How Aristotle's philosophy led to the American economy.
Dec 11, 2006, Vol. 12, No. 13 • By MARK BLITZ
Chan discusses Hamilton's view of the link between virtue and commerce--or, more broadly, the political goals of his economic recommendations--under five headings. He summarizes his position in advance by claiming that "Hamilton recognized a need for ancient as well as modern prudence in the practice of politics." The advantages of commerce outweigh disadvantages such as vicious luxury and moral licentiousness. I will report Chan's main points, but cannot do justice to the subtlety and intricacy of his arguments.
First is the contribution that commerce and manufacturing make to national prosperity, a contribution that depends on equal freedom: "True liberty, by protecting the exertions of talents and industry and securing to them their justly acquired fruits, tends more powerfully than any other cause to augment the mass of national wealth." Indeed, the American "spirit of enterprise," writes Chan, "is in itself an inexhaustible mine of national wealth." Hamilton believed it "easier and more humane" to arrange matters so that interest and ambition, rather than fierce courage and self-renouncing public spiritedness, are the major supports of the public good.
Hamilton also argued that vigorous commerce aids national defense. The Revolutionary War led him to see that "only a nation with a manufacturing base and an advanced system of public finance" would win wars, because war has been revolutionized by the modern "arts of industry and the science of finance." In addition, manufacturing would especially benefit from technology, for Hamilton believed it particularly well suited to the use and invention of machines.
Hamilton also thought that national commerce would help to cement the federal union and produce "a distinctly American economy." It would serve our mutual wants, and tie manufacturing to agriculture, as long as statesmen helped citizens to see that their enlightened self-interest required such a blend. Commerce also would "promote a gradual assimilation of temper and sentiments among citizens."
The political goals commerce serves are connected to Hamilton's belief that "commercial virtue" is "necessary for a prosperous, orderly, and just nation." The traditional view of the moral superiority of farmers is incorrect. Farmers' agitation for debt relief and easy money shows that they are more self-interested than pure. Indeed, the agrarian South and West depended on slavery, an institution more corrupt than anything commerce and manufacturing fostered.
By contrast, commerce and manufacturing give regular work to many not usually engaged in business, and furnish great "scope for the diversity of talents and dispositions among individuals." They make men more industrious and inventive, and expand their choices. Manufacturing, especially, gives the able opportunities for spirited and useful enterprise. And because a commercial nation depends on sound money and banks, it also encourages "punctuality, thrift, industry, responsibility in fulfilling contracts, and prudent financial management."
Finally, Hamilton thought that commerce would provide resources to enhance "public splendor," liberality, and national greatness. The "moral horizon of American politics" is more than "the ceaseless pursuit of security and prosperity." Liberality would replace the ancient republics' "excessive devotion to . . . military glory."
Hamilton's challenge here "was to reconcile magnanimity or the longing for splendor among great men with the natural rights of mankind, or consent." Commerce would allow the ambitious to "build great commercial empires" and practice liberality grounded on agreement, not slavery and plunder. Indeed, consent and affection, as opposed to fear, served "not only to limit but also to invigorate the powers of government."
The chief "enlarged plans of public good" that Hamilton had in mind for the United States were to promote industry, secure the independence of the new world from the old, end slavery, and advance the arts and sciences. Beyond his own efforts through foreign policy and state abolition societies, Hamilton thought that industrial, mechanical, and commercial development is the best economic alternative to slavery, and further undermines it by "softening and humanizing" mores, especially those of masterful men. Commerce also provides leisure to cultivate the arts and sciences and resources to communicate enlightened opinion. Here, government needs to support institutions such as a national university where there is little prospect of immediate economic gain.