The Rousseau of the Right
by Thomas J. DiLorenzo
by Thomas J. DiLorenzo
       
Rousseau’s wish to free the current
majority from all restrictions, to dissolve the people into a homogeneous
mass, abolish decentralization, and remove representative institutions
could not be in sharper contrast to American traditions of
constitutionalism, federalism, localism, and representation.
~ Claes G. Ryn, America the Virtuous, p. 73
In his important book, America
the Virtuous, Professor Claes Ryn of Catholic University makes the
compelling case that Rousseau is the ideological inspiration for the
neoconservative movement, which he calls the new Jacobinism. Rousseau
conjectured that some nebulous "general will" of the people was
always right, and therefore government should have absolute power over a
highly centralized and militarized state, all in the name of promoting if
not imposing "democracy."
It is not at all
surprising, then, that another of the neocons’ American idols is Alexander
Hamilton, whom historian Cecelia Kenyon labeled "the Rousseau of the
Right" (Cecelia Kenyon, "Alexander Hamilton, Rousseau of the
Right," Political Science Quarterly, June 1958, pp. 161–178).
The neocon love affair with "the Rousseau of the Right" was on
display recently in a Sunday, April 25 New York Times book review of
a new biography of Hamilton (Alexander Hamilton, by Ron Chernow) by Times op-ed
columnist and house neocon David Brooks. Brooks is just wild about
Hamilton, crediting him with nothing less than "creating
capitalism." (He also seems gratified that the Chernow book supposedly
does a "devastating destruction job on Thomas Jefferson").
Now, Alexander Hamilton
can and should be admired for many things. But the one thing that Brooks
says was his "greatest achievement"– his role as Treasury
Secretary – should not be. Hamilton was a mercantilist. This was the
corrupt system of political patronage and special privilege held into place
by economic superstition in the Europe of Hamilton’s day (and before). As
such, he championed protectionism, corporate welfare, central banking,
excessive excise and property taxation, and government debt. Adam Smith’s Wealth of Nations was a critique and repudiation
of mercantilism and a defense of capitalism. Brooks and Chernow have it all
backwards when they write that these policies were capitalistic. In fact,
they were just the opposite.
As Larry Schweikart
writes in The Entrepreneurial Adventure: A
History of Business in the United States (p. 63), Hamilton’s central bank, the Bank
of the United States (BUS) "brought out the mercantilist
Hamilton" and "fit perfectly with the mercantilist view of using
business in the service of government." (This was also the view of the
Italian and German governments during the 1920s and ‘30s). The BUS was
thankfully disbanded by President Andrew Jackson after several decades of
corruption, inflation, and political mischief making. It did serve,
nevertheless, as a precursor of the Fed.
Far from being a
champion of capitalism, Hamilton was a champion of economic
interventionism. Historians have long thought of him as "among the
most eloquent defenders of state activism in the economy," writes
Schweikart (p. 61).
Hamilton championed and
did more than anyone to create the national debt, arguing successfully that
it should be created as a means of taking over the state debts that were
incurred to finance the Revolution. (Brooks praises this has having
"bound the states together" and centralized more power in the
nation’s capital). The reason Hamilton gave for the national debt, however,
was that making property-owning taxpayers "reliant on the federal
government for redemption of the debts they held would generate greater
future support for federal taxation and centralization of financial policy.
. . he wanted to make the wealthy dependent on the government so that in
the future he could take more of their wealth!" (Schweikart, p. 61).
He was a scheming plunderer, in other words, and the public debt was an
integral part of his statist scheming.
Hamilton popularized
the "infant industry" argument for protectionism, arguing that
young industries needed to be protected from competition. Well, it turns
out that industrial infants never grow up. Hamilton’s protectionism has
only led to the permanent infantilization of industry. For example, the
1861 Morrill Tariff was vigorously promoted by steel manufacturers and
congressmen Thaddeus Stevens of Pennsylvania and Justin Morrill of Vermont
because it "protected" steel from international competition. In
keeping with the Republican Party’s big-government roots, one of the first
things President George W. Bush did upon taking office 140 years later,
almost to the day, was to place 50 percent tariffs on steel, which he
apparently believed had not yet grown up.
The Hamilton/neocon
notion that the national debt is a "blessing" repudiates the
thinking of most of the other founders on the issue. Government debt has
always been an underhanded means of disguising the true costs of government
to the public by forcing future generations to pay for government spending
that benefits only the current population. It allows politicians to
plausibly promise the public something for nothing by deferring the tax
bill to future generations of taxpayers.
If you think Hamilton’s
idea of a national debt is a blessing, consider this: according to recent
news reports the total U.S. federal debt is $7.2 trillion. In the past year
alone, the Hamilton/Lincoln-loving neocon cabal that runs the Bush
administration has increased the national debt by $700 billion, which
equates to almost $100,000 for every second of every eight-hour
working day according to financial advisor Sean Corrigan. This is more debt
than was run up in the first 200 years after the Declaration of
Independence. Some blessing.
Hamilton did as much as
anyone to destroy his own political party, the Federalist Party, with his
excessive taxation schemes. He persuaded Congress to impose the hated
Whiskey Tax (to help pay for the states’ debts, which the central
government had assumed), which led to the Whiskey Rebellion in western
Pennsylvania. The Official View of the Whiskey rebellion used to be that it
was a successful example of the putting down of a rebellion or insurrection
by George Washington himself, and therefore cemented into place the taxing
power of the central government. But this view is now recognized as
fallacious. In fact, virtually no whiskey taxes were ever collected, and
despite Washington’s show of force, no tax rebels were punished; all were
given amnesty. Furthermore, the entire episode fueled the anti-tax
mentality that was so prevalent during the Revolution, and helped elect
Thomas Jefferson president in 1800. Jefferson abolished all of the hated
federal excise taxes. (See Murray Rothbard, "The Whiskey Rebellion: A Model for Our Time.")
Hamilton created
another tax rebellion with his national property tax. This time the
rebellion was in Massachusetts. When some of the tax rebels were imprisoned
a man named John Fries organized a march on the courthouse and freed the
tax protesters. Fries was imprisoned and sentenced to be hanged for
treason. President John Adams pardoned him despite the strongest of
protests by Hamilton, who was the leading proponent of hanging Fries. (See
Charles Adams, Those Dirty Rotten Taxes: The
Tax Revolts that Built America, pp. 70-72). Early Americans despised
taxation with representation as much as taxation without
representation. Hamilton’s tax-raising "activism" led directly to
the death of the Federalist Party and the success of the Jeffersonians.
David Brooks also credits Hamilton with literally creating "the
fluid capital markets that are today the engine of world capitalism."
Well, not exactly. As Nathan Rosenberg and L.E. Birdzell, Jr. write in
their treatise, How
the West Grew Rich: The Economic Transformation of the Industrial World
(p. 220): "The earlier stock exchanges . . . trace their origins to .
. . the Amsterdam market, formed at the beginning of the seventeenth
century," though there were also precedents in "Italy, France
Spain, the Hanseatic towns, and . . . in German mines at the Leipzig fair
as early as the fifteenth century." "In London, securities
traders formed their own exchange in 1773. In New York, systematic trading
was conducted on the street (literally), beginning in 1792."
Moreover, the large-scale trading of stocks in industrial corporations
that Americans think of today was not invented by any one man, even a man
as brilliant as Alexander Hamilton, but "traces its origins to trading
in the trust certificates issued by the trusts of the 1880s"
(Rosenberg and Birdzell, p. 223). The hated late nineteenth-century
"trusts" invented the large-scale trading of stocks, not
"the Rousseau of the Right."
 Such
fantasies are typical of the neocons or neo-Jacobins, as Claes Ryn would
call them. They seem unaware of or unwilling to accept the fundamental idea
that the civil society is the result of the peaceful efforts of many
individuals who collaborate and cooperate for their own mutual benefit. It
is not created by any one Great Central Planner. "Democracy"
cannot be created by political fiat; the institutions of democracy evolved
over many centuries. The same is true of the institutions of capitalism, as
Rosenberg and Birdzell explain in painstaking detail.
 David
Brooks does hit the nail right on the head with regard to one point that he
makes in his New York Times review. Hamiltonian mercantilism, which
he confusingly labels the "activist, pro-market Hamiltonian
tradition," was "later embraced by Henry Clay and the Whig Party,
by the early Republicans in the age of Lincoln, and by Theodore
Roosevelt-style progressives." This of course is one of the main
themes of my book, The
Real Lincoln: The North’s victory in the War to Prevent Southern
Independence was, among other things, a Triumph of Hamiltonian Mercantilism
that led inevitably to so much government corruption that historian Mark W.
Summers wrote an entire book about the period entitled The
Era of Good Stealings!
 May 14, 2004
Thomas J. DiLorenzo [send him mail]
is the author of The
Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary
War, (Three Rivers Press/Random House). His latest book is How
Capitalism Saved America: The Untold Story of Our Country’s History, from
the Pilgrims to the Present (Crown Forum/Random House, August 2004).
Copyright © 2004 LewRockwell.com
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