A Commercial Republic
America’s Enduring Debate Over Democratic Capitalism
American Political Thought Series
Lawrence, Kansas: University Press of Kansas, 2014
Hardcover. xiv+287 pages. ISBN 978-0700619719. $34.95
Reviewed by Jeffrey H. Bloodworth
Gannon University (Erie, Pennsylvania)
Democralism: Heterodox History, Free Market Conservatism & the New Marxists
Daniel Bell was half right; Marxism and fascism are dead. In Bell’s iconic 1960 work, The End of Ideology, he argued that those “self-contained humanistic ideologies” had run their course. Prescient as that insight was, the impetus for comprehensive answers to society’s vexing issues remained very much alive. Indeed, communism’s demise emboldened a uniquely American “self-contained humanistic ideology”: free market conservatism.
Similar to the stale Marxist-Leninism of yesteryear, the right-wing commentariat shares a common, unthinking dogma: the free market cures all that ails you. From the Great Recession to healthcare, Rush Limbaugh, Glenn Beck, Fox News et al. offer one remedy: free market conservatism. The trio has convinced their audience that these intercessions represent a modern anomaly . In A Commercial Republic, Mike O’Connor takes direct aim at these doctrinal interpretations of the federal role in American economic life.
A Commercial Republic examines the relationship between democracy and capitalism. It does so by chronicling the federal government’s intercessions into the economy. A sprawling work of intellectual history, O’Connor has penned a readable and important book. At root, he attempts to discern how the Founders and successive generations have dealt with a contradiction at the core of their “commercial republic.” On one hand, a strong consensus supporting property rights and free markets has rendered most Americans into capitalists. On the other hand, proponents of governmental intrusion into the market validate their requests as legitimate demands of a democratic people. O’Connor traces this capitalism-democracy dance and how Americans reconcile these contradictory commitments.
As should be expected, A Commercial Republic is a work interested in a past that informs the present. Using the debates over the 2008 Troubled Asset Relief Program as a springboard, O’Connor reveals the folly that this bipartisan endeavor somehow lays outside the American experience. Obviously, the author is no free-market ideologue. At the same time, O’Connor is no left-wing shill. To be sure, there are junctures where the author’s policy and political hobbyhorses emerge. Nevertheless, the author admirably refuses the impulse toward political hackery.
Instead of writing an exhaustive narrative detailing all debates from Alexander Hamilton to Glenn Beck, the author employs a case study approach. In this way, A Commercial Republic is both comprehensive and manageable. Starting with Alexander Hamilton’s iconic 1790-91 reports to Congress, the author reveals that federal economic intervention is as old as the republic itself.(1) Once proven, O’Connor delves into the debates to flesh out their ideological contours. Indeed, the Sturm und Drang surrounding Hamilton’s Report on the Subject of Manufactures revealed a deep ideological divide that remains present to this day.
After securing his National Bank, the Treasury Secretary penned a treatise sparking the Ur-debate regarding governmental intrusions into the free market. For Hamilton, federal intervention to succor a nascent industrial base was a natural. To him, a diversified economy would safeguard the infant republic by ensuring prosperity and autarky. Meanwhile, Jefferson and his acolytes furiously opposed the Secretary’s scheme.
One of O’Connor’s central strengths is his ability to deftly depict and explain complicated subjects. His treatment of Hamilton’s national greatness liberalism and Jefferson’s republicanism exemplifies this forte. A classical republican, Jefferson rejected all hierarchical structures, believed concentrated power endangered liberty, and prized individual “virtue” as the only bulwark against moral decay. To him, an economy comprised of small producers rewarded the kind of virtue that prevented moral decay and maintained a democratic citizenry. In contrast, they feared Hamilton’s program not only empowered the federal government, but also created imbalances in wealth that threatened a virtuous citizenry. In the author’s deft hands neither Jefferson nor Hamilton are unflinching ideologues—both proffer a supple worldview that was, nevertheless, informed by liberal and republican principles.
As pragmatic revolutionaries, Jefferson, and his protégé, James Madison, enacted much of Hamilton’s program in their presidencies. Thus, even those Founders most opposed to federal economic intervention eventually came to embrace what they had heretofore combated. This is hardly the lone instance of irony in O’Connor’s work. Case in point is Jefferson’s political progeny, the Jacksonians, who rode their forebear’s anti-elitism to unforeseen places.
A “producerist” movement motivated by class antagonism, Jacksonians took direct aim at Hamiltonian “economic stewardship.” No longer ambivalent about capitalism’s influence upon citizen virtue, Jacksonians zealously prized market mechanisms even as they rabidly opposed federal economic interventions. To them, federal intrusions inevitably favored the privileged. As a result, they embraced “laissez-faire populism” . Thus, they sought to “divorce” federal power from the private market. The panic of 1837, the Democrats’ unwillingness to act, and their concomitant 1940 defeat rendered the Jacksonian drive for “divorce” impotent. According to the author, the election of 1840 settled the question once and for all; a natural byproduct of popular politics, federal economic intervention would become de rigueur.
Without organized opposition to federal economic interventions, post-civil war America witnessed “more intense forms” of the same . During the Gilded Age, federal intercessions via the Supreme Court made corporate growth and proliferation possible. Prior to this era, government granted corporate charters so long as they offered a public benefit. In 1886, the Supreme Court granted these bodies equal protections to those enjoyed by an individual. Thus, corporations might enjoy benefits, limited liability, that individuals lacked, but they also possessed a right to incorporate. To the author, this represented yet another example of federal intercession into the nation’s economic life.
O’Connor deftly explains complicated, if well known subjects, and relates them to his thesis. His chapter regarding the depression and the New Deal is an example of this ability. The author revisits the largely forgotten legislative battle over the Humphrey-Hawkins Full Employment bill. Passed by the Congress in 1978, the legislation rhetorically committed the federal government to full employment. O’Connor uses the bill as proof of the New Deal’s lasting significance. To the author, the New Deal made the federal government responsible for full employment, but “reigning ideas about American political economy” restrained leaders from using “the tools necessary to accomplish that task” . Long an argument dividing scholars of the New Deal, O’Connor takes the view that FDR (and later Truman) snatched defeat from the jaws of victory.
This episode represents an inevitable weakness in any deeply-engaged work. The author unwittingly subordinates political realities to his policy wishes. Similar to Alan Brinkley and other scholars critical of FDR’s “conservative” turn, O’Connor takes it for granted that a federally-mandated full employment economy somehow was within FDR’s grasp.
In much the same way that O’Connor explored the intellectual tenets of New Deal liberalism and found it wanting, so did he with the liberal consensus. To him, the consensus support for economic justice via growth and halfhearted support for a welfare state amounted to a wasted opportunity. It was squandered in his mind because the conservative anti-tax movement emerged in 1980. Ronald Reagan, like others before, used federal power to achieve conservative ends. Thus, even the modern apostle of free markets, the Gipper, endorsed Hamilton’s original position. In this, the author reiterates his central thesis, “[i]t is the specific nature of government economic intervention, rather than its mere existence, that defines the character of American democratic capitalism” .
For all of its profound failings, Marxism only became a punch line when fanatics embraced and implemented it with a quasi-religious intensity. In a similar fashion, free-market ideologues also refuse to let reality temper their zeal. In a refreshing turn, O’Connor takes America’s classical Liberal consensus for granted. Unlike the new Marxists who see one application of Liberalism, liberty, the author claims that a conflicting quest for freedom and equality animates the Liberal creed. Thus, conflicts and controversies regarding federal economic interventions are inherent to Liberalism rather than a battle pitting true believers versus apostates. The author’s advocacy for a thoroughgoing welfare state causes a few interpretive slips. Nevertheless, A Commercial Republic is a wise book that deserves a wide audience.
(1) Report on Public Credit; Report on a National Bank; Report on the Subject of Manufactures.
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