Alexander Hamilton / Review

Kudos for Hamilton’s Report on Manufactures

A Review of Christian Parenti’s Radical Hamilton

By Nancy Spannaus

Oct. 10, 2020–“Hamilton’s Report on Manufactures is the Rosetta Stone of his economic thinking,” I asserted in my 2019 book Hamilton Versus Wall Street, and called for a debate on resurrecting his policies. My evaluation of Hamilton’s report and its relevance today was unique in this time, and more than a little controversial, even in pro-Hamilton circles.

Now it appears that I have a co-thinker in my appreciation for that Report, in the book just published by John Jay economics professor Christian Parenti. Parenti’s book is entitled Radical Hamilton, Economic Lessons from a Misunderstood Founder,[1] and it starts right off with kudos for Alexander Hamilton’s seminal report. That’s a welcome development.

More Kudos for Hamilton's Report on Manufactures

I found much to admire in Parenti’s presentation of Hamilton as the “primary architect of American capitalism and the developmental state.” He makes very clear why Hamilton’s program for “dirigiste” measures was crafted to defend a very fragile country, threatened by imperial forces on all sides. Most of the book is devoted to developing in considerable detail the background within which Hamilton was operating, especially in what historian John Fiske called the “Critical Period” between the end of the Revolutionary War and the establishment of the Constitution.

Once he gets to a discussion of the Report on Manufactures, Parenti continues with vivid detail, and appropriately emphasizes Hamilton’s onslaught against Adam Smith’s laissez-faire approach. His argument about the radical nature of Hamilton’s thought includes constant references to how it might be followed up today, specifically with the Green New Deal.

Here, Parenti and I part ways. While I too believe that Hamilton’s political economy must be revived today, I locate its foundation in a set of principles which Parenti fails to discuss. Indeed, like many others, he chooses to characterize Hamilton as a brilliant pragmatist reacting to the circumstances he faced. He describes Hamilton’s agenda as “the struggle for national survival and state making.”

While that’s not untrue, I don’t think it’s sufficient. I see Hamilton’s prescriptions for the economy as arising from his view that progress and wealth derive from the development of the human mind. That idea of the productive powers of labor, and what government measures are needed to foster them, is what lives on in the development of the American System from the 1820s to the FDR administration.

The Corliss steam engine featured at the 1876 American Centennial, a showcare of American System progress.

What we need today are the principles which underlay Hamilton’s specific programs, and were taken up by the administrations of John Quincy Adams, Abraham Lincoln, and FDR. We also need to have a clear-eyed view of the opponents of those principles in the Wall Street-dominated financial establishment, which, surprisingly, Parenti does not emphasize.  I am very curious as to why.

Some Sticking Points

I believe that in many respects, Parenti’s book and mine (Hamilton Versus Wall Street: The Core Principles of the American System of Economics) are perfect complements.  Whereas Parenti emphasizes the political-economic cauldron within which Hamilton’s ideas came forth, I stress some of his intellectual predecessors, and adduce the general principles of the American System. I provide a much more extensive elaboration of how subsequent generations developed and implemented Hamilton’s principles. He provides more documentation of the economic effects of Hamilton’s program.[2]

But there are certain strands within his narrative which I find disturbing, and believe to be distortions of the truth.

One is the tendency is to use a Freudian psycho-analytical framework to explain Hamilton’s actions, ranging from his illness in 1777 to his relationship with John Laurens and his decisions about the duel with Burr.

The second is the emphasis Parenti puts on the nature of the Federal government as a fiscal-military state.  Indeed, Hamilton believed that it was necessary to have a standing army (and navy), which was trained in science and warfare, and prepared to defend the nation. But Hamilton knew that it was the ties created by a technologically developing economy, including transportation infrastructure, which would bind the Union together, not the military.

More Kudos for Hamilton's Report on Manufactures

Hamilton’s grand industrial project at Passaic Falls, New Jersey was part of his broad economic vision. (Leonard A. Zax)

The third is Radical Hamilton’s omission of the role of powerful financiers (in both London and New York) in opposing Hamilton’s program of dirigiste industrialization. It is Wall Street’s financialization of the economy which has led to the destruction of U.S. prosperity, and sabotaged the development of the technologies that can deal with crises of poverty, pandemics, and pollution.  Financial speculators have consistently opposed Hamiltonian measures – and bear responsibility for crippling Hamiltonian initiatives such as the Paterson, New Jersey Society for Useful Manufactures[3], among others.

Lastly, I must take issue with Parenti’s situating of the importance of the Report on Manufactures for today, in an argument for the Green New Deal. We need “deindustrialization” in order to have a “green reindustrialization” in energy, he argues. If he meant moving into a nuclear fusion-based society, that would be one thing. The use of nuclear power, fission and fusion, is the cleanest, most efficient, and only reliable way of providing the massive increase in energy consumption which we need to bring the entire world out of poverty, and lift living standards overall.

But that’s not what the Green New Deal proposes (despite nuclear power being a non-carbon-emitter). Rather, it calls for drastic cuts in energy consumption, huge waste in land and resources to expand unreliable solar and wind power, and cutting of the energy sources billions of people rely on for survival today.

More Kudos for Hamilton's Report on Manufactures

A partial picture of the book Hamilton Versus Wall Street.

The energetic government Hamilton envisioned and discussed in the Report on Manufactures cannot achieve its goal without taking the reins from the Wall Street speculators who dominate our economy, including the “green” part, today. Re-acquaint yourself with the principles of the American System I discuss in Hamilton Versus Wall Street, and you’ll see why.

[1] Parenti’s book was published by Verso Books, which is an imprint of New Left Books, and is based in London and Brooklyn, New York.  It is available in audio, kindle, and hard cover formats.

[2] I was particularly taken with his report on how Hamilton’s assumption plan actually resulted in the dramatic decrease in taxation for the average American!

[3] Unlike what Parenti says, however, the SUM was ultimately successful in turning Paterson into a nationally significant manufacturing center, as I discuss in my book.

image_pdfimage_print

Leave a Reply

Your email address will not be published. Required fields are marked *

*