The Development of a Uniquely American Political-Economic Tradition
Like Sieyes and Hamilton, Madison commercialized politics. A careful reader of Adam Smith and Smith’s friend and mentor, David Hume, he predicated his definition of a nation on the principle of division of labor: divided labor meant divided interests, and in a geographically large nation these interests could express themselves freely without coming together to form a mob. But Madison also, unlike Sieyes and Hamilton, politicized commerce. The ultimate measure of any commercial system, Madison made clear in his public essays of 1791 and 1792 combating Hamilton’s program of government-backed development, was whether it increased citizens’ independence: their ability to govern their own lives. In his view, Hamilton’s administration, which was using public debt to create favored industries, was creating stark dependencies instead.
To ensure citizens’ independence, Madison supported a shift to free markets and state-based governments run by the people’s representatives as well as targeted national action like tariffs and embargoes against the threat of dependency on Britain from abroad. Whereas Hamilton supported tariffs on specific industrial imports as an economic tool to promote large American manufacturers while leaving America’s dependency on British imports intact, Madison supported tariffs as a political mechanism to secure America’s sovereignty by breaking Britain’s hold on its market.
For 140 years after 1791, American political contestation rested on a clear public divide between these two political economic arguments. Everyone knew in the 1830s that the dominant Democrats stood for individual states promoting development and for mostly free trade, while up-and-coming Whigs stood for Washington-run development and across-the-board tariffs. In the 1870s, 1880s, and 1890s, minority Democrats hearkened to “Jefferson’s principles of 1798” while majority Republicans stood for Lincoln’s muscular federal government which used tariffs and land grants to back business. Beginning in the 1910s, in the face of government-backed corporations becoming powers unto themselves, the parties enacted more sophisticated versions of the same divide.
Each side gained decisive victories. Starting with Jefferson, some version of the Democratic Party dominated American politics from 1800 to 1860; Abraham Lincoln’s Republicans dominated from 1860 to 1932; and Franklin Roosevelt’s Democrats regained control from 1932 to 1980. Tellingly, though Lincoln and Roosevelt successfully argued for a larger role for a national government of managers, they ran their vision through states via targeted legislation (in Lincoln’s case) and labor unions and city parties via patronage (in Roosevelt’s). This connected them to the ground, ensuring feedback and support from the farmers, small businesspeople, and blue-collar laborers whom they had re-crafted their version of top-down political economy to serve.