hamilton’s design. Was a financial system and banks needed to do these things? Absolutely. Was financial system and banks supposed to have dominance over the rest of the economy? Absolutely not. Hamilton himself wrote in The Report of the Secretary of the Treasury, to the House of Representatives [on] Establishing the Public Credit, December 13, 1790:
    “Public utility is more truly the object of public banks than private profit And it is the business of government to constitute them on such principles that while the latter will result in a sufficient degree to afford competent motives to engage in them the former be not made subservient to it.”

    bob mcmanus points out that the American System informed the industrialization of Japan, Germany and other countries, though he incorrectly adds that it was “a more rational form of mercantalism, and feverishly nationalist and imperialist as hell.” A piece I wrote earlier this year I think places mercantilism in the proper historical context to understand how it was changed and used by republicanism. The idea of the General Welfare in the Constitution is crucial. In fact, in response to this all-too-typical outpouring of leftist dislike for the USA Constitution, it is useful to ask: why did the founders include the General Welfare in the Constitution? It certainly did not need to be there: in fact, conservatives and libertarians today have argued that one major improvement the Confederacy made to the Constitution was the elimination of any mention of the General Welfare. I discuss all this here:
    The Historical Context of Mercantilism, Republicanism, Liberalism and Neoliberalism. By NBBooks. Sunday Jul 24, 2016

    I believe that it is precisely the Constitutional mandate to promote the General Welfare that made the USA Constitution the instrument for technological and economic development. This is not to say that it has been a smooth, straight historical road we’ve been on. Has there ever been any human history that was smooth and straight forward? Our task, if we are willing to shoulder the burden of moving forward, is to sift through history and find those ideas and philosophies that have guided the best that have gone before us, that we may see the path they followed, and thus better recognize the path we must follow.

  20. > Kentucky was also a slave state. Ahem.

    I did not argue that the Constitution was perfect, far from it. I argued that the Constitution did not require any form of property, which the original poster had. being property was different, and while the original drafters of the Constitution considered banning being enslaved, several representatives of the South would not hear of it. which is why we had a catastrophic war to settle this, and then a century of neo-slavery. it was only in the 1960s that it was legally abolished, and that did not end the practice.

    So if you want to say that the Constitution was far from perfect, you will get no argument from me. But there were forces against slavery as well as for it, and I have argued in my book, that the Constitution often delays deciding on large disagreements, as much or more than it codifies agreements.

    ( side note: I put up interludes on my blog.

  21. EmilianoZ

    A constitution is like a set of tools. While it matters what tools you have at your disposal to do a certain job, what matters a lot more is who is wielding the tools.

    We can compare 2 pretty different political systems. I have a sketchy but I hope sufficient knowledge of the current French system (5th Republic). On paper, the French constitution is more democratic and makes change easier. The US constitution seems uniquely designed to make change almost impossible. In the French system, for presidential elections, you have the principle: one person = one vote, every vote counts. Basically it’s the popular vote. Hillary would be president in the French system. While Bernie was still in contention, some people said: even if he’s elected president he will not be able to govern because Congress will be against him. This wouldn’t be a problem in the French system. The president has the power to dissolve the Assemblee Nationale (equivalent of the Congress) and organize fresh elections. France has the additional advantage that the Senate has virtually no power. In the US, the senate seems to have been specifically designed to be a reactionary force (see the story about the saucer for cooling the coffee). When Mitterrand was elected in 1981, he dissolved the Assemblee Nationale, won the new elections and was able to pass his leftist measures (they didn’t succeed but that’s another story).

    Despite those constitutional advantages, the political situation in France is as desperate as in the US because the political class is as rotten there as it is here. The 2 main political parties there are as neolib as the Reps and Dems here. So unfortunately the only alternative is France’s own version of Trump, namely Martine Le Pen.

    It makes no sense to fetishize a piece of equipment (although Apple fanboys would probably tell you their iphone is not a tool but an integral part of themselves). The real question is whether it is possible to reverse the general in society. Maybe it isn’t. Maybe it’s just the natural course of the aging of a civilization. Everything has a beginning and an end.

  22. Peter


    Your assumption that the Red Queen would be president if we had a direct presidential vote is flawed because that is an alternate reality. It is also possible that Trump could have won in this kind of contest where he might have actually campaigned in California and drawn more support as he did wherever else he did campaign. Trump organized and directed his resources to win the contest we have, the electoral college vote and he won, the rest of this whining and nonsense is sour grapes. Clinton ran her campaign the exact same way but she lost after she concentrated on the weirdo celebrity culture in Cali to win their EC votes.

    Even if the Frogs get to vote directly for their lousy leaders their elite parties choose the candidates for them just as happened here until Trump came along.

  23. Ché Pasa

    What I and others are saying is that at the founding of the United States and for a century and a half afterwards, the majority of the members of the polity/republic had no say in the running of the polity/republic. When women finally achieved the franchise in 1920 it was the first time a majority of Americans could actually vote on issues and candidates, but by that time, blacks and other “inferiors” had been largely disenfranchised — again.

    In the Founders’ time and for long afterwards, chattel slave labor had no rights at all; so-called “free” labor had few rights employers were bound to respect. Whatever political rights they may have had were strictly constrained. This was how the nation was operated and to some extent it still is, though the methods have evolved over time.

    Whatever the intent of the Founders regarding labor, the facts on the ground were that labor was exploited, denied the fruits of their productivity, and often grossly abused. Workers had few or no political rights.

    Whether they were better off than their British and European counterparts probably depended more on who you asked, where and when. I can state with some certainty that my European and Irish ancestors were not better off when they arrived in the United States and for quite some time after their arrival.

    My British ancestors arrived in the 1600s, and I somehow doubt they saw themselves as better off than they had been in England until long after they’d settled in New Jersey — on land seized (er, “purchased”) from the Indians.

    The basis of prosperity was ownership of land, resources and manufacturing, not labor.

    Of course theft, dishonesty and corruption played more than a little role in the whole scheme, too.

  24. Michael Berger

    @Tony Wikrent

    On Veblen: Which of his works do you recommend/are you referring to for understanding industrial vs. business organization?

    “Theory of the Leisure Class”? “The Theory of Business Enterprise”? Both? Other?


  25. BlizzardOfOz

    Tony, when you look back at the Larouchites, do you think they might have had more success in today’s climate, where things are obviously going sideways and people are looking around for answers?

  26. Tony Wikrent

    Michael Berger: Theory of the Leisure Class is a must-read before anything else. As for industry vs business I recall the best was The Engineers and the Price System. Let mo go back and look at my notes in the books I have and I’ll post again, probably this evening.

  27. Tony Wikrent

    BlizzardOfOz – it’s always bothered me a lot that most of the material written on Hamilton and the American System was by the LaRouchies. That’s one reason many years ago I bought copies of Henry Carey and Friedrich List and E. Peshine Smith for myself. But what I found really “sealed the deal” for me was finding online Henry Clay’s 3-day speech on the American System, and Gabor Boritt’s Lincoln and the Economics of the American Dream. There simply is no way to understand Lincoln’s economic policies without understanding the American System policies of Henry Clay and the Whig Party before it disintegrated. Still, it bothered me that the LaRouchies were about the only proponents. So I was delighted to find Michael Hudson’s writing in the academic fighting aimed at burying the Carey and the American System economists, along with the whole idea of economic rent and unearned income. Then one day I read some screed against Lincoln’s economics by some asshat named Thomas DiLorenzo, who actually called Lincoln and Clay “national socialists” ie, Nazis. Turned out DiLorenzo is on the von Mises institute and self-identifies as an Austrian economist. Put that together with what Philip Mirowski, Stedman Jones, and Kim Phillips-Fein have written about the Mont Pelerin Society and the rise of the Austrian School, and you get a pretty similar picture to what the LaRouchies have written.

    I guess all that doesn’t really answer your question. I would guess the LaRouchies would get more traction today, especially among the Tea Party, with their fixation on the Council of Foreign Relations, but I wonder how receptive the conservatives who firmly believe in the superiority of Adam Smith, and Winston Churchill, would be to the LaRouchite hatred of Britain. Clearly, the Austrians, libertarians and radical free marketers would reject the LaRocuhie economic ideas.

    I read a lot of the LaRouchite material during and after the financial crash of 1987, and I have to say they were spot on. Seems to me that almost everything they warned about concerning economic and financial events, have come to pass. And, I have to credit them for making me aware of the immense financial power and influence the old royal families of Europe still have.

  28. tsisageya

    Please don’t preach to me about founding fathers, or whoever.

    Happy Thanksgiving, by the way.

  29. Michael Berger

    @Tony Wikrent

    Ah. Thank you Tony! I’ll be looking forward to your post (no rush).

  30. Tony Wikrent

    So, Trump’s election, as I predicted, has revived interest among some people to turn to some of the “anti-democratic” checks and balances.

    I am one of those 538 National Elector’s and yes the Electoral College is in play [edited with poll]

    Most of the framers expected that the powers and princes of Europe would constantly seek to meddle, hinder, hamper and even control the USA, including through interfering in the election of President, and members of Congress. So, I’m surprised no one has yet pointed out that the apparent role of Russia and Putin in this election exactly fits one of the primary reasons the framers created the Electoral College.

  31. Tony Wikrent

    Michael Berger: Veblen most explicitly treats the business versus industry in The Theory of Business Enterprise. I have only read parts of it. What sticks in my mind is Veblen’s discussion how business men artificially produce profit by deliberately sabotaging (limiting) industrial production, creating artificial shortages, from The Engineers and the Price System. It is the very first section of this pdf file:

    I think I elevate The Engineers and the Price System over The Theory of Business Enterprise because the creation of artificial shortages Veblen discusses demolishes the mainstream economics argument that the discipline is the study of how society allocates scarce resources. With the level of technology we have now, there are no real problems of scarcity: what appears to be scarcity is actually the result of industrial sabotage by management, or of the effects of unequal and inequitable distributions of income, wealth, and political power. This is why I always reject the neo-Malthusian argument of over-population: it is a way of diverting otherwise good people from exploring and solving the real sources of scarcity.

  32. tsisageya1

    Oh. Really? Jefferson and Hamilton.

    I can’t even finish reading this nonsense.

Powered by WordPress & Theme by Anders Norén