What is a republic? Foreword # 5: economic equality
I decided to name this "economic equality" instead of just economics because it is a more specific and accurate label for what I shall consider here. A consideration of the full range of economics pertaining to a republic must necessarily include the active role of government in not only regulating economic activity to direct it towards promoting the General Welfare, but also the active role government must perform in supporting and promoting the development of new science and technology, and the dissemination of their fruits throughout the general economy.
This is a crucial point on which Alexander Hamilton's tenure as first Secretary of the Treasury shines as an exemplar, but which is little understood and even less appreciated. As Hamilton wrote in his Report on Manufactures, Communicated to the House of Representatives, December 5, 1791: “To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients by which the wealth of a nation may be promoted.” And: “Experience teaches, that men are often so much governed by what they are accustomed to see and practise, that the simplest and most obvious improvements, in the most ordinary occupations, are adopted with hesitation, reluctance, and by slow gradations…. To produce the desirable changes as early as may be expedient may therefore require the incitement and patronage of government… it is of importance that the confidence of cautious, sagacious capitalists, both citizens and foreigners, should be excited. And to inspire this description of persons with confidence, it is essential that they should be made to see in any project which is new—and for that reason alone, if for no other, precarious—the prospect of such a degree of countenance and support from government, as may be capable of overcoming the obstacles inseparable from first experiments.”
The institutional framework through which Hamilton's policy for nation building was implemented is reflected in this abbreviated list of government projects and programs.
One thing that makes the creation of the American republic so unique in world history is that it is the first times a people went about creating a system of governance through a premeditated process of inquiring into the necessity, power, and faults of government, rather than attempting to modify adapt to a system of governance brought about by historical accident and coincidence. This sermon is typical of the thinking at the time: A Sermon On The Day Of The Commencement Of The Constitution, Boston, 1780, by Samuel Cooper (1725-1783).
....heaven hath granted us an inestimable opportunity, and such as has been rarely if ever indulged to so great a people: An opportunity to avail ourselves of the wisdom and experience of all past ages united with that of the present; of comparing what we have seen and felt ourselves, with what we have known and read of others; and of chusing for ourselves, unencumbered with the pretensions of royal heirs, or lordly peers, of feudal rights, or ecclesiastical authority, that form of civil government which we judge most conducive to our own security and order, liberty and happiness.....
Therefore, there was a popular demand for studies, essays, and books that looked to ancient history. Mesopotamia, Persia, Asia, whereever written records had survived, were looked to. The most popular however, was Rome. So shall we begin.
The Roman historian Plutarch warned what happens when there is no brake on the power of great wealth to subvert the electorate. “The abuse of buying and selling votes,” he wrote of Rome, “crept in and money began to play an important part in determining elections. Later on, this process of corruption spread in the law courts and to the army, and finally, when even the sword became enslaved by the power of gold, the republic was subjected to the rule of emperors.”
Machiavelli was also studied closely--but not The Prince, so much as The Discourses on Livy. Machiavelli argued that Florence, Lucca, and Siena preserved their liberty because there were very few nobles and none with castles; thus, economic equality existed there. When the rich began to build fortresses, it had the effect of making those who rule more violent toward their subjects, since they had less to fear while ensconced in their castellated heights. With this history in mind, we can argue that the right to bear arms was not just to cow government and defend against native american war parties, but to defend against, and even intimidate, the rich.
Along these lines, Montesquieu, wrote that in a republic, public virtue is in part the love of equality.
Just before he left London in 1774, Benjamin Franklin reflected this thinking when he wrote, or helped to write, Some Good Whig Principles. Note that last phrase about poor men needing more than an equal share of representation and access.
"That liberty, or freedom, consists in having an actual share in the appointment of those who frame the laws, and who are to be the guardians of every man's life, property, and peace : for the all of one man is as dear to him as the all of another; and the poor man has an equal right, but more need, to have representatives in the Legislature than the rich one."
Preparing for the Constitutional Convention, James Madison in April 1787 wrote Vices of the Political System of the United States, wrote that a minority can repress a majority when that minority possesses either the military means or the pecuniary resources to dominate the government. [Conservatives and libertarians today, unwilling to countenance any suggestion that the rich deserve less than the highest place in society, have turned this on its head to argue that a republic is characterized by the rule of law which prevents the majority from repressing a minority, i.e., themselves and the rich reactionaries who fund them.)
In The Federalist Number 39 Madison echoed this idea in his formal definition of a republic. Again, note that the issue is a minority repressing the majority, not vice versa as conservatives and libertarians argue today.
"If we resort for a criterion to the different principles on which different forms of government are established, we may define a Republic to be, or at least may bestow that name on, a government which derives all its powers directly or indirectly from the great body of the people, and is administered by persons holding their offices during pleasure, for a limited period, or during good behavior. It is essential to such a government that it be derived from the great body of the society, not from an inconsiderable proportion, OR A FAVORED CLASS OF IT: otherwise a handful of tyrannical nobles, exercising their oppressions by a delegation of their powers, might aspire to the rank of republicans, and claim for their government the honorable title of Republic."
In The Federalist Number 10 on factions-- probably the most famous of the Federalist essays -- Madison wrote that “…liberty is to faction what air is to fire - economic inequality will arise because of "different and unequal faculties of acquiring property" but the price of stopping this -- ending liberty -- is too high. Madison’s discussion here implies a crucial point that most people pass over. Madison is not arguing that economic inequality is desirable or even acceptable. Rather, he is arguing that it is inevitable, and, moreover, economic inequality is so dangerous and so pernicious, that the entire framework of government is being erected with an eye toward checking and corralling its political effects. " The regulation of these various and interfering interests forms the principal task of modern legislation...."
In The Foundations of American Economic Freedom: Government and Enterprise in the Age of Washington (University of Minnesota Press, 1973), E.A.J. Johnson did not use the word "factions" but used "interests" instead.
American economic liberalism in the 1790s represented an opposition to certain interests which not only were allegedly predatory and therefore unjust, but which also operated as restraining influences on the economic efficiency of the enterprise system. The blameworthy interests were both historical and emergent. Thus the British “landed interest” represented a historical exploitative agency as did the British factorage system. The “monied interest,” the “paper interest” or the “banking interest,” in contrast, represented new “factitious” interests; they were conceived to be recent perversions of an otherwise wholesome economic society. Democratic thought waged war, therefore, on two fronts: against the older propertied interests (which defended their privileges by a “political formula” which asserted that social stability required social stratification), and against the newer, “unnatural,” “factitious,” financial interests which threatened to create different forms of exploitation and to generate new forms of inefficiency within the enterprise system.” (pp 58-59)
The crucial question for the formation of the new government, then, according to Johnson, was how to balance and blunt the competing claims of these various interests, especially the pernicious impact of the “unnatural” financial, corporate, and foreign interests. While opponents of Jefferson’s vision of a purely agrarian society and economy such as John Adams and Alexander Hamilton looked to the emergence of a politically powerful wealthy class, they at the same time warned against the calcification of this class into a new aristocratic ruling class. “Hence,” Johnson writes, “although government should always protect and preserve property, it ought nevertheless temper the autocratic tendencies of the propertied classes.” Whenever government is weak, said the authors of The Federalist Number 62, the resulting economic and political instability will give an “unreasonable advantage” to “the sagacious, the enterprising, and the moneyed few” since “every new regulation … affecting the value of the different species of property, presents a new harvest to those who watch the change.” Thus, unless government referees a nation’s business, a state of things will emerge things in which it may be said with some truth that laws are made for the few, not for the many.” Again, the issue is the wealthy few repressing the many.
An excellent discussion of republicanism--with some consideration of these economic issues--is Gordon Wood's
"REPUBLICANISM" from Gordon Wood's Creation of the American Republic, 1776-1787, which deservedly won the Bancroft Prize for history in 1970.
GW 53-54 “The sacrifice of individual interests to the greater good of the whole formed the essence of republicanism and comprehended for Americans the idealistic goal of their Revolution. From this goal flowed all of the Americans’ exhortatory literature and all that made their ideology truly revolutionary… it alone was enough to make the Revolution one of the great utopian movements of American history. By 1776 the Revolution came to represent a final attempt, perhaps—given the nature of American society—even a desperate attempt, by many Americans to realize the traditional Commonwealth ideal of a corporate society, in which the common good would be the only objective of government.”
GW 55 “From the logic of belief that “all government… is or ought to be, calculated for the general good and safety of the community,” …followed the Americans’ unhesitating adoption of republicanism in 1776. The peculiar excellence of republican government was that it was “wholly characteristical of the purport, matter or object for which government ought to be instituted.” By definition it had no other end than the welfare of the people: res publica, the public affairs, or the public good. “The word republic, said Thomas Paine, “means the public good, or the good of the whole, in contradistinction to the despotic form, which makes the good of the sovereign, or of one man, the only object of government.” “
GW 60-61 “In a republic “each individual gives up all private interest that is not consistent with the general good, the interest of the whole body.” For the republican patriots of 1776 the commonweal was all encompassing—a transcendent object with a unique moral worth that made partial considerations fade into insignificance. “Let regard be had only to the good of the whole” was the constant exhortation by publicists and clergy. Ideally, republicanism obliterated the individual. “A Citizen,” said Sam Adams, “owes everything to the Commonwealth.” “Every man in a republic,” declared Benjamin Rush, “is public property. His time, his talents—his youth—his manhood—his old age—nay more, life, all belong to his country.” “No man is a true republican,” wrote a Pennsylvanian in 1776, “that will not give up his single voice to that of the public.” “
…the old Roman maxim: 'To take care that the commonwealth should receive no damage.'" But it was not simply a matter of invoking the Ciceroian maxim, Salus Populi suprema Lex est. The extensive mercantilist regulation of the economy, the numerous attempts in the early years of the war to suppress prices, control wages, and prevent monopolies, reaching from the Continental Congress down through the states to counties and towns, was in no way inconsistent with the spirit of '76, but in fact was ideally expressive of what republicanism meant. In the minds of the most devoted Commonwealthmen it was the duty of a republic to control "the selfishness of mankind ... ; for liberty consists not in the permission to distress fellow citizens, by extorting extravagant advantages from them, in matters of commerce or otherwise." Because it was commonly understood that "the exorbitant wealth of individuals" had a "most baneful influence" on the maintenance of republican governments and "therefore should be carefully guarded against," some Whigs were even willing to go so far as to advocate agrarian legislation limiting the amount of property an individual could hold and "sumptuary laws against luxury, plays, etc. and extravagant expenses in dress, diet, and the like."
Finally, James L. Huston, in "The American Revolutionaries, the Political Economy of Aristocracy,
and the American Concept of the The American Revolutionaries, the Political
Economy of Aristocracy, and the American Concept of the Distribution of Wealth,
1765–1900," The American Historical Review 98 (4), 1993, pp. 1079–1105.
The revolutionaries’ concern over the distribution of wealth was prompted by a tenet in the broad and vague political philosophy of republicanism. In contrast to nations in which monarchs and aristocrats dominate the state, republics embodied the ideal of equality among citizens in political affairs, the equality taking the form of citizen participation in the election of officials who formulated the laws. . . . Americans believed that if property were concentrated in the hands of a few in a republic, those few would use their wealth to control other citizens, seize
political power, and warp the republic into an oligarchy. Thus to avoid descent into despotism or oligarchy, republics had to possess an equitable distribution of wealth. (1993, 1080)