Brief Summary of Capitalism

It is possible to say that capitalism is greatly misunderstood by the common person, because of the economic agendas of corrupted governments and special interest groups. There is a great confusion between what capitalism and mercantilism actually is. It is true that there is and has been a real exploitation of poor people that capitalism has been blamed for, but that is just not reality. Through political and corrupt corporate rhetoric “in the late 19th and the early 20th centuries,” the true definition of capitalism has been greatly distorted and “condemned.”[1] It is commonplace for purported experts in economics and politicians to cry out that “capitalism has failed; we need more government controls over the entire financial market.”[2] Capitalism has not failed; it just has not been given a fair chance.

Capitalism can be defined as “a system of the free exchange of goods and services between individuals on a voluntary basis under the rule of law and in a system of private property rights.”[3] This means that business is conducted without government regulation or interference and “all parties” in the exchange of goods “are better off.”[4] In other words, this is free trade.

Mercantilism is the opposite of capitalism and is not meant to benefit the consumer, but is meant to secure power for a select few. Not all governments and businesses want to support free trade, because it creates competition that can affect their profits and control. The two are always attempting to work together and are “constantly trying to…erect various rules, restrictions, [and] regulations that help them.”[5]

This struggle has gone on for centuries, since the roots of capitalism took hold during the eighteenth century. This economic premise can be attributed to Adam Smith and his 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations. The collected minds of the era and their various studies of past great thinkers brought forth Adam Smith’s concept of “natural liberty,” Edmund Burke’s “natural society,” and Thomas Jefferson’s “all men are created equal, that they are endowed…with certain unalienable Rights.”[6] These philosophies all contributed to the ideal of capitalism, which when implemented brought great prosperity to those nations engaged in it.

With tremendous advancements in technology and innovations in commerce, the world was forever changed in the fifteenth century. Great wealth came out of this period and the drive to acquire more launched European colonization. The Revolutionary War was fought with capitalism and freedom at its heart. Americans fought against mercantilism as it reached its height during that period. They struggled to overthrow the “system of statism” and tear down the “subsidy and monopolistic privilege to individuals or groups favored by the state.”[7]

Even though Americans won their freedom to engage in capitalism and other liberties, the modern economic system in America is not based on those ideals of free trade. In fact, capitalism again lost out to the American promoters of mercantilism, which “included Hamilton and the Federalists and later, the politicians of the Era of Good Feelings in the 1820s who eventually became Whigs.”[8] The once greatly opposed British System was now relabeled and packaged as the “American System,” which brought with it the old world problems of “national debt, political corruption, and Court party…”[9]

Bibliography

Carden, Art. “The Myths of Capitalism’s History.” Mises Institute, May 11, 2009. http://mises.org/library/myths-capitalisms-history.

Chamberlain, John. “The Roots of Capitalism.” Mises Institute, March 23, 2010. http://mises.org/library/roots-capitalism.

Davies, Steve. “Capitalism is NOT Imperialism.” Learn Liberty, June 3, 2013. http://www.learnliberty.org/videos/capitalism-not-imperialism/.

DiLorenzo, Thomas J. “Trade and the Rise of Freedom.” January 31, 2000. http://mises.org/library/trade-and-rise-freedom.

Miron, Jeff. “Top Three Common Myths of Capitalism.” Learn Liberty, August 22, 2011. http://www.learnliberty.org/videos/top-three-common-myths-of-capitalism/.

Paul, Ron. “Has Capitalism Failed?” Mises Institute, April 16, 2008. http://mises.org/library/has-capitalism-failed.

---

[1] Art Carden, “The Myths of Capitalism’s History,” Mises Institute, May 11, 2009, http://mises.org/library/myths-capitalisms-history.

[2] Ron Paul, “Has Capitalism Failed?” Mises Institute, April 16, 2008, http://mises.org/library/has-capitalism-failed.

[3] Steve Davies, “Capitalism is NOT Imperialism,” Learn Liberty, accessed on March 7, 2015, http://www.learnliberty.org/videos/capitalism-not-imperialism/.

[4] Ibid.

[5] Jeff Miron, “Top Three Common Myths of Capitalism,” Learn Liberty, August 22, 2011, http://www.learnliberty.org/videos/top-three-common-myths-of-capitalism/.

[6] John Chamberlain, “The Roots of Capitalism,” Mises Institute, March 23, 2010, http://mises.org/library/roots-capitalism.

[7] Thomas J. DiLorenzo, “Trade and the Rise of Freedom,” January 31, 2000, http://mises.org/library/trade-and-rise-freedom.

[8] Ibid.

[9] Ibid.

Free Trade and World Peace

            In regards on how to deal with a nation that has strong military, which instills fear into the hearts of nations, I would offer a different approach than meeting force with force. Adam Smith and his economic work, An Inquiry into the Nature and Causes of the Wealth of Nations, promoted the idea of free trade and its economic benefits to the world as a whole. Assistant Professor of Economics at Duquesne University, Pavel Yakovlev, has looked at the principles of free trade and teaches that it can also “promote international peace.”[1]

            Professor Yakovlev explains that it is in a country’s best interest to not wage war if they participate in free trade. Mutual free trade creates an “interdependence [that] gives countries a strong incentive to keep hostilities low.”[2] These hostilities are reduced because of the openness and cultural understanding that comes from free trade. As nations trade openly with one another, they not only exchange goods, but they “exchange…ideas and culture” as well.[3] Thus, nations come to better understand one another, grow to appreciate “each other’s differences,” and are overall more tolerant.[4]

            The opposite approach to trade brings war. The European colonization period is a perfect example of this. The economic pushes of mercantilism by the various European nations lead to the first world war, The French and Indian War or The Seven Years War. The classic liberal and political economist, Frédéric Bastiat said, “If goods can’t cross borders, armies will.”[5] It only stands to reason that if more nations promoted free trade, then more nations would have less need for strong militaries.

Bibliography

Yakovlev, Pavel. “Does Trade Promote Peace?” Learn Liberty. March 13, 2012. http://www.learnliberty.org/videos/does-trade-promote-peace/.

---

[1] Pavel Yakovlev, “Does Trade Promote Peace?” Learn Liberty, March 13, 2012, http://www.learnliberty.org/videos/does-trade-promote-peace/.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid. 

1790s Press and the Republic

            The American press during the 1790s played the printed role of today’s electronic media; which like today, was used as a vehicle to attack the principles and policies of the opposing political parties. Since the dawn of a literate public actively engaged in government, politicians have both supported and cursed the effects of the press on the political process. The rapidly growing media of the late eighteenth century was seen as a necessary evil that could serve or destroy the evolution of the new Federal government.

            The United States of America was an experimental constitutional republic in its infancy during the 1790s. Its republican ideals and political theories were affecting the world; and when the French Revolution erupted in Europe, many Americans were becoming very interested in its outcome and in politics in general. As Duke de La Liancourt Rochefoucault observed on his visit to America, “every one here…takes an interest in state affairs, is extremely eager to learn the news of the day, and discusses politics as well as he is able.”[1] The great political debates fostered the development of the two predominant political parties in America, the Democratic Republicans and the Federalists.

            As these new political parties were forming and gathering their supporters, a new revolution was being born, a “reading revolution.”[2] Printed materials played a major part in the Revolutionary War; but technological advancements (“stereotyping, steam-powered printing, machine papermaking, and the introduction of cloth bindings”) and government “subsidies to newspaper publishers” created a new phenomenon, which “helped lay the groundwork for a new information network.”[3]  

            The printed information by the press in the 1790s was biased and often considered to be extremely fraudulent and slanderous to those it opposed. Thomas Jefferson wrote to John Norvell that a newspaper would “be most useful…by restraining it to true facts and sound principles only.”[4] In the first issue of the New York Evening Post, a newspaper established by Alexander Hamilton, Jefferson’s opponent, wrote: “’It is the Press which has corrupted our political morals and it is to the Press we must look for the means of our political regeneration.”[5]

            Both political parties would use the press to their advantage and both would attack the press for the damaging material they printed. The Federalist Party went so far as to attack the First Amendment and freedom of speech, when President John Adams signed into the law the Alien and Sedition Acts. Now, the government had authority to punish any citizen who wrote, printed, or published “any false, scandalous and malicious writing…against the government of the United States.”[6] Clearly, punishing any person for their printed views or opinions found to be contrary to the government could be seen as degrading to political discussion in any republic.

Bibliography

“An Act in Addition to the Act, Entitled ‘An Act for the Punishment of Certain Crimes Against the United States.’” The Avalon Project. Accessed on March 2, 2015. http://avalon.law.yale.edu/18th_century/sedact.asp.

Horrocks, Thomas A. Popular Print and Popular Medicine: Almanacs and Health Advice in Early America. Amherst: University of Massachusetts Press, 2008.

Jefferson, Thomas. Letters and Addresses of Thomas Jefferson. Edited by Parker, William B. and Viles, Jonas. Buffalo: National Jefferson Society, 1903.

Novotny, Patrick. The Press in American Politics, 1787-2012. Santa Barbara: ABC-CLIO, LLC, 2014.

Thomas Paine: Common Sense for the Modern Era. Edited by King, Ronald F. and Begler, Elsie. San Diego: San Diego State University Press, 2007.

---

[1] Thomas Paine: Common Sense for the Modern Era, edited by Ronald F. King and Elsie Begler, (San Diego: San Diego State University Press, 2007), 123.

[2] Thomas A. Horrocks, Popular Print and Popular Medicine: Almanacs and Health Advice in Early America, (Amherst: University of Massachusetts Press, 2008), 9.

[3] Ibid.

[4] Thomas Jefferson, Letters and Addresses of Thomas Jefferson, edited by William B. Parker and Jonas Viles, (Buffalo: National Jefferson Society, 1903), 175.

[5] Patrick Novotny, The Press in American Politics, 1787-2012, (Santa Barbara: ABC-CLIO, LLC, 2014), 25.

[6] “An Act in Addition to the Act, Entitled ‘An Act for the Punishment of Certain Crimes Against the United States.’” The Avalon Project, accessed on March 2, 2015, http://avalon.law.yale.edu/18th_century/sedact.asp.

William Dunning's Premise of Conservatives

            If the spirit of America and the revolution was to establish a land where “all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among them are life, liberty, and the pursuit of happiness,” then according to William A. Dunning (in his 1904 journal article, A Century of Politics) and classic liberals, conservatives are in opposition to that end.[1] Conservatives hold true to the old ideals of the “royal and aristocratic classes of the old regime.”[2] Thus, they do not approve of any form of written law or constitution that would bind their prerogative to govern over any people according to their desire; to be so bound would be considered “a hindrance to good government” and “the state is not a mechanism, but an organism.”[3]

            Even after the conclusion of the Revolutionary War and freedom established from the monarchical hold from Great Britain, the sovereign independent States of America were not more than fifteen years old before conservatives crept into the halls of government. It was conservatives, who cried for the Articles of Confederation to be abolished when their attempted amendments failed to give them the power they desired under that written constitution. Nationalism then became their watchword and a new law of the land that would centralize power their driving force.

            As the ideals of classic liberalism were debated against nationalism in the political halls of government, the new Constitution was written. The Bill of Rights was added by the liberals to protect individual rights; but the rallying call of nationalism for defense of all Americans shifted “to aggression.”[4] The conservative movement now “came to be, not the release of a people from foreign rule, but the subjection of every people to its appropriate domestic rule.”[5]

            The debate over liberal and conservative principles and their application in American government came to a head in the 1860s. Once the smoke settled and hundreds of thousands of the dead were buried, “Nationalism and its meaning shifted from one political extreme to the other.”[6] However, the Constitution and the Bill of Rights still exist to hinder the conservative to some degree, which allows for the classic liberal to maintain a foothold in modern society.

Even President Barack Obama commented on the difficulty to push forward with a classical conservative agenda in the modern American society, when he was interviewed by Matt Lauer in 2012. “What’s frustrated people is that I have not be able to force Congress to implement every aspect of what I said in 2008…It turns out that our founders designed a system that makes it more difficult to bring about change than I would like sometimes.”[7] As Dunning stated, “Classic Conservatives were against written constitutions. They were not for defined rules or schools of thought as to liberty.”[8]

The interesting aspect of this subject is how the definition of the two principals of liberalism and conservatism has reversed in meaning over the years. This is also why the core beliefs of the Democrats and Republicans from the 19th century and today have also switched. Intentional or not, this flipping of definitions and core beliefs has created a difficulty for the general public to discern the truth behind American political history.

- Scott

Bibliography

Dunning, William A. “A Century of Politics.” The North American Review Vol. 179, No. 577 (Dec., 1904): 801-814.

Jefferson, Thomas. ”Declaration of Independence, July 4, 1776.” Avalon Project. Accessed on February 28, 2015. http://avalon.law.yale.edu/18th_century/declare.asp.

Obama, Barack. “Obama Blames Founding Fathers.” Fox Nation. Accessed on February 28, 2015. http://nation.foxnews.com/president-obama/2012/02/06/obama-blames-founding-fathers.

---

[1] Thomas Jefferson, ”Declaration of Independence, July 4, 1776,” Avalon Project, accessed on February 28, 2015, http://avalon.law.yale.edu/18th_century/declare.asp.

[2] William A. Dunning, “A Century of Politics,” The North American Review Vol. 179, No. 577 (Dec., 1904):804.

[3] Ibid, 806.

[4] Ibid, 809.

[5] Ibid.

[6] Ibid.

[7] Barack Obama, “Obama Blames Founding Fathers,” Fox Nation, accessed on February 28, 2015, http://nation.foxnews.com/president-obama/2012/02/06/obama-blames-founding-fathers.

[8] Dunning, “A Century of Politics,” 806.

William Dunning's Premise of Liberalism

            In today’s modern society, the terms for liberalism and conservatism have flipped from their 18th and 19th century meanings. William Dunning noticed this anomaly and wrote his findings on the matter in his 1904 journal article, A Century of Politics. His premise of liberalism “fundamentally…meant democracy,” and those principles are found in what scholars today would label as classic liberalism.[1]

            Just as the meaning of liberalism has been twisted over time, the definition of the word democracy has changed with it. Webster’s complete dictionary of the English language (1886) and a current Webster’s dictionary both state that a democracy is a government by the people or where the power resides in the people; but the older dictionary includes “a constitutional and representative government; a republic.”[2] It is that definition, a republic, and the principles surrounding a constitutional republic that Dunning is referring to in his writings.

            Liberalism then calls for “liberty to all, authority to the qualified.”[3] Thus, the elected representatives in the republic guarantee the rights of all individuals and they govern according to strict limitations provided for them in a written “body of law” or constitution.[4] “The constitutional liberty of the individual” is the upmost aim of the liberal; which often leads the liberal to attempt to restrict centralization of government power and “majority rule in economic organization.”[5]

            Classic liberals today still hold true to these principles. They are motivated to ensure a world where individual happiness and wellbeing can flourish through individual liberty. Limited government is the desired system where “commerce, wealth, and trade are good, while war and conflict are bad.”[6] The classic liberal believes in a society where the individual, “through reason, empirical investigation, and study” can govern themselves through virtue.[7]

            The liberal Founders, like Benjamin Franklin, believed that “only a virtuous people are capable of freedom.”[8] The classic liberal today also understands that liberty is “a prerequisite for virtue.”[9] The constitutional republic created through the Constitution was meant for a virtuous people and “virtuous activity requires having the ability, the capacity to choose.”[10] In other words, liberty must exist for an individual to foster virtue and thus self-govern themselves to discover true happiness.

            Liberty does exist to an extent in today’s society; but it has been severely hampered by the opponent to liberalism, conservatism or nationalism. Great confusion has arisen around the misclassification of these terms and the history surrounding the establishment of the United States government. Nevertheless, the two principles of thought are as strong as ever and still fiercely debated in all the major academic disciplines.  

Bibliography

Ashford, Nigel. ”What is Classical Liberalism?” Learn Liberty. Accessed on February 24, 2015. http://www.learnliberty.org/videos/what-is-classical-liberalism/.

Constitutionalism and Rights. Edited by Bryner, Gary C. and Reynolds, Noel B.  Provo: Brigham Young University Press, 1987.

Dunning, William A. “A Century of Politics.” The North American Review Vol. 179, No. 577 (Dec., 1904): 801-814.

Ottteson, James. “Liberty & Virtue.” Learn Liberty. Accessed on February 24, 2015. http://www.learnliberty.org/videos/liberty-virtue/.

Webster, Noah. “Webster’s complete dictionary of the English language (1886).” Internet Archive. Accessed on February 26, 2015. https://archive.org/details/websterscomplete00webs.

---

[1] William A. Dunning, “A Century of Politics,” The North American Review Vol. 179, No. 577 (Dec., 1904): 801.

[2] Noah Webster, “Webster’s complete dictionary of the English language (1886),” Internet Archive, accessed on February 26, 2015, https://archive.org/details/websterscomplete00webs.

[3] Dunning, “A Century of Politics,” 804.

[4] Ibid, 805.

[5] Ibid, 808.

[6] Nigel Ashford, ”What is Classical Liberalism?” Learn Liberty, accessed on February 24, 2015, http://www.learnliberty.org/videos/what-is-classical-liberalism/.

[7] Ibid.

[8] Constitutionalism and Rights, edited by Gary C. Bryner and Noel B. Reynolds, (Provo: Brigham Young University Press, 1987), 16.

[9] James Ottteson, “Liberty & Virtue,” Learn Liberty, accessed on February 24, 2015, http://www.learnliberty.org/videos/liberty-virtue/.

[10] Ibid. 

Did the Articles of Confederation Fail?

            The discussion on how the Articles of Confederation failed to meet the challenges facing the new American republic is subjective based upon an individual’s interpretation of what the new American republic was meant to be. The argument then is a debate over governing powers between the States and a strong central federal government or a limited federal government. If the Articles of Confederation was devised to ensure that more power was held by the individual States, while the federal government was granted limited powers to act as a liaison with foreign nations and with the other States respectfully, then it came close to fulfilling its purpose. However, if the American republic was intended to be a strong central government, then the Articles of Confederation failed due to its strict restraints and limiting properties to impede such a government.

            An 18th century definition of a “republick" is: “Commonwealth; state in which the power is lodged in more than one.”[1] The States formed a confederation of independent governments and not a complete union prior to the completion of the Revolutionary War; thus the name, ‘The United States of America.’ The citizens of the various States were not interested in exchanging one strong central government for another; “their loyalties were much more local; they were Marylanders, New Yorkers, and Pennsylvanians, for example.”[2] However, it was evident that the Articles of Confederation was still not sufficient to meet the needs of the individual States.

            Even Thomas Jefferson had indicated that there was need to create “a new compact,” which would establish a “more perfect” constitution.[3] Jefferson like others realized that the Articles of Confederation offered no power to a central government to raise federal revenue, to control commerce internationally or across State lines, to enforce any laws passed, nor to provide for a court system, or even an official city from which to govern from. The other difficulty facing the federal government was that “the Articles were virtually impossible to amend, so unanticipated problems were not easily resolved.”[4]

            The Constitutional Convention and the new governing document, the Constitution, was produced, with great debate, to solve these and many other problems with the Articles of Confederation. With the development of the two-party system and varying opinions on the purpose of the federal government, it is still be debated whether or not the Constitution established a more perfect union and met the challenges facing the republic and the individual States.

           

Bibliography

Callahan, Kerry P. The Articles of Confederation: A Primary Source Investigation Into the Document that Preceded the U.S. Constitution. New York: The Rosen Publishing Group, Inc., 2003.

Feinberg, Barbara Silberdick. The Articles of Confederation: The First Constitution of the United States. Brookfield: Twenty-First Century Books, 2002.

Johnson, Sameul. A Dictionary of the English Language. Dublin: W.C. Jones, 1768.

McDowell, Gary L. The Language of Law and the Foundations of American Constitutionalism. New York: Cambridge University Press, 2010.

  

---

[1] Samuel Johnson, A Dictionary of the English Language, (Dublin: W.C. Jones, 1768).

[2] Barbara Silberdick Feinberg, The Articles of Confederation: The First Constitution of the United States, (Brookfield: Twenty-First Century Books, 2002), 13.

[3] Gary L. McDowell, The Language of Law and the Foundations of American Constitutionalism, (New York: Cambridge University Press, 2010), 253.

[4] Kerry P. Callahan, The Articles of Confederation: A Primary Source Investigation Into the Document that Preceded the U.S. Constitution, (New York: The Rosen Publishing Group, Inc., 2003), 13.

Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations encapsulated the spirit of the American Revolution.

            The spirit of the Revolutionary War was building in the hearts of Americans even before the shot was heard around the world from Lexington on April 19, 1775. That spirit was a determination to create a world free from tyranny and economic bondage controlled by a strong central government. The war for freedom challenged the predominant ideals of mercantilism. Adam Smith was a man who wrote a book that contained within its pages, the philosophy of economic freedom that Americans were fighting for.

            Adam Smith penned the work, An Inquiry into the Nature and Causes of the Wealth of Nations, which would later bring him the title of the father of economics. Smith was motivated by the plight of the world, particularly the poor found throughout the world, and asked the question, “How do we raise the estates of the least among us?”[1] Americans were asking themselves the same question; they asked the ruling authorities, debated among themselves, and decided the only way to give themselves the opportunity to raise their own estates was through independence from Great Britain.

            Americans discovered, as Adam Smith was writing his book, that to truly be free and independent, they had to allow for “commerce, free trade, free migration, limited government.”[2] The many great founders of The United States of American were well studied and learned men, who were coming to this same conclusion as Adam Smith. The founding generation were individuals, who were being hindered by the old economic way of doing things. Their human ingenuity was being stifled under the British System.

            A great awakening had occurred, and individuals like Adam Smith understood that if any nation or people were to succeed and grow up out of poverty, individual ingenuity had to be allowed for. The people needed to be allowed “to investigate, entrepreneurially figure out new ways to do things to satisfy their interests better.”[3] This was the spirit behind the revolution and Adam Smith captured it with his own words in his famous work.

Bibliography

Otteson, James. “Adam Smith: The Invisible Hand.” Learn Liberty. Accessed on February 20, 2015. http://www.learnliberty.org/videos/adam-smith-the-invisible-hand/.

Otteson, James. “What Motivated Adam Smith?” Learn Liberty. Accessed on February 20, 2015. http://www.learnliberty.org/videos/what-motivated-adam-smith/.

---

[1] James Otteson, “What Motivated Adam Smith?” Learn Liberty, accessed on February 20, 2015, http://www.learnliberty.org/videos/what-motivated-adam-smith/.

[2] Ibid.

[3] James Otteson, “Adam Smith: The Invisible Hand,” Learn Liberty, accessed on February 20, 2015, http://www.learnliberty.org/videos/adam-smith-the-invisible-hand/.