Reading Horatio Alger

I teach a senior seminar at Brooklyn College. The seminar's topic is success.  There are two views of success in American culture: the Jeffersonian, advocated by Thoreau, and the Hamiltonian, which has become the dominant vision of success. Progressivism and the Hamiltonian view of success, including consumerism, are intertwined.  America has made an error in overemphasizing the Hamiltonian view at the expense of the Jeffersonian view. Left wing politics is intimately linked to the Hamiltonian view: both depend on large scale, centralization, central bank control of the economy, large hierarchical structures to which pigeon-holed junior executives are expected to conform and to climb in order to achieve success.  The socialistic vision of a conformist, suppressive society where all are forced to work for the state and initiative is not only suppressed as currently but illegalized is an extreme application of the Hamiltonian/Whig model, one to which our president appears to be committed.

Louis Hartz (in The Liberal Tradition in America), like many, many writers, refers to the Horatio Alger model of success. When I read one of Alger's novels, Do and Dare: a Brave Boy's Fight for Fortune I was expecting to see a paradigm of the Hamiltonian model of success.  Alger died in 1899 in his late sixties, and he would have been one of the first Whigs (I am not certain that he was brought up as a Whig, but I imagine so because he came from Massachusetts from a Puritan background) to explicate the modern view of success as conformity to big business. 

But alas, Alger was a Jeffersonian, at least as he describes success in Do and Dare.  Elements of Alger's formulaic story line are, according to Wikipedia, a beneficent stranger, an antagonistic peer and a young man who suffers adversity and then succeeds.  These elements are present in Do and Dare.  The hero's mother is forced from her business by a selfish but honest businessman, whose son wrongly accuses the hero of having stolen merchandise. The beneficent stranger not only defends the hero, but then hires him to be his personal assistant. They travel to the wild west, where, after killing a couple of outlaws,  they meet a magazine writer who is decidedly Jeffersonian and also a success.   The beneficent stranger has inherited wealth but has no interest in business; he does, however, provide financing for the hero to invest in a mine.  The mine is successful, and with little care for its operations, the hero gains a windfall, pays back his beneficent supporter and employer, and then returns home to help his mother financially.

The book emphasizes two factors in success: (1) character and (2) luck. Alger pooh poohs lotteries, and emphasizes the importance of hard work, honesty, sobriety, and good interpersonal skills. In this he is in the Puritan tradition of Benjamin Franklin.  But success for Alger does not reflect power, rising in a hierarchy or manipulative business dealings, all of which are part of the Hamiltonian model.  Rather, he views money as a means to independence and business as a necessity that, he emphasizes, ought to minimized in importance, not maximized.

The Hamiltonian vision sees business as an end to itself. This is fundamentally anti-Aristotelian. Aristotle did not like business because he did not belive that there is a mean with respect to profit taking. The problem business faces is how to balance the quest for gain with objectives such as learning, personal development, raising a family and other contributions to society. 


One of the great strengths of Do and Dare is Alger's emphasis on character, an emphasis lacking in today's movies and books.  However, his whimsical depiction of a beneficent stranger who helps a poor rural 16-year old hero out of his financial problems is an unrealistic fantasy.  In using the phrase "Horatio Alger hero" we tend to refer to an economic dream or fantasy, but its application in today's world is very different from the more fluid world in which Alger lived.

Charles G. Koch's Market Based Management

I was pleased to receive an invitation to a market based management program hosted by the Charles G. Koch Charitable Foundation. In preparing for the conference I am taking a few days to read the materials the organizers have provided. Among these are Michael Polyani's essay "The Republic of Science," chapter two from Hayek's Law, Legislation and Liberty entitled "Cosmos and Taxis," Hayek's essay "Use of Knowledge in Society" (which I assign to my senior seminar students), and an excerpt from  Bastiat's essay "The Law."

Also included in the materials is Koch's book The Science of Success: How Market-Based Management Built the World's Largest Private Company.  The book is engaging and eminently readable. Koch describes the history of his firm and how he built his father's small oil industry services firm into the largest privately held company using basic principles of economics (specifically including the Austrian economics of Ludwig von Mises) and his philosophy of market based management.  Koch is perhaps too kind to his competitors. Few large firms are run using principles of economics, and big business tends to be inefficient and suppressive as a result.  Most of America's larger firms would not survive a competitive economy; if you doubt that, witness what happened to the automobile industry once faced with foreign competition.

Koch's market based management philosophy includes five dimensions: vision, virtue and talents, knowledge processes, decision rights and incentives.  Koch's focus and hard nosed thinking, which he attributes to his philosophy and to application of economics to management decision making, have enabled his firm to grow into a $100 billion (in sales) superstar, a nimble, huge company that keeps on growing.  His recent acquisition of Georgia Pacific for $23 billion has been a success, and success is rare in the area of mergers and acquisitions.

I am looking forward to the Koch conference. The attendees are a very impressive group and the material promises to be of great interest.

Student Defends Ron Paul

When I attended the Ron Paul fundraising event in Manhattan last April I was impressed at the crowd's youth. Given the failure of Progressivism and the ideology advocated in American universities, students are trying to figure out why America has failed now, but was successful for 120 years prior to the adoption of Progressivism in the early 20th century. This young man offers articulate responses to the legacy media's spin about Ron Paul. 

Letter to Michele Bachmann Concerning the Fed

PO Box 130

West Shokan, NY 12494

June 26, 2011

Michele Bachmann

103 Cannon HOB

Washington, DC 20515

Dear Ms. Bachmann:

Please take a position concerning the Federal Reserve Bank and the legal tender law.

I recently gave a small contribution to your campaign and to Ron Paul's and Gary Johnson's. I am not certain that I will vote for a Republican in November 2012, though.  One reason I contributed to you is the legacy media's bias against you.

In order for me to continue to support your candidacy I will need to know where you stand on the Federal Reserve Bank. You need to be specific.  Stephen Moore's recent Wall Street Journal article* about you was unconvincing. Moore indicates that you would appoint a different Fed chairman than Bernanke, not that you would eliminate the post altogether. I appreciate your opposition to TARP.  But the headline referred to Ludwig von Mises while the authors whom you admire include Art Laffer and Milton Friedman.  Milton Friedman's monetarism and Art Laffer's supply-side economics depend on big government.  Perhaps you might base your position on Hayek's essay "Denationalisation of Money." 

I await your position on the Fed, which is the decisive one concerning big government, for the Fed is a necessary and sufficient condition for big government.

Sincerely,

Mitchell Langbert, Ph.D.

*http://online.wsj.com/article/SB10001424052702304259304576375491103635726.html?KEYWORDS=bachmann