The fisticuffs that have erupted on the Right over Mitt Romney’s business record has revealed much about the conservatives, but what struck me most was that the right-wing still clings to an historical myth about the American economy.
If you missed it, Newt Gingrich and Rick Perry have taken to hammering Mitt Romney for his actions when he was with Bain Capital, calling it “vulture Capitalism.” Both Romney and Rick Santorum have responded by saying that such criticism is anti-free market Capitalism, hinting that it’s somehow akin to Socialism and un-American:
Former House Speaker Newt Gingrich and Texas Gov. Rick Perry have used Romney’s time at the investment firm to portray him as a business tycoon who fired scores of workers for his own profit. But Santorum likened such attacks to what he called the anti-capitalism rhetoric President Obama has used to attack America’s most financially successful corporate leaders. Rhetoric, Santorum says, that has stalled the economy and put the country’s free market system into question.
Gingrich and Perry are right, of course (hey, there’s a first time for everything), and their counter-argument is equally correct: criticizing a particular behavior within Capitalism is not a criticism of Capitalism as a whole.
More important, to me anyway, is the myth to which Romney et al cling: That an unregulated, free-market economy is what is American — is what the Founders wanted and intended. The truth is the U.S. economy has never been an unregulated, free-market. The truth is the Founders did not favor an unregulated, free-market economy.
The fact is that the economic system favored by most of the Founders was understood to be in direct and purposeful contradiction to the economy favored by the British, which become known as laissez-faire Capitalism. Indeed, the notion of a laissez-faire economy was foreign to the framers of the Constitution; the merchant and financial classes espoused a mercantilist philosophy while they used the powers of the central government to improve their own status.
Originally, the economic thought in the new nation was called the “American School.” Later, it came to be called the “American System,” and was championed by the Democratic-Republican Party and a number of leading politicians such as Henry Clay, John C. Calhoun and John Quincy Adams. Even Abe Lincoln was a supporter. The core of the system was four ideas: a tariff to protect and promote homegrown industry; a national bank to foster commerce; federal subsidies for roads, canals, and other “internal improvements” to develop markets for agriculture; and maintenance of high public land prices to generate federal revenue. Under the American System, the United States grew into the largest economy in the world with the highest standard of living, surpassing the British Empire by the 1880s.
The point is that the Founders wanted a federal government that was active in defining and creating the economy for the purposes of unifying and strengthening the new nation.
The Right-wing myth was ripped open and laid bare by Frank Bourgin in 1989 with publication of his study “The Great Challenge: The Myth of Laissez-Faire in the Early Republic.” Bourgin studied the personal writing and contemporary literature of the Founders and wrote a doctoral dissertation showing that the New Deal was not a departure from American tradition. Historian Arthur Schlesinger called him “a true pioneer in the reconstruction of the early economic policy of the republic.”
The actions of the Founders make their thoughts obvious. The Constitution established a nation with a unified, common market, with no internal tariffs or taxes on interstate commerce – in other words, our founding document created an activist government that defined the economy. The very first presidential administration built a strong national credit by bundling state debts with the national debt and funding that debt with tariffs on imported goods and a tax on whiskey. The administration pursued economic growth through diversified shipping, manufacturing and banking – even creating the first national bank in 1791. In 1781, Congress established the Superintendent of Finance of the United States – about the equivalent of the Secretary of the Treasury – and in 1790, Congress passed the Patent Act. In short, the first U.S. government played a powerful role in the emerging national economy.
Even Thomas Jefferson – who was an opponent of strong centralized government – pushed for a strong planning role for the federal government. After paying down the national debt, he urged Congress to use surplus revenues on roads, canals and education, including a national university.
In his 1973 study of the economic principles established by the Founders, E.A.J. Johnson wrote that the Founders generally held that while liberty “is one of the most important blessings which men possess,” the idea that liberty is synonymous with complete freedom from restraint “is a most unwise, mistaken apprehension.”
Of course, Romney, Santorum and the other right-wingers who try to define the intended American economy as unfettered free enterprise also try to define government interventions they support as “not interventions” – actions such as the creation of artificial entities called corporations and creation of the concept of corporate personhood. This allows them to advocate strong governmental actions that promote corporate power, while advocating against government actions limiting it.
In essence, the myth of the unregulated free market is nothing more than a rhetorical device that puts the Potemkin front of “freedom” in the service of the wealthy, allowing them to attack labor laws, environmental laws and Civil Rights.
The Founders fully intended a mixed economy with a large role for the federal government, and a mixed economy it has ever been. That the Right refuses to acknowledge that tells us much that’s unflattering about the Right.
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