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Tuesday, May 10, 2016

Brad DeLong on Hamiltonian Economics and U.S. Economic History

The beginning of a fairly long interview:

Brad DeLong on Hamiltonian economics and U.S. economic history: ...Why don’t you lay out for us the competing economic approaches of Thomas Jefferson and Alexander Hamilton, the two main characters in the first part of your book, and then we’ll go from there.
Brad DeLong: Well let’s start with Jefferson. Let’s start with Jefferson the ideologue, Jefferson the agrarian, Jefferson the person who above else was scared of corrupt imperial monarchical authoritarian autocratic London.
Jefferson was a very smart guy, was a very forward looking guy.
Jefferson also tended to believe his teachers, and his teachers had taught him a particular version of ancient history – call it the republican virtue tradition, right, that once upon a time there had been a Roman republic, and it was virtuous because it was composed of small farmers who ploughed their own land, and lived simply and ate porridge and loved freedom and would rebel against kings or foreigners or anyone else who tried to take control of their lives.
And as long as the basis of Rome was the small farmer, who really didn’t want to be in government, say Cincinnatus – if you named Cincinnatus to be dictator to command the armies of Rome, he would come, and he would command the armies of Rome in their wars against their foes because he loved the republic. But as soon as he possibly could he would abandon Rome itself and go back to his farm and go back to his plough.
That’s what he really wanted to do. And indeed, there’s no doubt that this had a huge influence on America in the generation of the founding.
We have a city called Cincinnati, for heaven’s sake. We had a Society of the Cincinnati, made up of George Washington’s army officers during the Revolutionary War.
Against this, against this belief that the only way to have a virtuous republic in which people were free was to have small holding farmers dominate, against this, in Jeffersonians’ imaginations, was imperial Rome or imperial London. The Rome that had conquered the Mediterranean Basin, in the process acquired millions of slaves, handed out those slaves to the politically powerful oligarchs of Rome who then got their enormous estates on which they lived lives of luxury. As they lived lives of luxury they lost their concern with the republic, they lost their republican virtue, they lost their ability to stand up to foreigners and to would-be kings. And the whole system comes crashing down with the wars of the first Century BC, and then with the ascent of first Julius Caesar and then the Emperor Augustus who stabilises the situation, who keeps Rome powerful, who keeps Rome rich — but who makes Rome not free.
That was how Jefferson was taught Roman history had gone, and Jefferson’s teachers said that’s what’s happening to imperial Britain in his day, in the late 18th Century. That’s what’s going on in London now, as trade grows and commerce grows and manufacturing grows and corruption grows and aristocracy grows, and the wealth of the elite grows.
And the remnants of political freedom that still remain are, Jefferson and company thought, about to be stomped into oblivion. That’s why Jefferson and company made the America Revolution, in response to insults and exactions from the British mother country that were quite small relative to the size of the American economy of the day, or indeed that were quite small relative to the taxes that other people had to pay in other countries.
But they thought it was a matter of life and death to get out from under this growing imperial structure.
And then no sooner do they win independence but Jefferson turns around, looks at New York, Philadelphia, looks at Hamilton, and says by heaven’s sake, they’re trying to do the same thing to us here. If Hamilton has his way, Philadelphia and New York will be the new London, and we’ll have done the revolution for absolutely nothing.
So that’s Jefferson. He has a very simple vision of how the world works. It reassures him. It allows him to think that he understands things, and can to some degree be in control of them.
And it leads to very strong conclusions.
Like the conclusion that the British mercantile system, the idea that America should simply produce primary products and ship them to Britain, while London handled all the commerce, all the banking, all the manufacturing — that that was actually a very good thing for America, because it kept America free. That to grab for a share of the manufacturing, the commercial, the banking business, would be to make America richer, but at the process of endangering its liberty. That the growth of finance, and especially the growth of banks, were an enormous danger. That the growth of manufacturing, that urban workers who weren’t out on the farm breathing healthy air, working largely for themselves, but were instead concentrated in cities working for masters — that that was a great danger as well.
With that set of principles as his lodestone, Jefferson knew exactly what to do in response to every single political question that came up, which is to exalt the yeoman farmer, and make sure that people who might challenge the dominance of yeoman farmers over American politics, and indeed in the American economy, should be discouraged and stomped as fast as possible.
That’s why Jefferson was so opposed to Hamilton’s assumption of the debt, to Hamilton’s national bank, to Hamilton’s encouragement of manufactures, to Hamilton’s plans for an army large enough to defend the United States from a Britain coming down from Canada…

    Posted by on Tuesday, May 10, 2016 at 06:50 AM in Economics | Permalink  Comments (26)


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