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Hamilton? Jefferson?

IN OUR CURRENT slough of economic despair, is it time for Americans to recognize that we should all become Hamiltonians, following the genius of our first and greatest Secretary of the Treasury? That is the appeal that Michael Lind makes in Land of Promise (a title that faintly echoes the work of The New Republic’s founding co-editor, Herbert Croly, in The Promise of American Life.) Lind has already gained a pair of appreciative (but hardly uncritical) nods in the New York Times, one in a book review by David Leonhardt, the other in a column by David Brooks. True, both journalists take issue with some aspects of Lind’s Hamiltonianism. Leonhardt wonders whether other nations have not pursued more Hamiltonian policies than Americans have, but with lesser results. Brooks goes much further, arguing that Lind is seeking to turn the true Hamiltonian philosophy “into something that looks like modern liberalism.” A real Hamiltonian, Brooks suggests, would favor “long-term structural development” above “providing jobs right now,” while fostering “national power and eminence” over individual wealth or social equality.

Anyone scouting this terrain should proceed with a great deal of caution. What does it really mean, after all, to wonder what a Hamiltonian or a Jeffersonian approach to issues of contemporary economic policy should look like? Interpretations as broadly worded as the ones that Brooks offers similarly operate at a level of generality so vague as to defy any sensible assessment. It is a bit of a surprise, for example, to learn that Hamilton did not care much about individual wealth, when most accounts of his financial policies emphasize his desire to attach the propertied classes of the post-revolutionary United States to the national government. Then, too, his insistence that President Washington take the field against the Whiskey Rebels of 1793 was contrived to persuade the “lower orders” of Americans that they were as obliged to pay taxes as their wealthier neighbors. Brooks has a long way to go to demonstrate that he is describing actually existing founders or policymakers.

Still, the notion that Hamiltonian and Jeffersonian values have repeatedly struggled against each other in ordering our discussions of economic policy is a well-established theme in American history. Lind’s new book is only its most recent example, but it gives the broader story a nicely cyclical sweep. Land of Promise is a virtual textbook of American economic history, with every chapter divided into numerous titled sub-sections running from two to six paragraphs. Lind describes four broad movements in American economic history, beginning with the pre-industrial world the founders of the Republic inhabited and then the three great transformations in the industrial economy that replaced it, one driven by steam and telegraphy, the next by electric and oil motors, and then the new world of the computer. Lind offers countless apt observations about American economic development, and with or without his interpretive scheme, any reader will learn much about that history.

But the overall argument depends on the juxtaposition of the Hamiltonian and Jeffersonian themes. In Lind’s story, the great economic transformations—or what Joseph Schumpeter famously called the “creative destruction” of capitalism—race three or four decades ahead of the capacity of the political and legal systems to deal with their vastly unsettling consequences. During this uncertain interval, Jeffersonian-style politicians flourish. They offer nostalgic visions of defying the rush of progress, much as Jefferson purportedly reacted against the specter of the first industrial revolution, and appeal to a simpler vision of authority where older institutions, more respectful of traditional decentralized power, can still operate. But at some point a crisis intervenes—the Civil War, the Depression, and our current Great Recession—and then Hamiltonian solutions have their day. These solutions are avowedly nationalistic in character. They rely on central institutions to accommodate economic change with more prudent, effective, and just notions of public regulation.

Lind is wholly unambiguous in drawing the balance sheet between the Hamiltonian and Jeffersonian traditions. “What is good about the American economy is largely the result of the Hamiltonian development tradition,” he tells us straight off, “and what is bad about it is largely the result of the Jeffersonian producerist school.” Contra Henry Ford, Lind insists that this is why “history is not bunk.” History has lessons to teach. It offers us a choice among the lessons its makers professed to leave, and between which we should be advised to choose.

Perhaps Lind is right, and sometime soon the challenges that our political system is now mishandling so badly will reach their apotheosis. In the meantime, the skeptical historian can offer a few reservations about his argument. The first has to do with the very concept of lessons. Historians hate them for many reasons, not least because they defy the underlying fundamental premise of historical thinking: that we study the past not merely to understand how the present emerged from it, which is the simpler part of our work, but more importantly, because it was so different from what we have become.

In the special case of the founders of our Republic, nothing could be zanier than naïvely assuming that we can pluck Hamilton or Jefferson or Madison or Franklin from their era, plop them down in ours, and apply their wisdom to our problems. The absurdity lies in this: the founders were deeply empirical in their thinking, deeply responsive to their experiences and observations, and deeply aware of the contingencies under which they acted. To apply their ideas to the present without giving them the same information we have—and thus exposing them to the same differences that perplex us—would turn their creative intelligence into a caricature of itself.

Lind faces a second difficulty when he emphasizes the modern preeminence of the nation-state in our political economy. That preeminence had many legal and political antecedents, dating to key decisions by the Supreme Court under Chief Justice John Marshall—McCulloch v. Maryland (1819) and Gibbons v. Ogden (1824) being the most famous—and the opportunity that the Republican Party seized during the Civil War, when the absence of Southern congressmen allowed them to enact key elements of Hamiltonian-style legislation. But it still took the crisis of the New Deal and World War II to confirm the superiority of national authority.

This story, although fine by itself, still neglects the critical role played by state-based policies and decisions throughout the nineteenth century and on into the twentieth. That development, in its pros and cons, was the subject of a brilliant set of monographs written by Oscar and Mary Handlin (on Massachusetts), Louis Hartz (Pennsylvania), Milton Heath (Georgia), and Harry Scheiber (Ohio) that collectively demolished the idea that the flourishing of the American economy was a tribute to a laissez-faire, quasi-libertarian ethos implanted in our national character. Lind acknowledges this fundamental fact of American economic development only in a handful of passing references, and never seriously examines the interplay between state-based and nationally-based activity.

The creation of an integrated national economy, of the kind that a visionary Hamiltonian was conceived to pursue, depended on more than the formal allocation of legal authority. It was also a function of how the real stuff of economic activity—production, transportation, distribution, consumption—actually operated. Here the work of the states in fostering development long played the dominant role, and the federal government only began to intervene when an objective basis demanding national regulation had been created. Indeed, some famous attempts to foster national integration may have been expensively premature, as my colleague Richard White has argued in his new book, Railroaded, which skeptically examines the construction of the transcontinental railroads.

The challenge of measuring state and federal “inputs” also leads to one final reflection on the ostensible quarrel between Hamiltonians and Jeffersonians. There are indeed some issues where an appeal to their values and positions still makes a great deal of sense. Anyone who wants to speculate about the value of maintaining an ample degree of presidential discretion in the realm of national security will find substantial inspiration in Hamilton’s observations about presidential power. Americans who believe strongly in the separation of church and state and the value of treating religion primarily as a realm of private belief and behavior can do no better than rereading Jefferson’s and Madison’s writings on this sacred subject.

Yet in the realm of political economy, the idea that Americans should be either natural-born Hamiltonians or Jeffersonians is a primitive way of explaining how the energy of economic activity pulses through our political and legal system. That system is open to influence and manipulation at every level, and it has no effective way of directing the surges of political calculations and commitments that drive our polity. The costs of our ingrained constitutional inefficiencies are often all too easy to measure, as our current impasse in Washington readily confirms. But perhaps Americans work best when the divided nature of our institutions encourages its opportunistic manipulation.

Thomas Jefferson closed his inaugural address of 1801—which was made possible by Hamilton’s continuing influence over the defeated Federalist Party—by reminding his congressional audience that “We are all Republicans, we are all Federalists.” It may also be the case that we are all Hamiltonians, all Jeffersonians, and that, for better or worse, this is a part of the genius of our American system.

Jack Rakove teaches history and political science at Stanford University.