Rahm Emanuel's Hitler Youth Plan

Fausta Wertz of Fausta's Blog has forwarded this podcast of the Daily News's Ben Smith's interview with Rahm Emanuel about his plan to institute a mandatory, totalitarian-style (Red Guard, Hitler Youth, classical Spartan) youth camp training for all Americans aged 18-25. Rahm Emanuel went to the same college as I did (albeit a number of years later), Sarah Lawrence College in Bronxville, NY.

We see in this video the results of America's crumbled higher education system. Mr. Emanuel is ignorant of the liberal principles that underlie American history and philosophy: the principles of individual rights and freedom, of John Locke and of the dissent of Roger Williams. Louis Hartz has argued that the New Deal and subsequent liberal tradition in America reflected a deeper Lockean liberal tradition. He was wrong. If you have not read, understood and agreed with Locke's Second Treatise on Government I do not think that you can be a good American. I do not believe that today's college graduates know what the American way of life is.

It is a mistake to elect candidates who have graduated from or taught at northeastern higher educational institutions. Northeastern universities inculcate ignorance about essential American traditions. They are not critical. They are simply ignorant. With thugs like Barack Obama and Rahm Emanuel in the White House, America is on a tragic path.

Enjoy:



Fausta writes:

>This "Civil Service Plan" is right out of Castro's Cuba, where you have to go work al campo in the countryside when you're twelve years old.

The Emanuel plan is for ages 18-25, so you don't have the outcry that using minors would generate. However, ages 18-25 are prime job-hunting ages. Anyone who doesn't comply with the "Civil Service Plan" can be blackballed from any future employment.

Notice how high schools across the country already have mandatory community service as a graduation requirement. Implementing a mandatory "Civil Service Plan" in colleges, considering how academia is sympathetic to Obama, would be the easiest thing in the world.

From that, to making the "Civil Service Plan" mandatory to future employment would only take nod from Congress.

Can't happen here?

Yes it can!

Economic Change in the Civil War Era

David T. Gilchrist and W. David Lewis. Economic Change in the Civil War Era. Greenvile, Del.: Eleutherian-Mills-Hagley Foundation, 1965. 180 pages. Out of print, available from Amazon.com used.

God bless Amazon.com for making scholarly books available to a national market with little fuss or muss. Economic Change in the Civil War Era is a conference proceedings of a 1964 conference that the Eleutherian Mills-Hagley Foundation put together in 1964. Several of the leading historians of the late twentieth century, to include Alfred D. Chandler, Jr., Daniel J. Elazar, and Fritz Redlich were in attendance and/or presented papers.

Robert P. Sharkey's paper on commercial banking coupled with Fritz Redlich's response was fascinating. Louis Hartz's paper, "Government-Business Relations" is brilliant as is Alfred D. Chandler's paper on the transformation of the "Organization of Manufacturing" as was George Rogers Taylor's "National Economy Before and After the Civil War".

Taylor points out that the "extension of settlement in rural New England" in the pre-Civil War period was largely unprofitable because the lands being settled in northern New England and upstate New York were not so fertile as the land the first settlers occupied. Thus, "most of the hill towns of New England had reached their population peaks by 1830 or earlier." The railroads made it "easier to migrate to Illinois or Wisconsin" so that New England rural population began to decrease in the 1850s. The population of the Western states was growing, in part due to emigration from New England. Western settlers needed a market. Shipping to New Orleans via the Mississippi River was expensive and risky. Canals allowed eastward shipment of grain and by the 1840s eastward shipments equalled the the shipments to New Orleans, and the railroads enhanced this trend. Railroads were in part a response to westward migration. Thus, argues Taylor, eastern demand for western agricultural output plus immigration led to demand for railroads. New Englanders migrated from farms westward and to cities like Boston. "Eventually migrants to the frontier produced the food consumed by migrants to the cities" (p. 14). Immigrants from Europe provided an abundant labor supply and low labor costs in the ante-bellum period. But "trained workmen or skilled mechanics were often in short supply and had to be brought in from England or Scotland at considerable expense".

According to Robert P. Sharkey, who treated the subject of banking:

"In 1850 the banking network of the country consisted of some 824 state-chartered banks operating in all the thirty-one states except Texas, Arkansas and Iowa, which prohibited the chartering of banks altogether. The laws which governed banking varied from the extreme permissiveness of the statutes in Illinois, where "wildcatting" was in vogue, to the stringent provisions of the enactments in Louisiana, where reserve and lending practices were conservative in the extreme....Twenty-three years later, in 1873, this anarchic condition had totally disappeared. The number of banks had quadrupled to some 3,298, but of this number, 1,968 were national banks chartered under the National Banking Act of 1864. . Instead of hundreds of different kinds of currency, whose varying values were known only to the most avid readers of the Bank Note Reporter, there was now a national bank-note currency secured by the deposit of US bonds with the Treasurer of the United States and passing at par throughout the country. The state banks were showing a great renaissance at this time, their number having more than doubled from less than 600 in 1872 to more than 1,300 in 1873. Despite this resurgent vitality, state banks were no longer feared by most contemporaries, since their currency-issuing powers had been effectively curtailed by the punitive tax of 10 per cent on state bank issues levied by the act of Marc 3, 1865."

Among the important changes with respect to money and banking was the "ever growing volume of demand-deposit money...the growing volume of demand deposits which could be transferred by check mitigated to some extent the deflationary effects of the rapid currency contraction which followed the Civil War."

Private clearing houses, a kind of regional private central bank, were established in New York, Boston and Philadelphia between 1853 and 1858 (p. 25).

The National Banking Act was, in Sharkey's estimate, the result of the Civil War. "The Civil War created a great mass of government securities which the National Banking Act required national banks to buy as collateral for the national currency." New York Bankers did not like the monetary expansion. Sharkey quotes James Gallatin in 1868 (p. 26): "Not content with a large volume of government paper money, we made it the basis of another volume of auxiliary money in the form of bank issues. We built paper upon paper. Our paper house topples to its foundation, yet we are advised to build it higher, with more paper..." Sharkey adds (p. 27):

"For those who savor historical ironies, these divergent attitudes are not without their delights, for, as the National Banking System took shape after the War, it was apparent that human ingenuity would have had difficulty contriving a more perfect engine for class and sectional exploitation: creditors finally obtaining the upper hand as opposed to debtors, and the developed East holding the whip over the undeveloped West and South...The fundamental purposes of the National Banking Acts were to provide an adequate bank-note currency as well as a wartime market for government bonds...providing a bond-secured national bank currency...As the price for his support of the original act of 1863, John Sherman had insisted that the total volume of the national currency be limited to $300,000,000"

He adds (p. 28):

"The excesses of state banking as the existed prior to the Civil War have been widely condemned. Bray Hammond has performed a great service in demonstrating that the craze for easy money was no agrarian aberration but rather one peculiar to the enterprisers. Insofar as outright frauds were sometimes perpetrated by issuers of bank notes, these practices deserve the criticism that they have received. But what about the loans made by good and not-so-good banks to the 'enterprisers' who wanted to improve lands, develop mines, open factories, etc.?...To the extent that capital was purchased through the issue of depreciating bank notes which passed through the ands of inhabitants of the less developed regions, such depreciation was in essence a form of taxation...To the extent that such notes could be made to circulate the urban East, they constituted a kind of capital levy by the less developed upon the more developed regions...It is quite understandable that politicians of the Whig persuasion, such as Daniel Webster and William Seward, were concerned about the infiltration of doubtful bank notes and forcefully plead the case of the creditor section for what Seward called a 'sound, equal, uniform' currency."

"...The general thesis here is that the laissez faire conditions of enterprise in pre-Civil War America--in which the entrepreneur thrived and the position of the creditor was none too secure--gave way in the post-Civil War period to a new situation in which the creditor interest was dominant, large-scale instead of small-scale enterprise was favored and the East held the whip hand over the less developed regions of the country...The Civil War years...were in fact the culmination of the great age of free and unrestricted enterprise. On the great crest of inflation thousands of businesses saw the light of day and thrived. The entrepreneur flourished, but meanwhile the creditor interest languished as debts were repaid in money of constantly diminishing value. Between 1860 and 1864 the capital invested in New York banks actually fell, a good indication that banking was not very profitable under inflationary conditions. But meanwhile, the seeds of decay had been planted. The National Baning System, with its yet unsuspected exploitative potentialities, had been established..."

After the Civil War, "the stock of money was rapidly contracted. Prices fell steadily. Loans and discounts, the life blood of small enterprise, rose only $9,000,000 between 1860 and 1867 despite the great increase in population and production, while the banks' holdings of corporate and government securities rose from $70,000,000 to $536,000,000. What this meant was that access to the money market was becoming ever easier for the proprietors of the great corporations with their well-known issues, and increasingly difficult for the small enterprisers and farmers of the hinterland...New York became the great magnet for money. Even the reserves of the country banks found their way to Wall Street where they helped meet the insatiable demands of the call-money market. In place of the illiquid mortgage loans made in the hinterland before the Civil War, there was now the illiquidity of stock-secured loans in New York, further reducing the ability of country banks to serve their customers. Is it any wonder that the true advocates of free non-corporate enterprise such as Henry Carey screamed so unrestrainedly at what they called the 'money monopolies' of New York?..It was in this type of environment that the Vanderbilts, Carnegies, Rockefellers and Armours consolidated their gains, swallowing up their smaller competitors in time of crisis, moving ever forward to the nirvana of rationalization and oligopoly. The ground rules had been changed by many factors, but in this process banking and government finance played significant roles."

Fritz Redlich adds (p. 32):

"the problem was to create a market for government loans...Its solution led concomitantly to the creation of the National Banking System, which in the end revolutionized American commercial banking, although it was not devised to that end." The National Banking Act established "free banking" under general law rather than specific charter. "Free banking acts already in effect across the country had introduced into American practice the government-bond-backed bank note...this brought into existence, on a national scale, a market for government bonds."

There were sectional differences in inflation so that in the east there were frequent complaints of too much inflation in the post Civil War era, and in the south and west there were complaints of too little.

I am somewhat skeptical of Redlich's argument that small businessmen depended on bank loans because in our era banks have not been sources of capital to start ups.

In Louis Hartz's essay "Government Business Relations" Hartz notes (p. 89):

"It is a matter of War producing an efflorescence of egalitarian thought in Whiggery, and now a strong corporate Whiggery was able to dip its ambitions...Freedom from state control went hand in hand with the religion of opportunity, which in the broadest sense democratized economic power and made it acceptable to the egalitarian ethos of a liberal society. Technically, of course, this correlation was not essential. One could have the Horatio Alger dream functioning in the context of the old Whig paternalism: Ragged Dick could dream of making his million in a business fostered by the federal government itself, and we cannot excuse Hamilton from his failure to grasp the Alger secret by referring to the state of the American economy. There was sheer blindness, sheer failure to understand America, in the Hamiltonian attitude. At the same time the capacity of Whiggery to dispense with the state, or at least with a portion of the state, did make certain things possible...."

Daniel J. Elazar discusses the implications of land grant programs to aid in the construction of the railroads; the expansion of federal technical assistance to the states and the emergence of large-scale federal domestic programs. "The largest land-grant program of the period was deigned to aid in the construction of railroads under state supervision and, after 1862, under direct federal supervision in the western territories. Federal technical assistance to the states and localities was oriented toward improving state and local programs that were, themselves, designed to encourage economic growth.l In the decades immediately preceding the War, this technical assistance was largely confined to such tasks as helping city officials plan harbor-improvement projects...After the war, technical assistance expanded into other fields, particularly those relating to agricultural improvements and the geological surveys designed to uncover new mineral wealth...All this government expansion was accomplished in the generation between 1847 and 1877...

"...With all the expansion of government programs between 1847 and 1877, the character of government efforts remained substantially the same-supportive of private enterprise and industrialization, through government subsidization for developmental purposes...Beginning with the mid 1870's, however, government began to assume an active regulatory role as well...

"The expansion of federal domestic programs, which began around the middle of the century, reached such a point during the War years that one could easily call Lincoln's presidency the "New Deal" of the 1860's (a term used, curiously enough, by a Raleigh, North Carolina editor in march 1865 as an argument to encourage his state to voluntarily rejoin the Union. In the space of four years, the President and Congress created a bundle of programs whose central effect was to reassert an American conception of the role of government in the economy in a manner consonant with the new industrialization.

"Among the measures enacted between 1861 and 1865were (1) the National Banking Act of 18643 (with amending acts in 1864, 1865 and 1866), which created a national banking system and a national currency; (2) the Morrill Land-Grant College Act of 1862, which by providing for the establishment of college specifically devoted to education n 'agriculture and the mechanic arts' was ultimately to play a major role in developing the pool of skilled personnel needed to man the institutions of the new economy; (3) the great transcontinental railroad land grants of 1862, 1863 and 1864, which were to bind the continent together and make possible the postwar conquest of the last of the land frontier and (4) the Homestead Act of 1862, which by providing virtually free land in the greater West for all takers, shaped the character of the last great agricultural frontier. An income tax was levied for the first time in 1861 and national paper currency was first issued that same year, setting the stage for reformer-conservative conflicts over national tax and fiscal policies for the next generation. In 1864 the Contract Labor Act was passed, providing for licensed recruitment of European laborers to man the nation's new industrial plant. That same year congress granted California the Yosemite lands for the express purpose of creating a public nature preserve..A number of new federal bureaus were created, among them the Department of Agriculture (1862), the Bureau of Printing and Engraving (1862), the Office of Comptroller of the Currency (1863) and the Office of Immigration (1864). In 1863 Congress created the National Academy of Sciences, initially to screen technological innovations to ascertain their usefulness for the war effort...The Morrill Tariff of 1861 restored the protectionist approach to tariff policy and inaugurated two generations of federal subsidy for domestic manufacturing via the high tariff...Though the bulk of the new federal programs were inaugurated during the War years, the last actions of this "New Deal" came in the postwar period. In 1866 the Mining Claims Act was passed, opening the public domain to mining claims."

State government also expanded in the Civil War era. "Construction of the transcontinental railroads also began in earnest after the War in conjunction with redoubled state efforts to build connecting lines both in the Mississippi Valley and on the West Coast, utilizing other Federal land grants couple with local bond issues to accomplish the task. The federal-state partnership in railroad construction had developed in the 1850's in Michigan, Illinois, Alabama and points west, but it was not until the postwar period that this partnership was to bear its greatest fruit. Though new land grants were made by Congress after 1871, the implementation of the program inaugurated by the grants made between 1850 and that year occupied the next thirty years

"(D)uring this period...several of the larger northeastern states began to experiment in new areas of government economic regulation. Again let me cite some random examples. In 1867 New York enacted the first of several tenement house laws designed to ameliorate the terrible living conditions in parts of New York City. These laws, ineffectual as they turned out to be, represented the first effort in the nation to come to grips with the problem of urban housing. That city, two years earlier, had established the nation's first professional fire department...

"In 1869 Massachusetts created the nation's first state board of health and first bureau of labor. During the 1860s the Bay State was in the vanguard of regulation pioneers, experimenting with government intervention in the fields of insurance, banking and railroads. These three fields also attracted the attention of states in other parts of the country and were the first to be regulated on anything like a nationwide basis...

"The increase in the over-all scope of local activity is nowhere better illustrated than in the great rise in municipal debt between 1866 and 1876...In 1866 the total debt of the nation's 130 largest cities was $221,300,000. Ten years later it was $644,400,000...

"It is likely that the Civil War was most helpful in adjusting American public opinion to government expenditure of large sums of money. Teaching the American people that government could legitimately spend on a grand scale..was extremely important in the short run and in the long run...the changes that took place in the Civil War generation did not so much lead to an increase in the role of the federal government as they did to an increase in the role of all levels of government in the nation's economy..."

Louis Hartz, however, took issue with Elazar's argument (p. 109): "Are you to extract form this evidence the conclusion that in fact the concept and the experience of state action in the economic sphere expanded in and through and after the Civil War as compared to the pre-Civil War period? I would reject that proposition even in the face of your evidence...The period before the Civil War, the period of the 1820s and the 1830s, took it as an accepted fact that most states could regulate working conditions on a broad scale. The Colonial period, under mercantilist regulations, took it for granted that an invasion of the sphere of economic enterprise by the state was legitimate, and indeed the state did implement such an invasion. Now after the Civil War, as a result of certain judicial decisions, this was held to be illegitimate, and much regulation which had been accepted before was dodged...

Elazar responds to Hartz: "I was confirming your point that there was almost a derogration of government activity at this time, although in fact government was actually increasing. However, it was supportive activity rather than regulatory activity...It was not until after the Civil War generation--after Justice Waite, for example left the Court in the late 1880s--that the notions of the Fourteenth Amendment emobided in the Slaughterhouse Cases were adjusted by the new majority on the Court so as to write the new corporation-endorsed doctrine of laissez faire nto consitutional law. Up until this period, of course, it was still assumed that regulation was permissible...

The final article in this fine book that I will discuss is Alfrd D. Chandler's "Organziation of Manufacturing and Transportation". Chandler argues that "the simulataneous adoption of three methods of communication in the dozen or so years before the Civil War did make an enormous difference and so become an initiator of important institutional changes. I would like to substantiate this thesis--that is, of the signficance of the transportation revolution in the dozen or so years before the Civil War--by focusing on the coming ot two important institutional forms: one, the use of the factory for the mass production of durable goods, and the other, the use of the corporation as an administrative device for the managing and controlling of large amounts of men, money and materials."

The transportation revolution involved the widespread adoption of the railroad, telegraph and steamship, which expanded the market between 1847 and 1854. "Beside increasing the volume and regularity of transportation, adding to the national income and beocming a brand new market for American industry, they created new patterns of economic an dbusiness action and new institutional forms...The massive financial requirements of the railroads caused the centralizing and institutionalizing of the nation's investment market in New York City...sudden demand for a large number of new railroads in the 1850s, rather than the financial needs of the Civil War created modern Wall Street, with its national stock exchange, its international investment-banking houses, its brokers' offices and its speculative techniques."

Chandler's arguments are excellent and parallel those he makes elsewhere, as in his book Visible Hand.

Overall, the conference concluded that the Civil War itself did not change the economy much. Rather, it was the population, technological, banking, monetary and other shifts that were occurring independently of the War that made the nineteenth century one of rapid change.

Social Democracy and the Achievement Motive

There may be a deepening rift between American culture and its political structure. The cause is the shift from what Louis Hartz calls the Horatio Alger psychology of late nineteenth century America to the credentialism and "rationalization" that Progressivism initiated in the early twentieth century. I put rationalization in quotes because although the Progressives and their predecessors, the Mugwumps, along with early management theorists like Frederick Winslow Taylor and Fayol believed that bureaucracy, tight structure, merit-based systems and the like fostered efficiency, this was only a partial truth. Merit and structure foster efficiency where change is limited but may not be so important where change is rapid. Also, the measurement of ability is riddled with error, even when it is done properly, which it rarely is. The best measures of ability explain 25-30 percent of the variance in performance for a specific job. There has never been any serious effort to predict long-term, say life-long achievement. There are measures that may predict future success, but the book "Millionaire Next Door" suggests that the key variables, ethics, time preference, thrift, interpersonal skills, type B personality, and a stable family are not generally discussed in the personnel psychology literature or tangentially so. But most firms do not utilize valid criteria in hiring. So even the modicum of rationality that the Progressives advocate have not been implemented in most firms.

More importantly, American society has chosen to replace achievement and market success with college and graduate school diplomas in making selection decisions. This removes achievement from the equation, and stratifies society. Part of selection into college is family background, and part is IQ as tested by the various scholastic aptitude tests. Neither of these is identical with achievement. The correlation between IQ and job performance is about .55, which means that about 30 percent of the variance in job performance is due to IQ, 70% is not. The correlation becomes much weaker when one looks at life success over the long term. Success and short-term job performance are two different things. Ethics and the Aristotelian virtues (courage, prudence justice and sophrosunae, self-control, balance or moderation) play a significant role over the long term. The point isn't to diminish the importance of IQ or raise the importance of ethics. Rather, the point is that structure rather than market have increasingly predetermined outcomes, and rough measures of potential rather than human excellence have been rewarded. In the nineteenth century Whig philosophers could argue that wealth reflected religious or moral virtue. In the twentieth century, one can argue that wealth reflects gaming some corporate HR department's slapdash interview process or the Scholastic Aptitude Test, which is only a hair better.

Thus, rather than achievement creating economic success, Progressivism decreed that success would be administered. The attack on achievement that began with the Progressive movement's emphasis on rationalized human resource management criteria and the related emphasis on professional degrees was carried forward by the social democracy of the New Deal, which reflected the ultimate fulfillment of the Progressives' agenda. The New Deal established the paradigm that experts can rationally determine the equitable distribution of wealth; that the very wealthy can retain their wealth intergenerationally through family trusts but that up-and-coming entrepreneurs would be heavily taxed upon death; that the use of coercion in the redistribution of wealth is acceptable; that the monetary system can and should be used to redistribute wealth as well as various compulsory welfare systems, such as social security and unemployment insurance.

The "conservative" attack on the New Deal focused on the unemployment insurance. In effect, the Democrats forced the Republicans into the same corner that Jefferson forced Hamilton, and the Republicans took the bait. The Republicans did not frame their complaints about the New Deal in terms of its bias toward the wealthy, in part because the Democrats were able to sufficiently cloak the bias by throwing up red flags that likely they anticipated the Republicans would charge. Social insurance is a small matter, and it could have been done voluntarily as many firms such as General Electric had been demonstrating by the 1920s through welfare capitalism. The public works of the Hoover and Roosevelt administration were nothing new. They had characterized American government since the pre-revolutionary days, and if anything were more voluntaristic than the approach that was often used in colonial America: forced labor.

What changed during the Progressive era was increasing subsidization of big business (which had always been subsidized) through the establishment of the Federal Reserve Bank, which increasingly became a conduit for subsidization of big business at the expense of small and at the expense of taxpayers. This can be coupled with regulation such as securities regulation, pension regulation, and health and safety regulation which purported to help small investors and employees but served the purpose of excluding entrepreneurial initiative and further consolidating power in the hands of large corporations and banks, which have through the twentieth century proved decreasingly efficient.

Thus, Progressivism attacked the achievement motive in two ways. First, by rationalizing selection for elite jobs, first through civil service and then through inept but rigid personnel requirements involving college diplomas that reflect IQ and class but not achievement. Second, Progressivism instituted a progressive process of regulation whereby elites could secure their position in the name of helping underprivileged groups whose lot became increasingly worse the more the social democrats helped them.

As a result, and because the debate between the advocates of achievement and social democracy devolved into a debate between two parties that advocate social democracy, the Democrats and the Republicans, the political and economic elite, through Progressivism, slowly wrenched America's heart out of its casing, and ate it, blood dripping from its Progressive chin. In effect, in the twentieth century Progressivism reversed the democratic and laissez-faire achievements of the nineteenth.

Louis Hartz wrote the following about those nineteenth century achievements:

"Freedom from state control went hand in hand with the religion of opportunity, which in the broadest sense democratized economic power and made it acceptable to the egalitarian ethos of a liberal society. Technically, of course, this correlation was not essential. One could have the Horatio Alger dream functioning in the context of the old Whig paternalism: Ragged Dick could dream of making his million in a business fostered by the government itself, and we cannot excuse Hamilton from his failure to grasp the Alger secret by referring to the state of the American economy. There was sheer blindness, sheer failure to understand America in the Hamiltonian attitude. At the same time the capacity of Whiggery to dispense with the state, or at least a portion of the state, did make certain things possible. One was a full appropriation, or perhaps one should continue to say "confusion" of the Jeffersonian and Jacksonian symbolism. That symbolism had assailed the state for granting the corporate charter and thus interfering with individual enterprise. Now, with the reliance on the state diminished, the capture of this symbolism was facilitated. The granting of the corporate charter could be confused with corporate regulation, the corporation could be confused with the individual, and Jackson could be turned inside out. The antagonism of state and individual, originally created to disadvantage the corporation, could be twisted to its defense. Down to the present day it is the genius of this achievement to convert the ideological Jefferson into his own worst enemy."*

Hartz's point is brilliant although his history is inaccurate in several ways. The point is that the corporation became a vehicle for individual achievement. But through a process of increasing government support as well as economies of scale and foreign trade advantages, the corporation became ever-increasing in size. Rather than demand that corporations prove themselves in the market, the Progressive era established exponentially greater supports for big business. This enhanced support had a range of economic and social effects. One of these was an attack on the achievement motive through credentialism, regulatory obstacles to new enterprise ideas, and the inheritance tax, which excludes the economic elite through the institute of family trusts, restricting the inter-generational evolution of family firms.


*Louis Hartz, "Government-Business Relations" in Economic Change in the Civil War Era: Proceedings of a Conference on American Institutional Change, 1850-1873, and the Impact of the Civil War Held March 12-14 1964. David T. Gilchrist and W. David Lewis, editors. Greenville, Delaware: Eleutherian Mills-Hagley Foundation.

Louis Hartz's Liberal Tradition in America and the Locke-Step Theory of American Liberalism

Louis Hartz. The Liberal Tradition in America: A new concept of liberal community that relates American politics and political thought to the mainstream of Western history. Winner of the Woodrow Wilson Foundation Award. New York: Harcourt, Brace and World, Inc. 1955. Available from Amazon.com for $10.20, used and new $0.42.

Louis Hartz's Liberal Tradition in America is a brilliant, riveting and erudite study of the history of Lockean liberal ideology in America. Hartz argues that all of American history to his writing in the early 1950s was characterized by a commitment to Lockean liberalism. There are paradoxes to this argument, though, because in order to make this claim Hartz has to explain away elements of the New Deal that were not Lockean in nature and overlook elements of the Progressive era that were also illiberal. Hartz's argument is almost Freudian. Much as Freud claimed that frustrated sexual impulse is behind myriad behaviors, Hartz claims that frustrated liberal impulses are behind myriad behaviors. This single-factor theory fails to work for Freud, but it becomes silly despite the brilliance of Hartz's exegesis. Moreover, Hartz himself is contemptuous of what he several times calls Americans' "irrational liberalism", which in his view is psychologically sublimated whenever a non-Lockean policy is devised.

Hartz's writing is unusually facile and abstract and so susceptible to over-generalization. Moreover, he focuses on ideology as opposed to economic fact. This problem becomes acute in his discussion of the twentieth century. The chapters in the book that discuss the Federalist and Whig periods are the most interesting. He fails to anticipate the possibility that Progressivism was as much a Whiggish doctrine as was late 19th century Republicanism. Somehow, he sees the Republicans as having made a transition from the Whiggery of McKinley to the Progressivism of Theodore Roosevelt and then back to the Whiggery of Harding, Coolidge and Hoover (p. 261). He misconstrues Hoover, failing to grasp that Hoover was as much an advocate of New Deal-style solutions as Franklin D. Roosevelt was, an insight that Murray N. Rothbard develops in his and Ronald Radosh's New History of Leviathon.

Perhaps I am committing a present-orientation fallacy since the benefit of Rothbard's, Martin J. Sklar's, Ronald Radosh's and Gabriel Kolko's libertarian and New Left reinterpretation of Progressivism had yet to be written at the time that Hartz wrote. But there is little in the record to enable him to argue, as he does, that Hoover and Harding were "Whigs" as opposed to Wilson. But he repeatedly calls Hoover a Whig, contrasting him with FDR, yet Hoover was a more left-wing Progressive than was Wilson. Moreover, Wilson was not the most characteristic Progressive, and Theodore Roosevelt was to Wilson's left, which is why Roosevelt ran against Taft, facilitating Wilson's victory. Teddy Roosevelt's Progressivism was not as Lockean and individualist as Hartz argues that Wilson's was. Moreover, the practical economic effects of the four Progressive administrations, Roosevelt, Taft, Wilson and Hoover were different from the democratic effects that Hartz assumes. Nor need we interpret FDR's New Deal in anything other than Whiggish terms. Nor is there any real reason to claim, as Hartz does, that a secret Lockean impulse was beyond FDR's statist policies. Roosevelt abolished restrictions on the central bank, a policy very much in the Whiggish and Federalist tradition, and this was the most far-reaching policy of the New Deal.

As with his discussion of the Progressives, Hartz takes the assertions of Harding at face value. He claims that Progressive legislation was repealed, but this is hardly so. Workers' compensation laws exist today in all of the states, and most or all of them were established in the Progressive era. Harding made no effort to repeal the Progressive laws concerning the Federal Trade Commission and the railroad regulation, and he added a few boondoggles of his own, despite the conservative rhetoric that Hartz takes at face value. Likewise, the gulf between FDR's practical influence in abolishing the gold standard and reinforcing the privileges of Wall Street and his democratic rhetoric are not sufficiently recognized.

The book's weakness with respect to Progressivism and the New Deal is that Hartz fails to disentangle the ideological rhetoric of the Progressives and FDR from the practical economic realities underlying their reforms. Although Hartz makes the point several times that much of the Progressive and New Deal reform had the effect of shoring up business, he overlooks the Whiggish long term effects of both movements.

Today's political milieu is dominated by a separation of rhetoric from effect, and so Hartz's argument concerning the nineteenth century has important implications. He is willing to view the Whigs and their Republican descendants as manipulative and opportunistic in the nineteenth century, but somehow in the twentieth he takes the claims of the Progressives and the New Dealers at face value, adding a naive belief in central planning and government to the mix and the cliched claim that the New Deal was pragmatic.

Hartz claims that liberalism characterizes all of American ideological history, and then argues that FDR's New Deal proves this because even though its policies were pragmatic and not Lockean, it retained an underlying belief in Lockean liberalism that was "sublimated" (pp. 270-1):

"For when the moral cosmology of New Dealism sank beneath the surface, what appeared, of course, was that happy pragmatism which usually refused to concern itself with moral issues at all. And this, in turn, permitted the American democrat to go about solving his problems without the serious twinges of conscience which would surely have appeared had he felt that his Lockian Americanism was at stake...the New Dealers were themselves taken in by the process involved, being proud of their pragmatism and seeing no more clearly than the great Dewey himself the absolute moral base on which it rested."

The trouble is, there is a reality against which ideas need to be tested. Ideas result in policies. If the policies are not Lockean, the ideas cannot be said to be so. The claim that there is an underlying Lockean morality is not a falsifiable one.

For all his literary and philosophical brilliance, Hartz fails to define liberalism coherently. Thus, he contradicts himself on various occasions. Liberalism is first and foremost a philosophy involving freedom. The Latin liberalis means "of freedom". Freedom means that an individual is free from coercion. To the extent that any doctrine involves coercion, it is no longer liberal. Progressive policies like the income tax, the Federal Reserve Bank and railroad rate setting are not liberal and are not motivated by liberalism. Nor is the Red Scare, the Palmer raids or McCarthyism. They are reflections of special interest manipulation of the state on the one hand, and emotional, democratic impulse on the other, not liberalism.

Hartz's ideas make an interesting contrast to those of Reinhard Bendix in his Work and Authority in Industry. Bendix argued that the Protestant idea of a pre-ordained elect that is chosen for salvation carries forward to business, as Max von Weber argued in his Protestantism and the Spirit of Capitalism. In Hartz's scheme, the idea of an elite carries forward to Hamilton but not to Jefferson. Hamiltonian Federalism fails because it rejects democracy in favor of the elitist Federalist doctrine. The Whigs recreate the elitist Federalist doctrine, but fail to elect candidates until William Henry Harrison took a different tack in 1840, claiming a common upbringing. Lincoln too, really the fifth Whig (and of course first Republican) president after Harrison, Tyler, Taylor and Fillmore emphasized his log cabin upbringing. Thus the Whigs created a "Horatio Alger" ideology. All Americans can be capitalists and all can be landowners. This capitalist vision enabled the Whigs and their Republican descendants to win two ante-bellum elections and to dominate national politics after the Civil War. In contrast, Bendix emphasizes the transformation of managerial justification of power from the religious to the moral justification associated with the common sense philosophers of the early nineteenth century to the social Darwinism of the late nineteenth century.

Where Bendix (who wrote his book a few years after Hartz) and Hartz diverge is with respect to the scientific management and human relations school eras. Scientific management was very much an ideology of the Progressives, while the Human Relations School was dominant in management theory from the 1930s through the 1950s, what might be called the New Deal period. In contrast to Hartz, who accepts the New Deal at face value, Bendix argues that scientific management and the human relations schools were but continuations of the elitist ideologies of the late eighteenth and nineteenth centuries. While sociologists and historians criticize Progressive and New Deal managerial theories as elitist, they reserve such judgments from the political power holders such as TR, Wilson, Hoover and FDR.

Hartz argues that to understand American political ideology it is crucial to emphasize the lack of a feudal history in the United States. Without feudalism, there is no socialism, for the power of conservative feudal aristocrats forces their opponents to think in centralizing terms. (p. 5; 43) "One of the central characteristics of a non feudal society is that it lacks a genuine revolutionary tradition..." He adds (pp. 9-10):

"...it is a remarkable force: this fixed, dogmatic liberalism of a liberal way of life. It is the secret root from which have sprung may of the most puzzling of American phenomena...At bottom it is riddled with paradox. Here is a Lockian doctrine which in the West as a whole is a symbol of rationalism, yet in America the devotion to it has been so irrational that it has not even been recognized for what it is: liberalism....I believe that this is the basic ethical problem of a liberal society: not the danger of the majority which has been its conscious fear, but the danger of unanimity, which has slumbered unconsciously behind it..."

He adds (p. 12): "Do we not find here, hidden away at the base of the American mind, one of the reasons why its legalism has been so imperfect a barrier against the violent moods of its mass Lockianism?"

This question illustrates the basis for my criticisms. Locke emphasizes natural rights and liberal limitation on the state. The Palmer raids, McCarthyism and similar examples of democratic hysteria are the antithesis of Locke. Any logician worth is salt will tell you that if you say that what is not Locke is Locke, then any conclusion can be drawn. Hartz over-strains his insight. America is primarily Lockean, but it falls prey to anti-liberal, democratic patterns at times. The anti-liberal patterns such as McCarthyism are democratic, not Lockean. There is no need to claim that the Tennessee Valley Authority is liberal because of unconscious libido-like liberal impulses.

The best part of this book, and it is truly breathtaking, is in the second section on the development of the liberal idea in combination with elitism. America was the freest country in the world, much freer than it is now, before the Revolutionary War. Hence, there was no need to overturn an aristocracy (p. 39-55):

"When men have already inherited the freest society in the world, and are grateful for it, their thinking is bound to be of the soldier type. America has been a sober nation, but it has also been a comfortable one, and the two points are by no means unrelated...the revolutionaries of 1776 had inherited the freest society in the world...It gave them, in the first place, an appearance of outright conservatism. We know, of course, that most liberals of the eighteenth century, from Bentham to Quesnay, were bitter opponents of history, posing a sharp antithesis between nature and tradition. And it is an equally familiar fact that their adversaries, including Burke and Balckstone, sought to break down this antithesis by identifying natural law with the slow evolution of the past...The past had been good to the Americans, and they knew it. Instead of inspiring them to the fury of Bentham and Voltaire, it often produced a mystical sense of Providential guidance...The trouble they had with England did not alter this outlook...The result was that the traditionalism of the Americans, like a pure freak of logic, often bore amazing marks of anti historical rationalism...one of the secrets of the American character: a capacity to combine rock-ribbed traditionalism with high inventiveness, ancestor worship with ardent optimism....men began to be held together, not by the knowledge that they were different parts of a corporate whole, but by the knowledge that they were similar participants in a uniform way of life--by that pleasing uniformity of decent competence."

Thus, the liberal norm penetrates us all (p. 56). Moreover, and this is part of the excessively Freudian part of Hartz's thinking (p. 59), "American pragmatism has always been deceptive because glacierlike, it has rested on miles of submerged conviction and the conformitarian ethos which that conviction generates has always been infuriating because it has refused to pay its critics the compliment of an argument." While I think he's right and that America is conformist and there is a Lockean impulse, it is wrong to conclude that imposition of securities regulation or internment of the Japanese during the Second World War reflect liberalism. A is not not A.

Hartz's comparative methodology (he uses France, England and Germany as comparison points) is off-the-charts brilliant. Hartz's familiarity with European and American history is impressive. He compares American and European liberalism and concludes that part of the reason socialism never appealed to Americans was that there was never any feudalism here (p.78). In America, the two basic impulses are toward democracy and toward capitalism (p. 89). In early American history, the Federalists saw the needs of the capitalist in opposition to the democracy. The democratic tradition of Jackson, which was therefore able to destroy it, formulated a philosophy which seemed to deny its faith in capitalism. But rather than allow the petit-bourgeoisie, the peasant and the worker to oppose capitalism, American Whiggery transformed the peasant into the "capitalist farmer", the worker and petit bourgeoisie into the "incipient entrepreneur" (p. 92). "For" (p. 94) "if the American democrat was unconquerable, he was so only because he shared the liberal norm. Thus what (pre-1840) Whiggery should have done, instead of opposing the American democrat was to ally itself with him..." (p. 95) "In America there was no mob: the American democrat was as liberal as the Whigs who denounced him...the quick emergence of democracy was inherent in the American liberal community."

But the American democrat was liberal and the Whigs' fear of him "coincided with the American democrats' fear of himself, for he no more than they, understood the liberal world that brought him to power and hence could not see any better than they could that in such a world the majority would not want to annihilate the individualist way of life." Thus, Jacksonian democracy did not resist the establishment of the Supreme Court, the Constitution and the law as a limit on democratic power. But while the Federalists and Whigs denounced the American democrat, the people were as liberal as they were (p. 106). Whiggery could only control the democratic American "by uniting with him in a capitalist movement" (p. 108). In the "age of Harrison" the Whigs "transformed" "the egalitarian thunder of the Democrats" (p. 111) by combining Hamiltonian capitalism with Jeffersonian equality. "The result was to electrify the democratic individual with a passion for great achievement and to produce a personality type that was neither Hamiltonian nor Jeffersonian but a strange mixture of them both: the hero of Horatio Alger...A new social outlook took shape, dynamic, restless, competitive, and because it united the two great traditions of the American liberal community, its impact ultimately became enormous" (p. 112). Hartz quotes Tocqueville: "what astonishes me in the United states is not so much the marvelous grandeur of some undertakings as the innumerable multitude of small ones" (p. 115). Farmer and factory worker were absorbed into the capitalist ethos (p. 119). Thus, the American character is rooted in small entrepreneurship. Americans have "a certain smallness of entrepreneurial preoccupation which has never been glamorous in Western thought." (p. 116).

However, there is tension between the democrats' attribution of the growth of big business on the state (pp. 137-8):

"The clash between capitalist hunger and anti capitalist principle reached its climax, of course, on the banking question. Charles A. Dana, a disciple of the easy credit schemes of Proudhon, lamented that American democracy wages a 'relentless war' on the banks of discount and circulation'...But the war was more relentless in theory than in practice...The hard money dreams of Taylor and Jackson were shattered by rising entrepreneurs, Western farmers and private bankers who favored the assault on Biddle not in order to limit credit but rather to expand it at the hands of local banks. This type of pressure had been exerted even against the First Bank of the United States under Jefferson. By the time of Jackson, America's acquisitive democracy,--its millions of go getting Americans as Hammond puts it--overwhelmed the concept of credit control. The speculative boom of the thirties is an excellent commentary on the get-rich-quick compulsion of the American democrat."

The outcome is that Whigs become like Democrats and Democrats like Whigs. "Locke dominates American political thought as no thinker anywhere dominates the political thought of a nation" (p.140).

In chapters six and seven Hartz discusses how the southern slave interests such as Calhoun and Fitzhugh attempted to subvert Locke and assert feudalist, conservative or even socialistic theories in defense of slavery. The key point in this interesting discussion is that Lockean liberalism destroyed their ideologies (p. 199):

"Here surely is the final irony in the fate of the South's feudal Enlightenment. It was not even buried by an elitist liberalism; it was buried by a democratic liberalism. It was not even put to rest by a man as sympathetic as Hamilton; it was put to rest by Andrew Carnegie and Horatio Alger, the children of Lincoln's achievement. If political theorists turn in their graves, Fitzhugh has turned many times, but could anything have bothered him so much as the sight of Jed the Newsboy walking unconsciously over his corpse?"

He begins chapter eight (entitled "The New Whiggery: Democratic Capitalism", p. 203):

"Unfurling the golden banner of Horatio Alger, American Whiggery marched into the Promised Land after the Civil War and did not really leave it until the crash of 1929."

"Two moods then run through the new Whig doctrine: one rational, the other irrational; one liberal, the other Americanistic. The difference bewtween them is the difference between William Graham Sumner and the American Legion." American
"Whigs" responded to the threats of Progressive and socialism. American Whiggery (p. 215):

"had itself been largely resopnsible for the tradition of economic policy it now proceeded to bury and destroy. It had been the American democrat, with Jefferson, who in theory at least had opposed it and had developed the closest thing to a laissez faire dogma that the country had produced. The principle at work here was obvious enough: big captalism was able now, with the major exception of the tariff, to dispense with the Hamiltonian promotionalism on which it had relied in the days of its weakness, especially since the corporate technique had become established and important. And so, if in the age of Jackson the American Whigs looked like the Corn Law monopolists of England, in the age of Carnegie they were prepared to look like the John Brights who had assailed those monopolists. One can trace this process of spiritual conversion and dramatic flip-flop with a brilliant clarity within the American states where on the eve of the Civil War the Hamiltonian interests who had originally demanded many public inestments, especially in banking and transportation, proceeded to deride them, producing precedent after precedent for the laissez-faire constitutional law so famous in the later time.

"What made the matter even more complicated, however, was that when Whiggery shifed from Carey to Carnegie it proceeded to use the ancient arguments of the American democrat himself, thus gravely confounding this figure. He, of course, in assailing state action, had opposed monopoly, which meant particularly the corporate charter. Indeed, lacking any real understanding of social oppression, he had defined all nonpolitical tyranny in terms of inequitable political decisions. Now, with the corporate charter universally accepted, due in part to his own ultimate drive for general incorporation, and with a huge trust growth being built upon it, he found himself confronted in his effort to solve a real social problem with the very symbols he had used...Who was the real disciple of Jefferson, the man who wanted the Anti-Trust Act or the man who opposed it?"

Hartz goes on to argue that the Progressives (p. 229):

"advanced a version of the national Alger theme itself, based on trust busting and boss busting, which sounded as if he were smashing the national idols, but which actually meant that he was bowing before them on a different plane. Wilson, crusading Wilson, reveals even more vividly than Al Smith the pathetic enslavement of the Progressive tradition to the Americanism that Whiggery had uncovered...the Algerism of the Progressives was no more due in the last analysis to the boom of the time than was the Algerism of Whiggery...but after the crash of 1929 it would not disappear but would go underground to serve as the secret moral cosmos on the basis of which New Deal pragmatism moved."

Hartz is irritated that the Progressives were not more socialistic. They emphasized trusts because (p. 232) "If the trust were at the heart of all evil, then Locke could be kept intact simply by smashing it..." and (p.236) "The Progressives failed because, being children of the American absolutism, they could not get outside of it and so without fully seeing that Locke was involved everywhere, they built their analysis around a titanic struggle between "conservative" and "radical" which had little relevance to Western politics as a whole."

The Progressive movement's democratic impulse was, in Hartz's view, Lockean. I do not see the connection because Locke argues for natural rights and against unlimited democracy, and Herbert Croly and the Progressives argued against natural rights and for unlimited democracy. The Progressives were the democrats whom Hamilton feared, but they used the argument of democracy on behalf of underlying Hamiltonian ends: the furtherance of big business interests. Rothbard, Sklar and Radosh discuss this and I will review their book in my next blog. I don't think that Hartz is right in his claim (p. 241, bottom) that "wealth was inexorably being concentrated".

Chapter Ten concerns "The New Deal". Hartz labors under the erroneous belief of the pre-Friedman and Rothbard era that the Depression was an outcome of capitalism rather than of government and/or Federal Reserve Bank intervention. He begins by claimng that "If the Great Depression of the 'thirties suggested anything, it was that the failure of socialism in America stemmed from the ideologic power of the national irrational liberalism rather than from economic circumstance." Actually, the reverse is true. The irrational, socialistic response of the New Deal to failure of the Fed and President Herbert Hoover's interventionist, New Deal style policy program caused the Depression, and the irrational policies of the Roosevelt administration intensified it in a kind of hyper-irrational, anti-pragmatism. The divergence of narratives here suggests that American history has not been so Locke-step as Hartz claims. Moreover, Hartz's argument of the consistency of liberalism falls apart. He writes (p. 260):

"The experimental mood of Roosevelt, in which Locke goes underground while problems are solved often in a non-Lockean way, wins out persistently. And who will deny that this, even more than the isolation of socialism, is a tribute to the irrational liberal faith of America? Eaating your cake and having it too is very rare in politics."

The problem is that America did not eat its cake. The New Deal started an illiberal pattern which has not been reversed and has spawned an increasingly intensifying government by special interest group brokerage and wealth transfers. The premise of the New Deal involved several layers of deception, not the least of which was the claim that Roosevelt's experimentation was helpful to the petit bourgeoisie and the poor, which it hardly was. There was a period of about 40 years during which wages increased somewhat more quickly on average than they did prior to 1932. But since 1971 the cumulative effect of the abolition of the gold standard and the New Deal policies have resulted in declining real wages and a dissolution of the American community into two warring camps, the advocates of intensification of the New Deal pattern in a socialistic direction, and those who continue to believe in the Lockean consensus. American elites have in large part dispensed with democratic liberalism. Whiggery has become dominant, but it is Whiggery cloaked in Progressive (Republican) rhetoric concerning efficiency and in New Deal or socialistic rhetoric concerning equity, income inequality and redistribution. Neither party has any interest in democracy, in Locke or in liberalism. Republican elites advocate perpetuation of the easy credit scheme in order to further wealth redistribution to Wall Street clientele, while Democratic elites, who are also in favor of loose monetary policy for the same reason, carry forward the monetary regime in social democratic robes.

Louis Hartz on Jefferson's Error

"(W)hat Jefferson was doing when he assailed the industrial worker was overlooking the magical alchemy of American life which was responsible for the very small liberal farmers that he loved. That alchemy, in addition to transforming passive peasants into dynamic liberal farmers, was going to transform bitter proletarians into incipient entrepreneurs. Jefferson emphasized the concrete fact of ownership of property which to be sure was not a characteristic of the industrial worker. But this was a kind of Marxian mistake, emphasizing economics at the price of thought, for the French peasant also owned property and he was far from being the enlightened liberal yeoman that Jefferson relied so heavily upon. The fact is, the liberalism of the American farmer was largely a psychological matter, a product of the spirit of Locke implanted in a new and nonfeudal world; and this spirit, freed as it was of the concept of class and the tyranny of ancient tradition, could infect the factory as well as it infected the land...Indeed, the irony of Jefferson's fear of an urban 'mob' is that he himself became its philosophic idol when it began to develop, and not merely in a general egalitarian sense: in the sense also of his theory of agrarian independence. The labor literature would not give up the old idea of yeoman free-holding..."

Louis Hartz, The Liberal Tradition in America. New York: Harcourt, Brace and World, 1955, pp. 122-3.

The Republicans' Whiggish Error

In Louis Hartz's Liberal Tradition in America* Hartz argues that all American ideology is ultimately liberal, to include the Progressives and the New Deal. Hartz's book was written right around the same time as William F. Buckley's God and Man at Yale. It would be interesting to hear how Hartz might have updated his argument in light of the predominance of European left wing and New Left ideology in today's universities. It is true that the elements of New Left ideology that seem to carry forward are in large part those that fit democratic liberalism, such as diversity. Nevertheless, it is also true that Americans have been increasingly indoctrinated in anti-liberal and anti-democratic rhetoric, such as support for ill-defined regulatory systems that benefit economic elites; emphasis on credentials developed by universities that economically support the same New Left ideologues; and a monetary system that is supportive of economic elites, to include the major universities, whose endowments have mushroomed under the Republicans, at the expense of the common working man, whose hourly wage has been decimated by the Keynesian economic policies that university professors have advocated since the 1930s.

Hartz's book is brilliant and perhaps it does not receive more attention is because of the increased emphasis on New Left solutions, and perhaps because he did not anticipate increased deference to elites by an American public that has been increasingly educated to do so. However, as a description of the main run of American history, to include the present, the book makes excellent points.

The history of the Whigs suggests why the Republican Party of the millennium has failed to capture the public's imagination. The Republicans cannot be an elitist party, that is, they cannot pander to the wealthy at the expense of the public. If they do the voters will, as they have, reject them. One of a number of turning points was Bill Frist's refusal to carry forward a law that would have limited federal support for states which permit private use eminent domain. Their failure do so in light of the case of New London v. Kelo captured the (in the early 19th century American sense) impulse of the Whigs.

In order to be successful, the Republicans must inspire the public with what Hartz calls the Alger myth. Americans are in large part desirous of economic opportunity. The Democrats have sacrificed the image of opportunity on the altar of special interest group politics and advocacy of wealth transfers to professional interest groups, real estate developers and Wall Street in the name of the poor. The Republicans cannot cloak the substance of their ideology in purely altruistic raiment because then America would have not two but one party, the Democratic. Nor can they, as they have done, adopt the 19th century Whiggish elitism that is contemptuous of the public. Rather, the Republicans must cloak their ideology in the raiment of economic opportunity. An ideology that capitalizes on such opportunity is believable only if it emphasizes and nurtures private property rights of individuals as against the state and special interests. As well, the Republicans must fathom the source of economic opportunity, which is free enterprise, without which entrepreneurs cannot execute new ideas.

Under George Bush and Bill Frist the Republican Party became a Whig Party, a party of economic elitism. The methodology it adopted was Federalist and Whiggish (in the nineteenth century American sense). It maintained and strengthened regulation; it supported central bank monetary expansion; and it sacrificed private property rights in the interest of frivolous, inept and too often corrupt big business, Wall Street and real estate schemes which have helped to bankrupt the nation.

Hamilton believed that there is a class of people, large commercial operators, who are best equipped to guide the economy. He was wrong. As all who have worked in the real world of industry know the best ideas come from the man or woman on the production line, not the executive. One example is that of Ray Kroc, the builder of McDonald's, who did not create most of the chief concepts that made McDonald's successful (with the exception of a strong emphasis on uniformity and quality of execution), from the concept of scientific management of fast food production to Ronald McDonald, to the firm's use of cash flows, to real estate investment in the stores, to the Big Mac to the Filet O Fish, almost all of McDonald's chief ideas came from franchisees or Kroc's employees.

If so, then why have the Republicans chosen to revert to the Hamiltonian fantasy of a big business elite that is able to guide the economy with freshly minted Federal Reserve counterfeit rather than the reality that the development of new ideas depends on entrepreneurs? The Kelo case brought the Republicans' Whiggish error home.

To quote Hartz (pp. 94-5):

"American Whiggery...could have transformed the very liability of the American liberal community into a tremendous asset. For if the American democrat was unconquerable, he was so only because he shared the liberal norm. And this meant two things: one, that he was not a real threat to Whiggery; and two, that Whiggery had much to offer him in the way of feeding his capitalist impulse. Thus what Whiggery should have done, instead of opposing the American democrat, was to ally itself with him...It should have made a big issue out of the unity of American life, the fact that all Americans were bitten with the capitalist ethos which it was trying to foster. It should, in other words, have developed some sort of theory of democratic capitalism which fit the Tocquevillian facts of American life.

"But this, as we know, is precisely what Whiggery failed to do until it saw the light in 1840, and indeed, in any large sense until the post-Civil War days of Horatio Alger and Andrew Carnegie. Over most of its early history, it pursued a thoroughly European policy, and instead of emphasizing what it had in common with the American democrat, it emphasized precisely what it did not have in common with him. Instead of wooing this giant, it chose, quite without any weapons, to fight him. This would be a high species of political heroism were it not associated with such massive empirical blindness. One can admire a man who will not truckle to the mob, even though the mob is sure to beat him, provided there is actually a mob in the first place. But in America there was no mob: the American democrat was as liberal as the Whigs who denounced him. Consequently the suicidal grandeur of Fisher Ames is tinged with a type of stupidity which makes admiration difficult. At best one can find in the Whigs a kind of quixotic pathos....They pursue the usual conservative strategies but are baffled and dumbfounded at every turn..."


*Louis Hartz, The Liberal Tradition in America. New York: Harcourt, Brace and World, 1955.