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Excerpt: 'Radical Hamilton: Economic Lessons From A Misunderstood Founder'

Excerpt: 'Radical Hamilton: Economic Lessons From A Misunderstood Founder'

What follows is an excerpt fromRadical Hamilton: Economic Lessons From A Misunderstood Founder, a fresh look by Christian Parenti at one of the most important but least discussed works by the American founder and first Treasury Secretary. It is offered with the permission of Verso Books.

The modern United States has a strange relationship with Alexander Hamilton.

We recognize him as the architect of our financial system, but we ignore what he wrote about manufacturing and the real economy in which goods and services are actually produced and consumed.

In particular, Hamilton's magnum opus, his 1791 Report on the Subject of Manufactures, is almost totally ignored by economists, historians, development specialists, and biographers. Though it is rarely studied in the United States, the Report's influence is appreciated throughout the developmentalist states of East Asia. Fittingly, the Report also contains the earliest published use of the word "capitalist."

Far from being a free marketeer, Hamilton favored a strong federal government that taxed, spent, borrowed, invested, and most of all planned. For Hamilton, a secure future depended on an activist government, powerful military, and robust, nationally integrated economy based on manufacturing. In place of Smith's "invisible hand," Hamilton saw the hand of government. The economy would not, in fact, develop all on its own "as if guided by an invisible hand." Rather, it had to be clearly and deliberately guided.

Government economic activity would provide "the means of promoting such as will tend to render the United States, independent on foreign nations, for military and other essential supplies." Hamilton called his specific recommendations for government economic action to jump-start and assist development of manufacturing "the Means proper." That phrase should be as ubiquitous in American history as "checks and balances," yet it has remained obscure.



Hamilton's ideas would be called the "American School." Then, in the 1820s under the leadership of the Kentuckian Henry Clay, they came to be known as the "American System." Taken up by the economist Friedrich List and brought to Germany, they morphed into the "National System." These ideas helped shape the late-19th -century industrialization of Germany and then Japan, and a century later the industrialization of South Korea, Hong Kong, and Taiwan. Today, they guide the world-transforming rise of China. Indeed, Hamilton's Report on Manufactures is the basic policy blueprint followed by most other successfully industrialized countries.

Hamilton's defensive developmentalism, though in no way socialist, nonetheless had an anti-imperialist or at least post-colonial tinge, and in that regard anticipated some of the challenges later faced by the socialist experiments of the 20th century.

A more symmetrical comparison can be drawn between Hamilton's project and that of the 19th-century South American revolutionary leader Simón Bolívar. Like Hamilton, Bolívar was a liberal nationalist with a political vision of continental scale, rooted in the quest for development, sovereignty, and a strong central government. As Joshua Simon put it, "Bolívar's constitutional thought, especially his views on the separation of powers and on the role of the executive in a republic ... compare well with those of the early American republic's High Federalists, especially Alexander Hamilton." Bolívar's project fragmented, and in Latin America economic development was delayed and distorted by outside powers.

There is a perception, a latent, often unspoken assumption, that the United States was inevitably bound for high standards of living and political stability, while the states of Latin America were always and only destined for instability and underdevelopment. That perception not only smacks of racism, it is wrong on both counts. There was nothing inevitable about the formation of the United States. The pessimistic warnings of The Federalist Papers could have become reality.

Hamilton's dirigiste economic theories emerged first from his experiences in the Revolutionary War. As a member of Washington's staff, Hamilton got a bird's-eye view of the new nation's poverty, corruption, and near-catastrophic disorganization. Then during the "Critical Period," the postwar economic slump and political crisis of the 1780s, Hamilton saw the new nation sliding toward civil war, fragmentation, foreign invasion, and re-colonization.

As a man of the state—soldier, politician, then bureaucrat—he was materially bound to it and thus worked to create a political structure that tied various economic interests to the new government. His fortune was linked to that of the state: call him homo publicus. National survival was his desideratum.

The tripartite circuitry of Hamilton's nationalism cast sovereignty as dependent on national defense. National defense was dependent on the capacities of a professional standing army, which was, in turn, dependent on the wealth and technological sophistication of a manufacturing-based national economy. And that sort of economy, which did not yet exist in 1790, could only be created with the active guidance and support of a powerful central state. Thus, the state was both means and end. A weak state, in this logic, is the path toward economic underdevelopment and permanent dependence.

Or as Hamilton put it in Federalist 11: "If we continue united, we may counteract a policy so unfriendly to our prosperity in a variety of ways. By prohibitory regulations, extending, at the same time, throughout the States, we may oblige foreign countries to bid against each other, for the privileges of our markets." Here, Hamilton illustrates the essence of economic nationalism: The state does not merely react to economic conditions; it creates them. Hamilton's political economy was a defense against European imperialism, a form of postcolonial pragmatism. The young nation's choice was to either build a strong manufacturing-based economy or face disintegration. The mission was, in short, development or death.

Although our current world bears little resemblance to the 18th century, some parallels exist. After the Revolution the new nation slipped into a dangerous, multifaceted crisis. Political and economic collapse seemed imminent. Yet the framers managed to produce significant political and economic transformations that stabilized the situation, and the early republic avoided social breakdown, political fragmentation, and foreign domination. The society produced by the Constitution and the developmentalist state it empowered was never fair, or just, or ideal. But it was relatively stable and capable. If its mission was expansionist, racist, exploitative, its methods were at least functional and effective in their own terms. Many states are born of hierarchical and bigoted agendas. But not all succeed.

Like that first generation of Americans, we contemporary Americans also face a multi-faceted crisis. Ours takes the form of massive and growing class inequality, a pandemic, anthropogenic climate change, and the inability of laissez-faire ideology to address them. Failure to face these realities will, in the long run, mean almost certain violent social breakdown. Addressing climate change hinges upon, among other things, a total transformation of the world's energy sector. We must euthanize the fossil fuel industry and build out clean energy technologies and infrastructure. This means fossil fuel sector deindustrialization coupled with a simultaneous green re-industrialization and progressive re-regulation of the economy.

In short, we must execute a radical and sweeping economic transformation. In facing that task, we could do worse than to consult our own history. Hamilton's Report on the Subject of Manufactures, born in the shadow of an impending crisis, was, after all, a plan for radical and rapid economic transition. If we must now re-industrialize, then let us consider how America first industrialized. What forces drove the transition from an agrarian to a manufacturing economy? The actual historical record reveals surprising facts, central among these the very active role of government in guiding economic change. Indeed, the developmental state begins to appear not as something new and foreign, but rather as something old and indigenous.

Christian Parenti is Associate Professor of Economics at John Jay College, CUNY. His latest book Radical Hamilton: Economic Lessons from a Misunderstood Founder, from which this essay is excerpted, has just been published by Verso.

Punishing Trade Pirates Is Complicated

Punishing Trade Pirates Is Complicated

There’s a hierarchy of larceny in our world, from pickpockets to the Wall Street syndicates running sophisticated mass swindles. But atop the heap are “bandit nations” — countries whose industrial and political elites conspire in economic espionage aimed at stalking and stealing the ideas, technologies, and innovations of other economies. Their global robbery, “intellectual property theft,” plunders billions of dollars a year. Recently, U.S. corporate leaders have been in a sputtering rage over these state-sanctioned criminal enterprises. “Pirates!” they shriek, accusing China, Russia, some European competitors and even developing nations of spying, hacking and otherwise filching U.S. patents and such.

Pirates? Well, what else to call a country that makes such robbery core to its economic development strategy? (WARNING: Inconvenient historical truth dead ahead.) You could call it the United States of America.

In the 1790s and early 1800s, America’s basically agrarian economy was dependent on cotton, tobacco and other raw farm commodities. For value-added finished goods, we were a captive market of England and other manufacturing nations. To survive, much less advance, our new nation desperately needed its own processing and manufacturing industries. But how, without the technology or skills? Our founders’ answer: Steal them.

No less an eminence than Alexander Hamilton led America’s elite ring of state-run thieves. As America’s first treasury secretary, Hamilton declared that the U.S. must “procure all such machines as are known in any part of Europe.” His Treasury Department dispatched an agent abroad to “procure” machine drawings, and it initiated bounties to lure England’s textile designers and skilled operators to pass automation techniques to our government and industrialists-on-the-make.

Of course, the outraged Brits rushed to protect both their secrets and their iron grip on the U.S. market, assessing severe fines (up to 500 pounds per violation — $99,000 today) on anyone trying to take industrial designs out of country. Nonetheless, determined Americans kept stealing and soon built their own competitive textile industry.

Two centuries later, we are like old England, and China is the bad-boy disrupter of the global corporate order. Its leaders — like Hamilton — have little respect for other countries’ intellectual property laws. A big difference, though, is that China is not a backwater; it’s a global industrial power.

Still, industrial property protectionism is a tricky topic: No one has sympathy for Big Pharma when it uses brute political force to extend product monopolies that let drug companies charge outrageous prices. But if, say, America Corp. creates a new wing design, shouldn’t it be able to sell its made-in-America plane to China without transferring its wing technology, too? While Chinese officials deny such theft, they (among other countries) are widely known to run a sustained, sophisticated operation to “extract” and duplicate our technology. They can then set prices below U.S. production costs — thus sucking global manufacturing and jobs to China.

But where is our moral authority to condemn and punish them? Donald Trump can fulminate all he wants and even launch an ill-considered, mad-dog tariff war, but China’s leaders see the “procurement” of American industrial secrets as — Helloooo, Donald — their China First policy! Indeed, since 2015, China has been investing billions in an ambitious 10-year “Made in China 2025” crash program to dominate the global market in 15 “industries of the future” (including alternative energy equipment, high-speed rail, robotics and electric cars). Yes, this massive offensive includes sending moles and other agents into the inner sanctums of such giants as Boeing and GM to purloin their latest designs and materials. But the Chinese program has been abetted by some surprising partners: the very U.S. corporations complaining so loudly about Beijing’s thievery.

Drooling at short-term profits from access to China’s billion-person market, Western CEOs have been selling their corporations’ futures by handing over their patented jewels in exchange for import licenses and access to China’s low-wage non-union workers. In addition, Chinese companies have obtained keys to industrial secrets simply by investing in U.S. firms — $135 billion between 2005 and 2016 in partnerships and joint ventures.

Follow the bouncing ball: (1) To punish the Chinese for taking the technology that our CEOs hand to them, (2) Trump (backed by some congressional Dems) has imposed a mountain of tariffs on goods China exports to the US, which (3) will raise the prices for U.S. consumers and (4) has prompted Beijing to impose retaliatory tariffs on U.S. grain and other products, thus hurting our farmers, other producers, and consumers.

Populist author, public speaker and radio commentator Jim Hightower writes The Hightower Lowdown, a monthly newsletter chronicling the ongoing fights by America’s ordinary people against rule by plutocratic elites. Sign up at HightowerLowdown.org.

We Are Waiting No More, Ladies: From Abigail to Hillary

We Are Waiting No More, Ladies: From Abigail to Hillary

We are ladies in waiting no more, gentlemen. Tired of traveling third class to the revolution.

Heroines Harriet Tubman, Lucretia Mott, Alice Paul and Eleanor Roosevelt on the money herald the start of something big.

And by we I mean American women here now in 2016, voters from 18 to 98. Heck, count girls and babies; they inherit the new world being born and they can campaign, too. April brings Hillary Clinton as the presumptive Democratic presidential nominee.

How sweet it is. A victory from sea to shining sea. Long time coming.

Dial back to 2008, the bittersweet spring when Clinton lost to Barack Obama in the Democratic primary, though she was far better seasoned. But who said the world was fair? Witnessing an American president break the color barrier one wintry day at high noon was breathtaking.

To be clear, Obama’s victory over Clinton turned a page in our oldest story. The historical theme is clear. Women are often expected to wait for their rights. Wait their turn for political power.

In 1776, Abigail Adams wrote to husband John a famous letter saying, “Remember the ladies” in the new republic. Did he listen to her? No. Though she warned, ladies might “foment a rebellion.”

In Philadelphia in 1776, Thomas Jefferson and the Declaration of Independence signers in that hall completely cut us out of their revolution’s documents. “All men are created equal” means what it says. Fourscore and seven years later, Abraham Lincoln expanded the phrase to mean black men. The founding fathers didn’t remember us.

As the Broadway hit musical, “Hamilton,” puts it, we weren’t in the room where it happened. Only one man in the Revolutionary generation believed in the rights of women: the truly talented Aaron Burr, Jefferson’s vice president. The man who dueled and slew Hamilton at sunrise on July 11, 1804. If not for the tragic duel, Burr might have become president and our struggle, our story, might have been different. Nobody knows.

The “Negro’s Hour” episode, however, could not be clearer. After working for the abolition of slavery for 30 years (1833-1863) women in the anti-slavery movement also created the women’s rights movement in 1848.

The first convention was held in Seneca Fall, New York, now a national historic site. It is to women what Philadelphia in 1776 was for men. Lucretia Mott, the Philadelphia Quaker champion of rights for slaves and women, was the main speaker. Frederick Douglass, abolitionist orator and publisher, was among hundreds in the throng. He urged Mott to make the vote one of the demands.

Hillary Clinton has visited Seneca Falls, as first lady and as senator from New York. She’s pretty perfect to take the past to present and future. The sisterhood’s fight for our rights is the march she’s on — and it’s not over.

Not Mott, not Susan B. Anthony, nor Elizabeth Cady Stanton — the three depicted in the U.S. Capitol Rotunda suffrage statue — lived to see the day women won the vote.

Here is where the earth shattered: In 1865, the Civil War’s political settlement extended voting rights and citizenship to black men only, excluding women.

The cut happened after women had worked for abolition and their own rights together. Republicans told women to wait, this was the “Negro’s Hour.” (Except Lincoln, who had died.) Even great Douglass sided with that political refrain.

The vote is the passport to democracy. Trouble was, history’s major change trains run only so often, and you have to catch one if you can. Here was the chance.

Suffrage took a long time coming, from 1865 to 1920. That’s two generations. The vote was never given, but taken over years from a grudging Southerner with three daughters — Woodrow Wilson.

Spirited Alice Paul changed the game by moving it from private to public, out on the streets of Washington. In vivid vigils and parades, “go ahead, arrest us,” was the template of her nonviolent resistance — and the police did, in the public eye. So much for ladylike. Like Mott, Paul was a “birthright” Quaker. She arrested national attention and sympathy for suffrage.

Anna Quindlen, the luminous novelist and journalist, stated that since serving as secretary of state since 2008, Clinton’s vast experience puts her at the top of the class of candidates — ever.

Our time is now. Ladies, we are waiting no more. There’s a train to catch to Philadelphia in July.

To find out more about Jamie Stiehm and read features by other Creators writers and cartoonists, visit Creators.com.

COPYRIGHT 2016 CREATORS.COM

Photo: Abigail Adams. Wikimedia Commons/ Gilbert Stuart.

Aaron Burr Is A Great Character, Too, For Right Now on Stage

Aaron Burr Is A Great Character, Too, For Right Now on Stage

Alexander Hamilton is killing it, pardon the expression. George Washington’s adored treasury secretary inspired Hamilton, a Broadway musical. Brash and handsome, Hamilton filled pages of a best-selling biography by Ronald Chernow. Still the $10 bill man, Hamilton could not have planned his posterity better. And yes, the shrewd schemer did plan it.

But give me dashing Aaron Burr, known for his shining eyes and crystal-clear speech, any day. The 48-year-old vice president who cut Hamilton down in 1804 was light-years ahead of his time when it came to women.

In fact, he was years ahead of our time. The 2016 Republican presidential candidates all oppose choice — just the first barometer of their dark state of nature. Compared to Jeb Bush, Scott Walker, or any of their neighbors on Mean Street, Burr is a woman’s best friend. You see, he took seriously women’s civic and political equality.

Perhaps Burr’s exile has lasted long enough. Isn’t it time to refresh our political palettes?

By contrast to the current Republican crowd, Burr studied Enlightenment philosophy, such as The Vindication of Rights of Woman, by Mary Wollstonecraft. He found the first feminist tract a work of “genius.” He had one daughter, Theodosia, whom he educated with the same rigor that he practiced in his student days at Princeton. Burr’s gemlike flame was snuffed out, too, on the summer day that Hamilton died. But they never tell you that part.

To be sure, Hamilton is a marvelous character. Billy goat Donald Trump looks like chump change next to two magnificent New Yorkers who never got to be president, more’s the pity. Hamilton and Burr could have had the presidential Republican field for breakfast and enjoyed the rest of their day. In hindsight, they were the forward-leaning Founders whom we needed to live longer.

The inventor of modern banking, Hamilton was the leading Federalist leader and thinker, with a sharp pen and tongue in political intrigues. He was far from blameless in the duel.

But the weight of history’s verdict has fallen on Burr. It’s worth noting he tied the older Thomas Jefferson for president in 1800. He, not Hamilton, was still destined for greater things.

Hamilton was born illegitimate in the West Indies. Blue-blooded Burr was from a long line of Puritans. Both were orphaned young. What contrast could be more compelling? Their final “interview” on the field of honor was not a simple victim and villain story line.

Chernow leads the school of Hamilton loyalists and tars Burr. Yet here are a few little-known facts: Burr’s gift for oratory made men in the Senate weep. His farewell address is considered one of the greatest floor speeches ever. Plainly put, Burr and Hamilton were the brightest young stars of the Revolutionary generation.

As the sun rose on the Weehawken heights by the Hudson River, two New York lawyers disembarked from boats with their “seconds” to settle a score of slander (Burr challenged Hamilton.) Each man stood 5’6″, and carried himself with confidence and grace. Each served as a Revolutionary War officer. Burr won the encounter with one shot. Yet he lost the larger shooting match.

The Early Republic was too small to hold these rival characters, larger than life.

So can’t we lay down our arms and clear the smoke? Burr’s worthy of a big movie or musical, too; smoldering Sean Penn is perfectly cast in the lead. Note for the script: Burr defused a duel brewing between Hamilton and James Monroe: “I found it not too difficult to convince them both that we cannot afford to lose either of them.”

Burr outlived his opponent by 30 years. He lived with the words of his second: “You have just made Hamilton a great man.”

To settle personal scores, Burr and Hamilton blew away their inheritance. The Revolution itself missed a beat. As Northern city dwellers, breathing in finance, trade and commerce, their nation-building was the way of the world. They were the rightful challengers to Jefferson’s agrarian slaveholding vision. But after the duel, Virginia planters’ lock on power was assured for years.

The tragedy was that two stars were gone from dawn of the American political pantheon.

To find out more about Jamie Stiehm and read features by other Creators writers and cartoonists, visit Creators.com

Image: Vice President Aaron Burr in an 1802 portrait, via Wikimedia Commons.