Two themes in American political economy. Links on grand strategy, debating liberalism, and the future of American manufacturing.
Implicit in debates about the “realignment” is the question of political economy. There are two layers to this debate. One is about whether policy should ever aim to direct political economy: Some (often coming from a more libertarian perspective) argue that the use of policy to shape the market has grave peril, while others hold that policy can be a valuable tool for influencing the contours of the market. If someone agrees with the policy project of political economy, a second topic of debate immediately arises: What should be the aim of a given political-economy program?
I thought a quick tour through history might be useful for considering political economy in the American tradition. Many readers have probably read John Adams’s statement that the American “Constitution was made only for a moral and religious People.” Most members of the Founding generation took for granted that the success of the American political order required certain cultural resources—and they were quite willing to use government power to support those resources. (Thomas G. West’s The Political Theory of the American Founding has a lot of good information about that.)
They also took for granted that certain economic conditions were important for the survival of self-governance. As with social issues, they believed that government had a role to play for securing those economic conditions.
But there were deep disagreements about what the important economic conditions for self-government were and what policies should be taken to address them. Those disagreements were part of the political conflict between the Federalists and their opponents in the early years of the Republic.
One one side stood Alexander Hamilton, the first Secretary of the Treasury and leading architect of a Federalist policy platform. Hamilton stressed the importance of centralized federal action, national greatness, and the growth of industrial production and finance. In his landmark “Report on the Subject of Manufactures,” Hamilton called for federal action to promote manufacturing. He argued that an industrial base was essential for continued national sovereignty: “the independence and security of a Country, appear to be materially connected with the prosperity of manufactures.”1 Hamilton’s economic vision emphasized greatness, opulence, and innovation in the United States. This tradition of industrial innovation—often backed by state power—became the organizing economic agenda of the Whigs and, later, Republicans in the 19th century. Henry Clay, Daniel Webster, and Abraham Lincoln supported the use of tariffs and infrastructure programs to encourage commercial development. Throughout the 20th century, policymakers invested heavily in infrastructure and defense technologies (which in turn led to broader commercial developments) in order to protect the “independence and security” of the United States.
Another tradition—often associated with Hamilton’s great rival, Thomas Jefferson—instead emphasizes smallness, celebrates the life of the independent yeoman, and remains skeptical about industrial transformation. The fondness for “small town” life and hostility to “big business” are hallmarks of this strand of politics. This so-called “Jeffersonian” tradition can be seen in Andrew Jackson’s war on the Second Bank of the United States, antitrust reformer Louis Brandeis’s lamentation of the “curse of bigness,” and preferences for localism and federalism in government.
Turning to some of Thomas Jefferson’s writings illuminates the thinking behind this tradition. In a 1785 letter to James Madison, Jefferson contrasted France (where he was serving as an American envoy) with the United States. Jefferson claimed that the “property of [France] is absolutely concentrated in a very few hands.” This concentration led to a sprawling servant class and vast unused lands (which were preserved for the hunting of the nobility). In order to redress this concentration, Jefferson said that “legislators cannot invent too many devices for subdividing property.” Inheritance laws would be one mechanism for encouraging this broader distribution of economic resources. Jefferson wrote that “the descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree” should be encouraged.2 In the early years of the American republic, state legislatures moved to ban primogeniture and entail in order to encourage a more equal “balance of property” in the words of a Delaware statute.3 Jefferson also argued that a progressive tax system could help promote this diversification of property: “to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise.”4
It would be a mistake to translate these two political camps into just warring ideologies. Not ideas alone but groups and interests were at stake in the conflict between Hamiltonian Federalists and Jeffersonian Democratic-Republicans. Concentrated in the Northeast and sensitive to demands of commerce, the Federalists had very different political interests than the planters and independent farmers who formed the bulk of the Jeffersonian coalition. As president, Jefferson was perfectly willing to take vigorous federal action. (There is also the great irony that, while Jefferson celebrated the freeholding farmer, the plantation system instead led to the dominance of slave-holding oligarchs in the South. Jeffersonian dreams of egalitarianism collided with the chattel slavery that ornamented Monticello and other great houses south of the Mason-Dixon.)
Moreover, Jefferson later came to repudiate his earlier positions on trade and manufacturing. In an 1819 letter, he explained that the disruption in trade caused by the War of 1812 illustrated the need for industrial independence. Jefferson wrote that “experience has taught me that manufactures are now as necessary to our independence as to our comfort” and that those who are “against domestic manufacture, must be for reducing us either to dependence on that foreign nation, or to be clothed in skins, and to live like wild beasts in dens and caverns.”5
Thus, American concerns about the concentration of economic power and the need for economic and industrial vitality are as old as the United States itself. In the unraveling of the neoliberal era, we’re seeing more debate about both sets of issues, and that’s completely normal.
I think both traditions have their merits, and formulating a successful new paradigm is finding a new synthesis between them. Measures to check the new centralized powers of the digital age are probably useful for shoring up self-government and restoring a sense of popular legitimacy. Diversifying economic opportunity (through vocational education, regional development, infrastructure investments, etc.) is an important aim.
Growth is also important. (And one of my hobbyhorses is that the high neoliberal era—roughly 2001 to 2015—was *not* a good time for growth in the American economy.) The U.S. economy still needs to leverage entrepreneurialism and dynamism. A “degrowth” agenda would not be good for the nation—or the working class.
Some policies can speak to both aims. For instance, tightening the labor market could simultaneously raise incomes for working families, boost growth through more consumer spending, and encourage more innovation. Rebuilding the depleted American defense infrastructure could help revitalize some parts of the country while also promoting more growth overall and helping the U.S. be able to fulfill its security commitments.
One of the reasons why we have statues of public figures is not simply celebration but also recognition—acknowledging the figures who have shaped the body-politic. Hamilton and Jefferson remain imposing figures in the American landscape, and they reveal two competing (and essential) emphases in American public policy.
A few other links:
Elbridge Colby has a great list of recommended readings on grand strategy.
Michael Lind on “this new age of great-power rivalry.”
Nate Silver on the challenges facing free speech.
Liberalism Agonistes: In a recent Munk Debate, George Will and Jacob Rees-Mogg faced off against Sohrab Ahmari and Ash Sarkar about the conditions of liberalism. You have to be Munk donor to watch the debate video, but here’s a (free!) podcast talking with the debaters.
David Adler and William Bonvillian on restoring American manufacturing.
New kid on the block: For a daily dose of “realignment”-themed links, check out the newsletter for America 2100, an organization led by former Marco Rubio chief of staff Mike Needham. It’s concise, punchy, and informative.
ICYMI: For City Journal, I write on the outpouring of antisemitism and the legacy of 2020’s “reckoning.” At UnHerd, I look at the Trump-Haley pincer that DeSantis faces and what that reveals about the shape of the current GOP coalition.
Thanks, as always, for reading! If you enjoyed this, please consider liking, sharing, and subscribing.
Hamilton, Writings (New York: Library of America, 2001), 691-2.
Jefferson, Writings (New York: Library of America, 1984), 841.
See Gordon S. Wood, The Radicalism of the American Revolution (New York: Vintage, 1993), 182-3 and Thomas G. West, The Political Theory of the American Founding, 332-5 on state restrictions on entail and primogeniture.
Jefferson, Writings 841.
Jefferson, Writings 1371.
Thanks for providing historical perspective on contemporary debates and political narratives.
This piece corresponds in part to what I try to offer as well with my Substack.