Saturday, March 2, 2019

Liberals and the left fail to notice - and celebrate - the intellectual death of conservatism

Faced with Trump's populist seizure of the Republican Party, establishment conservatives and libertarians are trying to redefine classic republicanism (referring to the ideas on which the USA was established as a republic, not to the Republican Party) to exclude anything other than market capitalism.

The Winter 2019 issue of conservative quarterly National Affairs carries an article, "Republicanism for Republicans," which marks the intellectual grave of American conservatism. It was written by Brink Lindsey, former director of regulatory studies at the radical libertarian Cato Institute and fromer senior editor of Regulation magazine. Lindsey is now drawing his thirty pieces of silver as vice president and director of the Open Society Project at the Niskanen Center. [1]

Lindsey begins by summoning together the bedraggled and disconsolate disciples of "pure" conservatism and libertarianism. Looking over the smoking ruins and salted earth of their conservative paradise laid waste by Trump and his hordes of "ethno-nationalism", Lindsey laments that "What was once your political home, or at least a familiar haunt you visited regularly, has been overrun by people or ideas you find repellent."
We cannot simply wait for Trump to pass from the scene, or for Democrats to win big, and hope that things will then somehow go back to normal. We must face the fact that the Trump presidency is not a freak accident, but rather the culmination of developments that have been corrupting the conservative movement and the Republican Party for many years. To root out this corruption, to build a new center-right that can lift this country up to its noblest aspirations instead of dragging it down to its darkest impulses, we must return to our intellectual foundations and build anew from there.
This is a clear admission that the seven decade rise and ascendancy of modern American conservatism has met its ignoble demise at the hands of a grifting conman and TV huckster. It's over, there is no life left in it, it has flat-lined: the relentless and richly funded climb of conservatism to national power that began with Strom Thurmond's states rights Dixiecrats in 1948, the Austrian School economic shit-fest of Ludwig von Mises and Friedrich von Hayek excreted from the rancid rectum of the Hapsburg empire in 1944 and 1945, and tail-gunner Joe's 1950 discovery of Communist Party membership cards in every desk drawer of the State Department, is finally over.

In a just universe, the fellow travelers of Barry Goldwater, Milton Friedman, William Buckley, David and Charles Koch, Jesse Helms, Lee Atwater, and Karl Rove would pop out of mortal existence and re-emerge in Dante's infernal eighth circle, suffering each healed wound to be ripped anew. But in this world, justice is only bent toward, so we must suffer for some time the continued brain-dead lurching and staggering of conservatism: an ideological zombie still dangerous in its capacity to inflict harm and consume the flesh of the living.

A large part of the problem is that most leftists have never really bothered to understand the ideological thinking of their enemies, preferring to saute themselves in the purity of their own ideological beliefs. So, I was not too surprised that most liberals and leftists failed to notice the intellectual death of their arch-foe.

And, they have forgotten what republicanism is long ago. Actually, they probably never learned. Rather than master the ideas of statecraft developed by the antique city states of Greece and Italy, the Hanseatic League of the southern Baltic, and England in the time of Cromwell, liberals have busied themselves severing ties with the working class, collecting the contributions and currying the favor of the one percent, or at least the professional class. Meanwhile, leftists willingly descended into a mass act of historical amnesia by dismissing the creation of the United States -- supposed to be a republic, but who knows or cares what that means? -- as just another act of oppression committed by privileged white men.



Scrambling to control the coming discourse

So we have Brink Lindsey putting forth a project, to dress the zombie in new duds, and keep it staggering on into -- who knows when or where?  "To build a new, post-Trump right, we need a new political language in which to express ourselves," Lindsey writes. Well, of course, because after Newt Ginrich and Frank Luntz finished savaging the English language, every word and utterance of conservatives for years now have been nothing but half-truths at best, outright lies at worst.  "Right to work" has been redefined to mean "surrender to the boss man" and "No child left behind" turns out to mean "no child capable of thinking for him- or her self."  Say "reduce fossil fuel dependence" and conservatives hear "war on coal." A federal mandate that everyone purchase health insurance -- just like state mandates that every driver have auto insurance -- is vilified as "death panels." Feed the poor, house the homeless, care for the sick, and conservatives don't see dedication to the injunctions of a great world religion, they see socialism and looming despotism. How can any political language survive such a consistent and persistent record of misuse for diabolical dissembling and massive misinformation? Of course Lindsey feels the need for "a new political language."

Lindsey continues:
"Where will we find this new vocabulary, which might reach beyond the term "conservatism" as an organizing principle? The answer is right under our noses, hiding in plain sight. The project of intellectual and moral renewal on the right is best founded on the principles of republicanism."
Well, you just know this can lead to no good place. But since most liberals and leftists failed to even notice this funeral procession marching past their noses, filling the air with the choking stench of zombie putrefaction, it falls to me to guide you there and back.

What is a republic?

Lindsey begins by giving himself artistic license to slap and splash on the paint any damn way he wants: "Republicanism, in the most basic sense of the word, simply means support for a republican form of government." Indeed. And to be hurt means that something hurts you. The obvious question, then: What is a republican form of government? Lindsey refuses to go there, probably because it would derail his project immediately.

Now, it so happens that since 2009, when it became clear that Obama had sold out to Wall Street and had no intent of actually investigating, let alone punishing, the nation's financial executives for their crimes and misdeeds, I have tried to reach an understanding of what a republic is, and what economic policies it should have. Here's the definition I have reached:

A republic is a system of government in which all citizens have an equal right to select their governing representatives, equal access to those representatives, and equal standing before the law. A republic is not a democracy, but a republic is always democratic in form: all citizens have an equal right and access to the electoral process through which government officials and representatives are selected.

For a fuller, but relatively brief description of what a republic is, including some illuminating quotes from the founders -- including on slavery, which they recognized and excoriated as a "blot" on what they were trying to create --  I highly recommend 12 pages from an 1866 speech by Senator Charles Sumner urging passage of the Fourteenth Amendment [2]. Among the many quotes and excerpts proferred by Sumner is this by Madison, from The Federalist No. 39, "The Conformity of the Plan to Republican Principles":
...we may define a republic to be, or at least may bestow that name on, a government which derives all its powers directly or indirectly from the great body of the people, and is administered by persons holding their offices during pleasure, for a limited period, or during good behavior. It is ESSENTIAL to such a government that it be derived from the great body of the society, not from an inconsiderable proportion, or a favored class of it; otherwise a handful of tyrannical nobles, exercising their oppressions by a delegation of their powers, might aspire to the rank of republicans, and claim for their government the honorable title of republic.
"The core of " republicanism, Lindsey writes, is "the ideal of political liberty achieved through popular self-government." Actually, there's a bit more to the core of republicanism than that -- Madison and others made quite clear the danger of a minority group of aristocrats or oligarchs falsely posing under the mantle of "republic" --  but at least this sentence is not misleadingly inaccurate like so much of conservative declamation. Lindsey continues:
"This ideal stood in contrast not only to hereditary regimes — kingdoms and empires — but also dictatorships, oligarchies, and direct democracies. Steeped in the classical literature on the example of ancient Rome, republicans saw political liberty not as the expression of some spontaneous general will, but as the artifact of constitutional structure: limits on power, checks and balances, and the rule of law. The structure of liberty is not self-maintaining, however. It rests on the civic virtue of the people, bound together as fellow citizens, who are called upon to uphold the public interest and safeguard it from corruption."
Here we get the first of Lindsey's sly revisions of republicanism, and it's freighted with great significance for the rest of his argument. First of all, "constitutional structure" today denotes something quite different than what the term did in the last decade of the 1700s. Today we think of "constitutional structure" mostly in terms of the clauses and strictures of a written constitution. At the time the USA Constitution was debated and written, however, constitutional structure encompassed much more, namely, the unwritten norms of accepted political behavior developed over time and attaining gravitas and power through habit and tradition. In the 1968 Pulitzer Prize-winning book of history, The Ideological Origins of the American Revolution, Bernard Bailyn writes:
....the colonists at the beginning of the Revolutionary controversy understood by the word "constitution" not, as we would have it, a written document or even an unwritten but deliberately contrived design of government and a specification of rights beyond the power of ordinary legislation to alter; they thought of it, rather as the constituted -- that is, existing -- arrangement of governmental institutions, laws, and customs together with the principles and goals that animated them. So John Adams wrote that a political constitution is like "the constitution of the human body" -- "certain contextures of the nerves, fibres, and muscles, or certain qualities of the blood and juices... without which life itself cannot be preserved a moment." A constitution of government, analogously, Adams wrote, is "a frame, a scheme, a system, a combination of powers for a certain end, namely, -- the good of the whole community." [pp. 68-69]
This is why everyone understood why the precedents set by Washington in his first term were so important, and examined so closely. And why almost everyone, including the two great rivals, Jefferson and Hamilton, agreed that it was indispensable to have Washington -- yearning to return to his pastoral pursuits at Mount Vernon -- serve a second term. And, it is exactly this unwritten constitutional structure of USA politics and governance that the word games of Lutz and Gingrich have eroded and subverted. Lindsey is forced to admit the damage, though he carefully avoids heaping blame where it belongs, when he writes "Today, "owning the libs" has become an end in itself; inflicting a loss on the other side is a victory regardless of the implications for policy or the national welfare."

Republicanism, the public interest / general welfare, and economic justice

Second, and much more important, is the way Lindsey frames the concept of civic virtue and its attendant duty of citizens to uphold the public interest. Lindsey notes, but is careful to avoid exploring, that at the beginning of the republic, this was understood to require citizens to sacrifice their own self interest when it conflicted with the general welfare. Just wade into USA history a bit deeper with me, and it soon enough becomes clear that this is the rock on which shatters the lifeboat Lindsey is contriving to construct. In The Creation of the American Republic, 1776-1787 -- awarded the  Bancroft Prize in 1970 -- Gordon Wood wrote:
....In a monarchy each man's desire to do what was right in his own eyes could be restrained by fear or force. In a republic, however, each man must somehow be persuaded to submerge his personal wants into the greater good of the whole. This willingness of the individual to sacrifice his private interests for the good of the community - such patriotism or love of country - the eighteenth century termed "public virtue." A republic was such a delicate polity precisely because it demanded an extraordinary moral character in the people. Every state in which the people participated needed a degree of virtue; but a republic which rested solely on the people absolutely required it... 
The eighteenth-century mind was thoroughly convinced that a popularly based government "cannot be supported without Virtue." Only with a public-spirited, self-sacrificing people could the authority of a popularly elected ruler be obeyed, but "more by the virtue of the people, than by the terror of his power." Because virtue was truly the lifeblood of the republic, the thoughts and hopes surrounding this concept of public spirit gave the Revolution its socially radical character - an expected alteration in the very behavior of the people, "laying the foundation in a constitution, not without or over, but within the subjects." [p. 68]
Note the formulation in the last sentence: a constitution within the citizens. This is not the written constitutional structure with which Lindsey associates "the republican conception of liberty as non-domination." It is not the conservative and libertarian wet dream of a national government bound, tied and gagged by a strict adherence to the enumerated powers of a written constitution. This is an embrace of the noble aspects of humanity to share and cooperate; more to the point.

So let's be very clear here: capitalism and the importance it places on selfishness and self-interest is a fundamental rejection of republicanism.

This is the cliff over which plunges the conservative zombie Lindsey is flailing to animate. The actual conception of civic virtue in a republic is by its very nature fundamentally contrary to the basic tenets of capitalism: everyone pursuing their own selfish interests, unfettered by government, in the great information processor of free markets, is the great "invisible hand", the uber-god that omnisciently sorts the selfishness of hundreds of millions of individual souls into "rational expectations" resulting in the best and most efficient allocation of society's resources.

The Koch-funded libertarians have taken selfishness and self-interest, to their logical capitalist extreme, and in so doing provided us the caricature which demonstrates why, no matter how much Lindsey twists and contorts it, republicanism will never be in harmony with market capitalism.


In The Creation of the American Republic,Wood wrote:
In a republic “each individual gives up all private interest that is not consistent with the general good, the interest of the whole body.” For the republican patriots of 1776 the commonweal was all encompassing—a transcendent object with a unique moral worth that made partial considerations fade into insignificance. “Let regard be had only to the good of the whole” was the constant exhortation by publicists and clergy. Ideally, republicanism obliterated the individual. “A Citizen,” said Sam Adams, “owes everything to the Commonwealth.” “Every man in a republic,” declared Benjamin Rush, “is public property. His time, his talents—his youth—his manhood—his old age—nay more, life, all belong to his country.” “No man is a true republican,” wrote a Pennsylvanian in 1776, “that will not give up his single voice to that of the public.”  [ pp. 60-61.]
It is only this rejection of materialist avarice demanded by republicanism that can possibly explain how readily most early corporations were managed in complete fidelity to promoting the public interest. In the Sixteenth Annual Report of the Fitchburg Rail Road Company, date January 1858, we find on page 10
“The managers of railroads need not now have the fear, which was seriously entertained a few years since, of excessive profits — at least they need have no such fear during the life of the present generation, for as large as their profits may be they will need all, in our opinion, to give reasonable returns to their shareholders, and keep their roads in good order.”
Fear of excessive profits?! Can you imagine any CEO, COO, CFO, director, or fund manager of today discussing seriously the danger of “excessive profits”? Clearly, the capitalism of today is a far different, more voracious beast than the capitalism of 1858. But if hundreds of local citizens had invested their capital with a company, the officers of that company would be violating the simple dictates of republicanism to care for one's community, if they made excessive profits.

Republicanism specifies neither capitalism or socialism

In the Introduction to Securing the Fruits of Labor: The American Concept of Wealth Distribution, 1765--1900 (Lousiana State University Press, 1998) James L. Huston writes, “…the essence of the historical interest in republicanism  is lodged in the word virtue, which means a willingness to forgo self-interest in order to pursue the general welfare. The search that so many historians have engaged in is to find when self-interest triumphed over virtue, when liberal capitalism overran republicanism.” [pp. xx-xxi]

Lindsey cannot, and most likely never will, recognize, or acknowledge, that republicanism does not specify any particular form of economic organization society should adopt. It certainly does not specify capitalism. In fact, neither does the Constitution or the founders. Find the text of the Constitution and The Federalist Papers online in a searchable format, and try to find the words "capitalism" or "capitalistic" in them. They simply are not there. Why? Because those words do not become fully developed intellectual concepts until the years just before Karl Marx's Capital was published in 1867.

But Lindsey is fanatically insisting that market capitalism is the form of economy required by republicanism. It simply is not. By my reading, republicanism is more conducive to socialism than it is to capitalism, especially now that we have reached a tipping point of deep and widespread deployment of automated production processes, artificial intelligence, and self-driving vehicles. What do conservatives and libertarians propose to do with the 3.5 million professional truck drivers in the United States, if self-driving trucks are actually put on our roads and highways? What do they do with another 10 million or more unemployed manufacturing workers? And a couple million unemployed bank and retail clerks, displaced by AI?
(Chart: Why Industrial Robot Sales are Sky High [Visual Capitalist])

Unfortunately, the left's understanding of republicanism is also fatally flawed. Too many on the left do not even know what republicanism or a republic is and should be. This ignorance of republicanism is what leads so many who insist justice and equality shall not be had until any arrangement and institution they deem to be capitalistic is extirpated, to believe that the rapacious drive to empire that characterizes the USA today is the original intent of the founders. They are unable to discern the two hostile schools of political economy that contended for control through all of USA history, and thus have difficulty distinguishing friend from foe, producer class from leisure class. Intellectually, they are incapable of grasping the significance of Lindsey's ideological dead end.

Economic injustice creates oligarchy which destroy republics from within 

But it gets worse, much worse, for conservatives and modern libertarians. Unless Lindsey and other doctrinaire propagandists succeed in redefining it on their terms, republicanism demands that the problems of wealth injustices and income inequalities be solved in ways they are going to hate. Lindsey at least recognizes that there is a problem conservatism and modern libertarianism have failed to address up to now (when it is almost too late), when he writes, at the very end:
The impetus for such changes will not come from today's Republican establishment, or from the right-wing media complex. A new intellectual movement — one that firmly opposes itself to both ethno-nationalism and plutocracy and offers an appealing vision in their place — is the most promising vehicle for generating and articulating new ideas.
Lindsey is at least recognizing that plutocracy is hostile to republicanism, though, again, he refuses full consideration of all the consequences that flow therefrom. Again, it comes down to promoting the General Welfare. In his 1866 speech defining republicanism in support of passing the Fourteenth Amendment, Sumner included an excerpt of letter from Roger Sherman to John Adams, dated 20 July 1789:
"...what especially denominates it a Republic is its dependence on the public or people at large without any hereditary powers. But it is not of so much importance by what appellation the government is distinguished, as to have it well constituted to secure the rights and advance the happiness of the community." (Emphasis by Sumner.)


(Over 60 percent of voters — including half of Republicans — support a wealth tax [The Big Picture 2-17-19])

Wealth and income injustice in our time have reached extremes last seen just before the world financial crash of 1929. That set the stage for a populist political upsurge, just like the failures to address the underlying causes of the 2007-2009 world financial crash set the stage for the reemergence of political populism in our own time. In the 1930s, populism in Europe was steered to the right, ushering onto the world stage Mussolini and Hitler. Fortunately, in USA, it ushered in Franklin Roosevelt and the New Deal. But this was not a sure thing -- the right in USA tried to launch a military coup against FDR [3].)

In our time, any populist track to the left has been carefully curtailed (the 2016 Sanders campaign) or ruthlessly crushed (Occupy Wall Street). By contrast, the rightwing populist surge has been richly funded by a long list of billionaires such as Adelson, the Kochs, Langone, the Mercers, Ricketts, Singer, Thiel, and more, and enabled by the news media's increasingly insane doctrine of "fairness and impartiality," which fails to adequately reveal and condemn the extremism, jingoism, and bigotry of the anti-establishment surge which Trump rode into office. And, hence, Lindsey's desperate plan to resurrect conservatism as it lies dead in the national economic and political ruins of its own making.

Simply put, rectifying the problem of excessively large concentrations of wealth today is going to require measures of taxation, claw back, and seizure, especially of the $35 trillion estimated to be sitting in offshore accounts, which just happen to be (no real surprise, actually) intimately linked to the world's flows of dirty money.
(Hidden Loophole in Corporate Tax Reform Law, RevealedBarry Ritholtz, February 13, 2019 [The Big Picture])

Just look at the right wing's outraged outcry, a couple weeks ago, in response to the "tax the wealth" proposals of Representative Alexandria Ocasio-Cortez and Senators Elizabeth Warren and Bernie Sanders. The three did not even propose a return to a top marginal income tax rate of over 90 percent, which was in effect for nearly two decades after World War Two. Is there really any chance Lindsey's newly remolded conservatives and libertarians can drag the Republican Party away from its Pavlovian response of snarling and snapping at any mention of a tax increase? The plain fact is that Republican tax cuts have been a major factor in increasing wealth and income inequality since Reagan. Nowhere does Lindsey admit or even discuss this.

But an equality of wealth among all citizens is so fundamental a concern in republicanism that Lindsey cannot avoid admitting it. Of course, he does not come anywhere close to portraying the full import of this issue. Consider this pre-Revolution sermon by Benjamin Trumbull, who served in the Continental Army as a volunteer, then chaplain during the Revolutionary War. Trumbull delivered this before the War, when he was pastor of the Congregational church in North-Haven, Connecticut. A discourse, delivered at the anniversary meeting of the freemen of the town of New-Haven, April 12, 1773.
It should also be the particular care of every civil community to keep their rulers as much as possible dependent on them, and intimately connected with them. For this purpose it will be highly politic, in every free state, to keep property as equally divided among the inhabitants as possible, and not to suffer a few persons to amass all the riches and wealth of a country: and also to have a special care how they adopt any laws, customs, or precedents, which have a tendency this way. For when men become possessors of the Wealth of a state, it will be in their power to purchase, or by undue influence, which, in such circumstances, they may have ways almost innumerable, to thrust themselves into all places of honour and trust. This will put it in their power, by fraud or force to keep themselves in those important posts, and to oppress and tyrannize over their fellow men. It will teach the people to look up to them, as to lords and masters, make them servile, and by little and little it will despoil them of all true liberty and freedom. But on the other hand, the keeping of property, as equally divided as possible among a people, will make elections more free, the rulers more dependent, and the liberty and privileges of the ruled vastly more secure. [Pp. 31-32]
Which form of economic organization seems the better fit to "keep property as equally divided among the inhabitants as possible"? Capitalism? or socialism?

Economic justice essential for civic virtue

Economic justice is basic to a republic because, for civic virtue to operate effectively, all citizens must be fully independent from the largess, benevolence, or tolerance of others. It is unacceptable, for example, having employers trying the coerce or even tell employees who to vote for. This concern over dependence in economic relations 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 -- the fabled "yeomanry" of Jefferson's ideal society. In fact, Jefferson wanted to delay as long as possible the advent of industrialization because he viewed subservient factory labor as being unable to exercise the independence required of citizens by civic virtue.

Jefferson's ideal of the independent yeomanry is inextricably connected to the feudalistic maxim that surplus economic value is derived solely from "the bounty of nature." Drew R. McCoy explains in The Elusive Republic: Political Economy in Jeffersonian America (University of North Carolina Press, 1980):
American republicans valued property in land primarily because it provided personal independence. The individual with direct access to the productive resources of nature need not rely on other men, or any man, for the basic means of existence. The Revolutionaries believed that every man had a natural right to this form of property, in the sense that he was entitled to autonomous control of the resources that were absolutely necessary to his existence. The personal independence that resulted from the ownership of land permitted a citizen to participate responsibly in the political process, for it allowed him to pursue spontaneously the common or public good, rather than the narrow interest of the men – or the government – on whom he depended for his support. Thus the Revolutionaries did not intend to provide men with property so they might flee from public responsibility into a selfish privatism; property was rather the necessary basis for a committed republican citizenry. [p. 67]
What we have here is a strong rebuke to conservatives’ fixation on property rights. Those rights were intended by the founders not to protect untrammeled avarice and unprincipled acquisition, but to provide as wide a basis as possible within the citizenry for the maintenance of republican civic virtue. When the control of property and the distribution of wealth becomes so distorted and so lopsided, as it is now, the framers expected serious deleterious effects to be manifested: a withering of a sense of public virtue; private avarice flourishing like unwanted weeds; economic power concentrating in fewer and fewer hands. And they also foresaw that a great inequality of wealth would corrupt the purpose of government, from a steadfast commitment to the general welfare, to what we call “regulatory capture” today. In other words, the wealthy would control and use the powers of the state to rig the economic system in their favor, and even facilitate the extraction of economic rent.

The desire to preserve republican public virtue, McCoy explains, is what underlay Jefferson’s opposition to Hamilton’s plans to nurture manufacturing, banking, and commerce. In Jefferson’s view, the longer the transition to a commercial society from an agrarian society could be delayed, the longer the free yeomanry and their public virtue would be preserved. In Jefferson’s view, the only citizens with strong enough sense of public were the free yeomanry with holdings of land, which they worked to harvest the “honest” agricultural "bounty of nature."

Alexander Hamilton shattered feudal economics

Here lies a key point of economic ignorance evinced by leftists and most professional economists.
This emphasis on owning land is a relic of feudal economics, in which the sole sources of wealth, besides precious metals and debentures, were considered to be ownership of the land, and ownership of the slaves, peasants, or serfs who worked and cultivated the land, then gathered “the bounty of nature.” Thus, it is a seriously misleading misinterpretation of economic history to associate slavery directly with the rise of industry and capitalism. Obviously, slavery created concentrations of wealth which in turn were used to finance the rise of industry and capitalism. But as an economic institution by itself, slavery in the south was a relic of feudal economics. The fact that slavery in the south coexisted with the rise of industry and capitalism in the north has provided more than enough leeway for incorrect economic historiography.

First Treasury Secretary Alexander Hamilton shattered the stranglehold of this feudal economics. First, he designed a system for attracting concentrations of wealth, and transforming them into a form of money that could more readily be used as capital. Forest McDonald explains, in "The Constitution and Hamiltonian Capitalism"
The genius of the system lay in Hamilton's understanding of the nature of money. Money is whatever  people believe is money and use as money; as Hamilton put it, "opinion" is the soul of it. If it became fixed in the public mind that government securities were equal in value to and readily interchangeable with gold and silver, people would accept the securities in most transactions as the equivalent of "money," and therefore they would be money.
Hamilton did this based on his and Washington’s experiences during the Revolutionary War, when they realized the major strategic advantage of the British empire was its ability to raise funds to support its armies and fleets. This is the reason so assiduously studied British finance and the Bank of England, and why the structure he created were so similar to them. Jefferson, wedded to a fedualistic notion of land as the sole source of wealth, was unable to appreciate what Hamilton was doing. In fact, the similarities of Hamilton's plans to the Bank of England and British finance -- which the planter class in Virginia and the rest of the south loathed and detested -- led Jefferson to mistakenly believe Hamilton was intending to throttle the new republic in its cradle.

What Hamilton did created the foundation for modern industrial capitalism to emerge. (To provide an accurate history here, we must note that over the past half century industrial capitalism has been steadily usurped and replaced by financial / rentier capitalism, which is actually neo-feudal in form and effect.) Moreover, after USA nearly lost the War of 1812, both Jefferson and Madison reluctantly concluded that Hamilton had been correct, and Madison, as President, signed the charter for the Second Bank of the United States in February 1816. The Bank's largest stockholder was the federal government, which held 20 percent of the stock, and it quickly became the largest monied corporation in the world. Andrew Jackson would veto the rechartering of the Second Bank U.S. in 1832, leaving USA without an organized national banking system until the outbreak of the Civil War.

Next, Hamilton set in motion an economy in which the creation of new wealth in the form of new science and technology led to advances in machinery, which increased the productive power of labor. The left’s typical critique of Hamilton – that he merely created a new government that perpetuated the wealth and privilege of already existing elites – is simply wrong, and entirely misunderstands what Hamilton did. The key to understanding Hamilton is his 1791 Report to Congress on the Subject of Manufactures, most especially “Section II: As to an extension of the use of Machinery”: “The employment of Machinery forms an item of great importance in the general mass of national industry. ‘Tis an artificial force brought in aid of the natural force of man; and, to all the purposes of labour, is an increase of hands…”

Hamilton was creating a national economy at a point in human history that the machine age was just beginning. In Britain, Newcomen’s atmospheric engine of 1712 hardly provided adequate power for almost any purpose. James Watt's addition of a condenser to a steam engine in 1765, finally made steam an adequate source of power –  just a decade before the Revolution, and two decades before the Constitution. During this time, Oliver Evans -- considered the first American engineer -- was perfecting his automated flour mill during this time; it was not until 1801 through 1806 that Evans developed the high-pressure steam engine, which finally delivered enough power and reliability to allow the steam engine to emerge as the primary mover of choice in the nineteenth century.

Farming tools and implements, 1790 (top) compared to 1860s
Source: Journal of the West, January 1982 (Sunflower University Press, 1982) pp. 4-5. 

Industrial capitalism versus financial / rentier capitalism

But to blame Hamilton for creating the basis of our present bastard system of financial / rentier capitalism, one must entirely ignore crucial parts of Hamilton. He understood that while financiers and bankers do have an important role, and that there is room for private gain, the creation and allocation of money and credit must be organized and regulated in such a way that it promotes the general welfare, not just private gain. In The Federalist Number 15, he laid down a short and simple test: “Is private credit the friend and patron of industry?” And in The Report on Manufactures, he wrote,
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, to a significant degree, to afford competent motives to engage in them, the former be not made subservient to it.
Also consider Hamilton's plan to limit the concentration of stock ownership in the First Bank of the United. In The Second Report on the Further Provision Necessary for Establishing Public Credit (often referred as The Report on a National Bank), submitted to Congress on December 13th, 1790, Hamilton propounds a system of proportional shareholder representation in which no one "person, copartnership, or body politic" was allowed more than 30 votes, no matter how many shares they owned. This scheme of corporate ownership is entirely at odds with the business management and neoliberal financial economics ideas of shareholder value, profit maximization, and private equity that have dominated the USA economy since the 1970s, and which have turned what was the world's mightiest manufacturing economy into a post-industrial wasteland of extreme economic inequality, cultural and economic despair, drug abuse, and now, increasing death rates for the lower classes. Hamilton's plan of shareholder voting, had it been extended to all corporations, would have hampered, if not entirely crippled, the corporate raiders who looted and destroyed tens of thousands of USA industrial facilities and companies.

The deindustrialization of the USA, and the attendant impoverishment of a majority of its citizens, are the result of abandoning, not following, Hamilton's plan. In June 2012, in Neo-liberalism, De-capitalization/De-industrialization, and the Res Publica, I posted the evidence and my argument that the United States is becoming less capital intense. It is becoming, in other words, less capitalistic.



Hamilton: An active role of government in the economy is required

Moreover, in an explicit repudiation of the laissez faire ideas of Adam Smith and the British, Hamilton emphasized the importance of having active government interests and investment in new and important economic enterprise. In his December 1791 Report to Congress on the Subject of Manufactures, Hamilton  wrote:
"Experience teaches, that men are often so much governed by what they are accustomed to see and practice, that the simplest and most obvious improvements, in the [most] ordinary occupations, are adopted with hesitation, reluctance and by slow gradations … To produce the desirable changes, as early as may be expedient, may therefore require the incitement and patronage of government… The apprehension of failing in new attempts is perhaps a more serious impediment…it is of importance that the confidence of cautious sagacious capitalists…should be excited… it is essential, that they should be made to see in any project, which is new, and for that reason alone, if, for no other, precarious, the prospect of such a degree of countenance and support from government, as may be capable of overcoming the obstacles, inseparable from first experiments."
The left usually misses this crucial point of what Hamilton designed. Rather than the Marxist model of the means of production determining the political superstructure, what actually happens under Hamilton's system is government support for new science and technology creates new means of production. The machine tools and machining techniques developed at the Springfield Armory after the War of 1812, became the basis for the manufacture of interchangeable parts, laying the foundation for industrial mass production. In 1843, Congress directly funded Samuel B. Morris's development opf the telegraph. Just before and during the Civil War, it was Navy research that introduced the science of thermodynamics to steam engine design. In the 1930s, the Bonneville Power Authority and the Tennessee Valley Authority promoted rural electrification. Computers come entirely out of the USA government research during World War Two to create calculating machines for artillery and naval gunfire ballistics, cryptography and code breaking, flight simulation, the physics calculations of the Manhattan Project, and more. All the underlying technologies of today's cell phone and smart phones were originally developed in government research programs. The three major developments in aerodynamics of the post war-period -- the area rule, supercritical wings, and winglets -- were developed by a government scientist named Richard Whitcomb using the wind tunnels at the NASA Langley Research Center.

In this historical record you should see another aspect of Hamilton's shattering of feudal economics: rather than the deterministic model of Adam Smith, in which national economies were shaped by the "invisible hand," Hamilton recognized and honored the role of human agency. Note how Hamilton explicitly rejects Smith's "natural state of things" in this passage from Report to Congress on the Subject of Manufactures:
The remaining objections to a particular encouragement of manufactures in the United States now require to be examined. One of these turns on the proposition, that Industry, if left to itself, will naturally find its way to the most useful and profitable employment: whence it is inferred, that manufactures without the aid of government will grow up as soon and as fast, as the natural state of things and the interest of the community may require.
Hamilton's repudiation of feudal economics and creation of a new system of economics also made zero-sum economics obsolete. Under the feudal economics of the British empire apologist of Smith, Malthus, and Ricardo, a nation's stock of wealth was based on its land and the slaves and serfs who worked it, and whatever mass of precious metals and debentures it had amassed. Growth of national wealth could only be achieved by 1) seizing other lands and peoples and imposing colonial status on them. or 2) gaining an advantage, usually unfair, over other countries in international trade. Under Hamilton's economics, national wealth becomes primarily based on the scientific and technological achievements of a nation's people, and the consequent improvements in their ability to use machinery to increase the productive power of labor.

As noted above, these two schools of political economy -- the American, versus the British (on which is based today neo-classical economics) -- have contended for control of the USA economy through all of American history. So, 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 policy dominance, and the balance shifted back and forth a number of times. To the extent that people today mistakenly believe that the American economy was founded on the ideas of Adam Smith (as discussed above, 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 USA between the American and British systems. [4] For now, the simplified version is that the British system was dominant in the slave south, which fought for free trade in opposition to the north’s Hamiltonian protective tariffs.

A historic experiment: the fate of USA versus England's elites

In short, Hamilton did not intend to preserve existing wealth. He intended to marshal existing wealth and use it to finance the creation of new wealth. The proof of this is to compare the late 18th century elites of USA with the late 18th century elites of England and Great Britain. Where today are the fabulously wealthy families of the descendants of Franklin, Washington, Adams, Hamilton, Jefferson, Madison, etc.? There are none, so far as I know. Look then in contrast at the continued wealth, privilege, and rank in Britain of the families of Windsor, Grosvenor, Schroder, Barclay, Cavendish, Somerset, Seymour, and others, all of which go back three centuries or more.

Hamilton set feudal economics on the course of extinction, though in USA a costly and bloody Civil War was required to eliminate slavery. The problem today is, slavery was eliminated. but not the political economic ideology that supported the laissez faire free trade Confederacy. That Confederate political economic ideology is simply in the DNA of conservatism and libertarianism [5], and how can Lindsey ever expect to exorcise it if he will not even admit it exists?

Mix socialism and capitalism 

Recently, conservatives and libertarians have ginned up a fuss over the remarks of Cornell Law professor, Robert C. Hockett, who is advising the newest target of conservative and libertarian spittle and rage, Congresswoman Alexandria Ocasio-Cortez. According to the attack dogs of the right, Hockett, and thus by extension Ocasio-Cortez, have designed part of the Green New Deal to just hand money to people unwilling to work. Hockett's scholarship over the years has incorporated much research on republicanism. In "Materializing Citizenship: Finance in a Producers' Republic" (2014, Cornell Law Faculty Publications. 1300), Hockett writes:
Early American property law abandoned British common law primogeniture precisely in order to ensure a broad ownership of the newly conquered continent’s most conspicuous resource—arable land. Subsequent late eighteenth- and early nineteenth-century federal legislation, most notably the Northwest Ordinance, had the same aim. Later still, the Homestead and Land Grant Acts of the second half of the nineteenth century, not to mention the Free Soil and Free Labor movements that pushed for them, reflected a national policy favoring a broad spread of productive assets—including vocationally relevant higher education in the Land Grant Act case—over a population of industrious, civically engaged, and responsibly productive republican citizens....
What all of the New Deal enactments had in common was their building upon the Progressive Era’s accomplishments to foster the continuing development of an industrial-era counterpart to the primarily agrarian yeoman class of the previous century, and thereby carry the productive republican ideal into the modern era. The primary focus in so doing was on the real economy prerequisites to that goal’s accomplishment—in particular, “living” wages and job security, widespread homeownership, and a robust social safety net—while a secondary but no less important focus was on regulating finance in a manner that kept it subservient to the needs of the productive republican real economy.  
What flowed out of the New Deal enactments was the mixed economy, with production and distribution of most individual, industrial and agricultural goods and services provided by private capitalist enterprise, while certain sectors of the economy, such as fire and police protection, primary education, and the social safety net were organized along socialist lines. In addition, and most significantly, the bedrock of economic progress -- scientific and technological research -- was performed almost entirely by government until after World War Two, including a prominent role by the public land grant universities. The research efforts of  General Electric, and Bell Laboratories, a joint effort of American Telephone and Telegraph, and Western Electric, were notable, but never came close to the scale of government research. Since the 1970s, and especially the Reagan 1980s, government research and development has been starved for funds by the free market fetishists, and private sector research and development has become as large in terms of funding. This has proven to be very significant. Private research and development tends to favor short term projects that promise relatively quick commercial profits, while government R and D focuses more on basic research with little or no short term potential for payback.  It should surprise no one that USA economic performance in this era has been increasingly dubious and unstable, and USA has been replaced as the largest trading partner, largest manufacturer, and largest innovator in the world.
(The Government Money That Built The Internet Is Going Away, Feb. 24, 2011 [Business Insider])

The Doctrine of High Wages

But, how to reconcile republican theory regarding the need for economically independent citizens with the rapidly rising number of wage earners, usually poor, in the USA economy as it developed? 
To ensure propertyless workers had the independent economic means to exercise civic virtue, a theory of wage income began to develop which certain American economists came to call, by the last quarter of the nineteenth century, the Doctrine of High Wages. The first traces of this can actually be found as early as 1783, in Benjamin Franklin's essay “Reflections on the Augmentation of Wages, Which Will Be Occasioned in Europe by the American Revolution,” which was published in Paris in the Journal d Economie Puplique. It is a deliberate and comprehensive attack on the “free trade” ideas of the house economists of the British East India Co., such as Adam Smith and Thomas Malthus:
....The horrible maxim, that the people must be poor, in order that they may remain in subjection, is still held by many persons of hard hearts and perverted understanding, with whom it were useless to contend. Others, again, think that the people should be poor, from a regard for the supposed interests of commerce. They believe that to increase the rate of wages would raise the price of the productions of the soil, and especially of industry, which are sold to foreign nations, and thus that exportation and the profits arising from it would be diminished. But this motive is at once cruel and ill founded. 
....To desire to keep down the rate of wages, with the view of favoring the exportation of merchandise, is to seek to render the citizens of a state miserable, in order that foreigners may purchase its productions at a cheaper rate; it is, at most, attempting to enrich a few merchants by impoverishing the body of the nation; it is taking the part of the stronger in that contest, already so unequal, between the man who can pay wages, and him who is under the necessity of receiving them; it is, in one word, to forget, that the object of every political society ought to be the happiness of the largest number.

…. High wages attract the most skillful and most industrious workmen. Thus the article is better made; it sells better; and in this way, the employer makes a greater profit, than he could do by diminishing the pay of the workmen. A good workman spoils fewer tools, wastes less material, and works faster, than one of inferior skill; and thus the profits of the manufacturer are increased still more.

The perfection of machinery in all the arts is owing, in a great degree, to the workmen. There is no important manufacture, in which they have not invented some useful process, which saves time and materials, or improves the workmanship....

The low rate of wages, then, is not the real cause of the advantages of commerce between one nation and another; but it is one of the greatest evils of political communities.
Note Franklin's mention of "the perfection of machinery," a clear, and not coincidental, precursor of Hamilton's focus on machinery increasing the productive power of labor.

Proponents of the Doctrine of High Wages argued that not only were American workers better paid than their counterparts in England and Europe, but they were far more productive as well. In fact, American economists argued that high wages created a virtuous circle, in the superior productivity of American workers allowed them to be paid much higher wages than anywhere else in the world, while those high wages provided American workers a much higher standard of living, which, in turn, enabled them to be more productive. The development of the Doctrine of High Wages can be traced in these publications:
It is difficult to imagine that Lindsey will convince conservatives and libertarians to embrace the Doctrine of High Wages if he is not willing to even mention the right wing's war on labor. 

I have been writing for several years now that republicanism and capitalism are largely incompatible. A return to republicanism would be welcome, but not on the terms Lindsey lays out.

Notes

[1] The Niskanen Center was established in 2014 by William A. Niskanen, chairman of President Ronald Reagan's Council of Economic Advisers. Niskanen is celebrated in conservative and libertarian circles for resigning as chief economist of Ford Motor Co. in protest over Ford's embrace of trade protectionism. Niskanen is now chairman of the extremist libertarian Cato Institute.

National Affairs was established in 2009 by the right wing media company originally run by Irving Kristol, the former Trotskyist  who worked for the CIA-funded Congress for Cultural Freedom in the early 1950s, before becoming the "godfather of neoconservatism." Board members of National Affairs have included former Secretary of State Henry Kissinger, former ambassador to the United Nations Jeane Kirkpatrick, and author Charles Murray, co-author of controversial 1994 book The Bell Curve: Intelligence and Class Structure in American Life. Pretty hefty right wing credentials.

[2] On republicanism, read pages 176 to 188 of the February 1866 Massachusetts Senator Charles Sumner delivered urging passage of the Fourteenth Amendment, This 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.”

Regarding slavery, Sumner includes a number of quotes showing the founders' discomfort with, but reluctant acceptance of slavery, including this excerpt from The Federalist No. 54, written by Madison: "...it is only under the pretext that the laws have transformed the negroes into subjects of property, that a place is disputed them in the computation of numbers; and it is admitted, that if the laws were to restore the rights which have been taken away, the negroes could no longer be refused an equal share of representation with the other inhabitants.." See also Sumner's discussion of the Constitutional Convention voting twice to strike down South Carolina's attempts to insert language declaring that "all privileges and immunities of FREE CITIZENS in the several states " were strictly limited to only "free WHITE inhabitants" (pages 188-190).

[3] The 1933 coup plot began with operatives trying to recruit national hero Marine Corps General Smedley Butler to give a speech before the American Legion convention. The speech was written by the operatives, not Butler, and included a section demanding USA return to the gold standard, which Roosevelt had ended the year before. Mention of the gold standard caused Butler to be suspicious, and he began to carefully profile the men trying to recruit him. Butler also viewed the American Legion as "nothing but a strikebreaking outfit." Butler turned the tables on the plotters by collecting  information about them, then going to the press.  It is almost criminal that the new Marine Corps museum has nary a mention of Gen. Butler and his most heroic act: defending the republic against its internal, conservative reactionary capitalist enemies. Roosevelt's most strategic political error was failing to fully prosecute the plotters exposed by Butler; doing so probably would have eviscerated the factions that later funded and built the modern conservative movement beginning in the 1950s. See Sally Denton, The Plots Against the President: FDR, a Nation in Crisis, and the Rise of the American Right (Bloomsbury Press, 2012).

[4] 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.

[5] Kevin Phillips, Chapters 6 and 7, "Defeat and Resurrection: The Southernization of America" and "The United States in a Dixie Cup: The New Religious and Political Battlegrounds," American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century

https://www.nationalreview.com/2019/01/republican-party-agenda-populism-republicanism/

6 comments:

  1. Although the word "capitalism" does not appear in the Constitution nor in The Federalist Papers, Hamilton does discuss the principles proposed by Adam Smith in The Wealth of Nations in Federalists 11 - 13. Smith stated that a united, federal government had three major responsibilities: to supply a federal military service to protect the borders from invasion (and this military included a navy that would protect national waterways and shorelines, as well as international trade routes for merchants); to supply a police service to protect private property; and to provide infrastructure such as bridges, canals and other means of conveyance, so as to promote trade within the united nation. All of this was to be paid for by taxation collected by the federal government from its citizens (Federalists 30 - 36). So, Adam Smith and his "liberal economic" vision, which was written in The Wealth of Nations (published in 1776), plays a key role in the founding of this republic. This republic is a test of Enlightenment ideas and ideals, and Smith is foundational to this test. His ideas from his writings are found in multiple Federalist papers.

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    1. Both of these posts are from Jeremiah Snyder. Not sure why it is coming up as Natalie Hater. Anywho, https://www.adamsmith.org/the-wealth-of-nations. http://www.independent.org/news/article.asp?id=2085. http://www.crf-usa.org/bill-of-rights-in-action/bria-23-1-a-adam-smith-and-the-wealth-of-nations.html.
      All of these sites discuss Smith's thoughts, which I outlined in my original post. I could not find the original spots in Wealth of Nations and I did not feel like thumbing through 800 or so pages of the book.

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    2. Jeremiah here. When Hamilton's December 1791 Report to Congress on the Subject of Manufacturers is discussed, again Hamilton is drawing directly from Adam Smith's Wealth of Nations. In Wealth of Nations, Smith states, "The superiority which the industry of the towns has every where in Europe over that of the country, is not altogether owing to corporations and corporation laws. It is supported by many other regulations. The high duties upon foreign manufactures and upon all goods imported by alien merchants, all tend to the same purpose. [29] Corporation laws enable the inhabitants of towns to raise their prices, without fearing to be under-sold by the afreedcompetition of their own countrymen. Those other regulations secure them equally against that of foreigners." Here, Smith directly advocates for controlled corporations and other companies through federal laws that allow companies to work within the market. Smith does not advocate a hands-off approach to economics; rather, he advocates interacting with the national and international markets in the appropriate manner by using a lawful, light-handed approach. This is in contrast to mercantilism and other strong-handed, direct intervention means that had been employed up to his day. Therefore, what Hamilton is advocating in his writings come directly from Smith. They are both stating that the federal government needs to interact with the market, but in the correct manner and so that every citizen has an equal opportunity to be financially successful. I have included another website link that provides some additional useful information.

      https://economistsview.typepad.com/economistsview/2010/03/adam-smith-and-the-role-of-government.html

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  2. Smith also talks about the weaknesses of the Bank of England (page 302 in my copy, starting at approximately line 52 for this discussion on Hamilton), and Hamilton borrows heavily from Smith for how a central federal bank in the USA should work. Essentially, with regard to gold or silver coinage and paper moneys, the central bank was to retain its specie so as to guarantee the value of its paper money currently in circulation. This would not occur in the US until the Civil War. Furthermore, Smith states that tying the federal bank to the government through shares stabilizes the banking system, making the central bank as reliable as the federal government, which allows the citizens and businesses to place their trust in both the government and the bank. Hamilton states as much as well.

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  3. Wow, there are a lot of errors in this essay with regard to Smith and Hamilton. I have detailed some, but Smith decries feudal economics as a backward system, saying, "The increase of the quantity of gold and silver in Europe, and the increase of its manufactures and agriculture, are two events which, though they have happened nearly about the same time, yet have arisen from very different causes, and have scarce any natural connection with one another. The one has arisen from a mere accident, in which neither prudence nor policy either had or could have any share: The other from the fall of the feudal system, and from the establishment of a government which afforded to industry, the only encouragement which it requires, some tolerable security that it shall enjoy the fruits of its own labour.(2) Poland, where the feudal system still continues to take place, is at this day as beggarly a country as it was before the discovery of America" (Smith, 256). Smith later says of serfs and landed tenants, "The occupiers of land were generally bondmen, whose persons and effects were equally his property. Those who were not bondmen were tenants at will, and though the rent which they paid was often nominally little more than a quit-rent, it really amounted to the whole produce of the land. Their lord could at all times command their labour in peace, and their service in war." As these passages directly from the Wealth of Nations illustrate, Smith did not support feudalism nor its methods, economics, nor slavery. Smith even refers to the times of "feudal anarchy" in Chapter III. Therefore, Smith was not a feudal apologist, and Hamilton understood this. What bothers me about this article is the reliance on secondary sources with regard to Smith. It is imperative that primary sources be read whenever possible and Wealth of Nations is not at all difficult to read. This leads me to the conclusion that most scholars and researchers, including the one who wrote this article, are too lazy to read one of the most important, foundational works of world economics. Hamilton obviously read Wealth of Nations and took much of his inspiration from it, regardless of what others say.

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  4. "Smith did not support feudalism nor its methods, economics, nor slavery... Smith was not a feudal apologist." Yet Britain today remains a vassal state under the Windsors; the richest and most powerful families of England at the end of the 1700s are still among the richest and most powerful families of England; and the City of London, the most powerful financial center on the planet, is still a feudal guild with state sovereignty apart from and above that of England. I don't care what Smith wrote; what did he DO? This defense of Smith is the same as Nixon's "I am not a crook." Just saying or writing it, does not make true.

    Adam Smith is a blood-soaked apologist for the British empire. End of story. And most Americans through most of the nineteenth century understood that. Smith's defenders need to stop regurgitating the pablum they were spoon fed in graduate school and spend some time reading what economists in India or China not trained in the West write about Smith.

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