What is the True American Liberalism?

Ivan Jankovic

Introduction:

With the rise of the Tea Party movement in the US and its subsequent entrenchment into the

Republican party mainstream, the centre of political gravity seems to have shifted rightwards,

from the centrist establishment republicans towards the small government, libertarian wing of the

party. The election of many libertarian-leaning members of the House of Representatives and the

Senate in 2010 and 2012, as well as the movement for the state nullification of federal laws,1 best

exemplify this trend. The surge in popularity of Ron Paul among the younger voters, with

significant impact on the debates in the party was also noticed by many observers.2 The last year

Senate filibuster of the appointment of the director of the CIA, led by libertarian senator Rand

Paul over the issues of civil rights and executive power, as well as Ted Cruz’s 21 hour filibuster

speech on the Obamacare, newly energized the small government constituency in America. Even

the proponents of the old-school Republican party and media elites concede that Paul’s and

Cruz’s filibuster efforts signified their elevation as the major national figures and in the same

time entrenched the classical liberal and libertarian ideas into the republican mainstream. This is

one of the immediate reasons to ask the question: is the recent resurgence of the classical liberal

ideas an aberration, a short-term trend, or maybe it has some deeper cultural and historical roots

in America, and if yes, where they could be found?

This simultaneous resurgence of federalism/decentralism and the free market philosophy

within the Tea Party in recent years is not a coincidence; it represents the newest historical

embodiment of a very old American tradition, unifying the ideas of local self-government and

minimal intrusion into the private economic and social interactions of the people. This tradition

goes back all the way to the colonial and early revolutionary periods and has never entirely

1 The Tenth Amendment Center, established by Michael Boldin in California closely tracks the state level initiatives to block or nullify the federal laws. The most important initiatives thus far include California, Colorado, Wahsington nullification of the federal anti-drug laws, Missouri preventive nullification of the federal anti-gun laws and ongoing South Carolina nullification of Obamacare (see http://tenthamendmentcenter.com/). 2 See for example an article in New Yorker from 2011 which argues that Ron Paul is much more than a typical run of the mill right-wing politician (http://www.newyorker.com/online/blogs/johncassidy/2011/12/why-ron-paul-isnt-just-another-right-wing-nut.html) . There are scores of similar media portrayal in the last couple of years admitting big impact that Ron Paul is making in Republican politics.

disappeared in America, although it has been under a heavy assault of the movement for political

centralization and welfare state in the 20th century.

Liberalism?

The very term ‘liberalism’ in North America nowadays lost any connection with its original

meaning in the 17th and 18th centuries, and all the way through the Progressive era. Ironically,

John Dewey’s rhetorical ploy, to give collectivism, as a distinctly unpopular idea in America, a

nicely sounding and time-honoured name,3 by calling it ‘liberalism’, came to define the way the

term is used by both proponents and opponents of Dewey’s philosophy. ‘Liberal” in American

political jargon became almost synonymous with “socialist’ or ‘social-democrat’, so much so

that many contemporary ‘liberals’ are trying desperately to shake off this old name as a ballast

and refashion themselves as ‘progressives’ again.

However, for a different reason, the things with American liberalism are not much clearer

even if we go beyond those linguistic (mal)practices of the 20th century and consider liberalism

in its original context of the 18th century, as a philosophy of political and economic liberty,

individualism and limited government. Who were the true American liberals in this classical

liberal sense, the proponents of free market economy and minimal state? The answer that the

prevailing wisdom of American historiography gives us is deeply misleading, and in some

respects even outright false. Both progressive and conservative historical orthodoxies agree that

the classical liberal thinking coincides with something called ‘commercial liberalism’, starting

with Alexander Hamilton and federalists, and then continues with the Whigs and into the early

20th century with the republicans.4 The alternative political tradition that goes from the anti-

federalists, via Jeffersonians and Jacksonians to the 20 th century is considered to be a proto-

social-democratic and preparing the way for the progressives and the New Deal. This tradition is

given different names and labels, from ‘social-reformist’, ‘agrarian’, ‘radical democratic’ and so

on, but the essence of all these interpretations is that it emerged as a popular or democratic or

socialist (mainstream historians rarely distinguish between those terms) resistance to the

3 Dewey developed this conception in his paper “Liberalism and its Future” published in 1935, see Dewey, 1935.4 This tendency is equally visible in the progressive historiography, for example Beard 1965; Jensen 1963, Parrington 1937, as well as among the members of the neoconservative or ’liberal nationalist’ school, eg. Zuckert, 1996; McDonald, 2000.

prevailing spirit of commercial liberalism. For the sake of simplicity we could call these two

different and opposed political traditions ‘Hamiltonian” and ‘Jeffersonian’.

When we study more deeply the founding debates and the history of the early republic, it

becomes obvious that the second, so called ‘radical democratic’ tradition is much closer to what

we would nowadays call ‘classical liberal’ or ‘libertarian’ than the Hamiltonian tradition. What

historians dubbed the ‘commercial liberalism’ and what really starts with Hamilton and

federalists would more conveniently be termed ‘crony capitalism’ or ‘mercantilism’, namely the

belief in the employment of state power in order to orchestrate and advance the economic

development of the country. On the other hand, Jeffersonians and Jacksonians, the purported

political ancestors of Woodrow Wilson and FDR believed in laissez-faire, non-interventionism

and an ultra-minimal state. Hamiltonians promoted political centralization as empowerment of

the political class to mastermind the economy and monetary and banking policy, whereas

Jeffersonians believed in the local self-government, states’ rights and very limited federal power,

as the “surest bulwarks” of freedom.

The main reason for the persistence of this misperception of Jeffersonian tradition as anti-

capitalist and Hamiltonian as a classical liberal one is the fact that the American historiography

is for more than a century dominated by Marxists and semi-Marxists who have a very simplistic

understanding of economics; the big difference that exists between Adam Smith’ laissez-faire

(the doctrine of Jeffersonians) and the 17th century mercanitilists (the doctrine of Hamiltonians)

is not a big deal from the Marxist point of view; both are the doctrines of the ‘bourgeoisie’.

Additionally, those authors always tend to analyze political processes in terms of the class

struggle between the representatives of the ‘oppressors’ and the ‘oppressed’. In the case of the

early American political debates they decided that the federalists who were closely allied with

the big banks and commercial interests were to be the ‘oppressors’, which meant the puppets of

the bourgeoisie, which meant that their opponents had to be good guys, i.e. some kind of

socialists or proto-socialists. Charles Beard’s canonical study “An Economic Interpretation of the

Constitution of the United States” (Beard, 1965) pioneered this kind of approach and launched it

into the historical mainstream. In Beard’s study the new Constitution was concocted by the

representatives of the big banks, land speculators and bond holders, themselves with a big ax to

grind, in order to centralize power and advance their own private interests. The opponents of the

Constitution, the so called anti-federalists were depicted as the champions of the small guy and

the working people, who were against capitalism and bourgeois interests, and for ‘democracy’,

paper money and debt relief. The entire school of thought, inspired by Beard had emerged that

went far beyond him, to include Jefferson and his followers as well as Jacksonians into this

Pantheon of the champions of the working people and opponents of capitalism (Main, 1961:

Schlesinger, 1953).

The first impetus to break the hold of this interpretation was an insight that Hamiltonian

federalists were much more in tune with the progressive political thinking than anti-federalists.

Cecilia Kenyon’s article ‘The Men of Little Faith’ (Kenyon, 1955) was a big game changer in

this regard: herself a left-winger and a progressive, she saw that Beardian extolling of anti-

federalists and Jeffersonians as the champions of the ‘people’ was very dangerous and

misguided. She offered instead a picture of anti-federalists as the narrow-minded, libertarian

“men of little faith”, excessively and obsessively worried about big government and political

centralization and not in the least inclined to the typical 20 th century “liberal” causes, such as

government redistribution and regulation. On the contrary, argued Kenyon, the anti-federalists

were the extreme laissez-faire fanatics, whose classical liberalism was insofar stronger and more

extreme than Hamilton’s, as they rejected any form of government regulation of the economy

whatsoever. Their opposition to the Philadelphia Constitution was prompted neither by their

“agrarianism”, nor by their proto social-democratic concern for the ‘downtrodden’, but by their

extreme and stubborn form of classical liberal dogmatism, threatened by the Constitution’s

nationalist and democratic character. The real precursor of the New Deal and 20 th century

liberalism was, according to Kenyon, Hamilton, ‘the American Rousseau’ with his emphasis on

‘general will’ and nationalism, and his creation of a strong national government as a preferable

arena for achieving the later ‘democratic’ big leaps forward of the 20th century (Kenyon, 1955).

Some other authors also questioned the conventional wisdom by finding free market

elements in Jefferson’s philosophy (Hofstadter, 1941: Appleby, 1996) or among the Jacksonians

(Rothbard, 1995), but there has not been a systematic exploration of the tradition as a whole.

American libertarianism is not a novel doctrine, and it is not even an early revolutionary doctrine

as one might have thought. It actually starts in the colonial period and represents perhaps the

leading intellectual orthodoxy of that period, especially in the 18th century.

On the one hand, from the mid-18th century Americans are under overwhelming influence

of a tradition that Caroline Robbins described as radical Whig tradition of England, pioneered by

James Harrington in the 17th century and most forcefully formulated in the early 18 th century by

the British pamphleteers and journalists Trenchard and Gordon in their famous Cato’s Letters

(Robbins, 1961). The radical Whig doctrine was libertarian both in economics, where those

authors resisted the new schemes of mercantilism advanced by the British Parliament, taxation,

regulation of business, paper money, national bank, as well as ‘corruption’ in the form of public

pensions and bureaucratic patronage; and in politics, where the radical Whigs castigated

centralization of power, attack on the traditional British medieval liberties and privileges by the

newly emerged executive and administrative state. Radical Whigs abhorred political power as

such, wanted to revive the traditional Saxon liberties of the English “free holders” and to limit

the power of the Parliament by making the MPs the mere delegates of their local constituencies

(Wood, 1969; Bailyn, 1967). This tradition crossed the Atlantic very early in the 18 th century and

as Bernard Bailyn and Gordon Wood among others extensively documented it became the

leading political orthodoxy in the North American colonies. Cato’s Letters were endlessly

printed and reprinted, commented on, invoked, plagiarized, enjoying something of a cult status

among the men of letters and intellectuals in America.5

On the other hand, there was in North American colonies another element which

facilitated the absorption of this radical Whig doctrine of government, and that is a semi-anarchic

institutional structure of the domestic political societies. For the better part of the 18 th century the

colonies were not ruled almost at all by the British government; a policy of ‘salutary neglect’ left

most of the job of governing the colonial societies in the hands of local notables and political

elites. Americans grew accustomed to the system in which the British were just regulating the

commerce with foreign nations, but all internal affairs they were virtually invisible. Moreover, as

early as mid-17th century, a strong sense of a separate existence emerged in North America, one

of the expressions of which was a right of incorporation that the colonial bodies illegally

appropriated from the Crown (Kaufman, 2009). All leading North American universities, led by

Harvard and Yale were illegally set up by the colonial assemblies, in a clear act of defiance to

the standard doctrine of the prerogative of the Crown to grant the rights of incorporation

(Kaufman, ibid.).

It was quite natural for the Americans of the 18 th century to perceive themselves as self-

governing polities, for the most part independent of the jurisdiction of British Parliament,

5 For the reception of Cato’s Letters in American see especially Bailyn, 1967.

although in a cultural and economic unity with the British Commonwealth. This is the same kind

of enlightened liberal decentralism we can see in Goethe’s attitude against German political

unification, Cattaneo’s analogous stance vis a vis Italian unity or in Tocqueville’s critiques of the

centralized state in France.6 This nowadays defunct combination of localism and liberalism was a

natural condition for the colonial Americans, it was the air they were breathing and a self-evident

truth of their political existence.

From this combination of ideas and influences emerged the rebellion against the British

Parliament which ended in secession in 1776, and this attitude carried Americans through the

Revolutionary War, strengthening their sense of political independence and civilizational

mission. When the War ended the challenge to this political vision and experience did not come

from without, from a hostile foreign power, but rather from the domestic political cabal pushing

for a strong national government.7 As early as 1780-81 many of the people who will come to be

known as ‘federalists’ just 7 or 8 years later, started to propagandize for a national, consolidated

government that would do away with the “anarchy” prevailing under the Articles of

Confederation, which was a very loose association of independent colonial polities. And the

American libertarians, led by anti-Federalist writers and Thomas Jefferson reacted against this by

trying to reassert the traditional American scepticism towards strong government, economic

regulation and standing armies. The entire rich political doctrine of decentralism, going from

anti-Federalists and Jefferson to Jacksonians and eventually Calhoun, was a reaction to the

emergence of modern state in America with the new Constitution.

The real crystallization point of the American early history is in the 1790s, one of the

most tumultuous and in the same time intellectually most productive decades in the nation’s

history. The real birth place of American libertarian theory is the formation of the first party

system in America; the clash between Jefferson and Hamilton over the first National Bank and

economic policy of the first Washington’s administration. The issue was both the concept of

sovereignty and territorial organization and economic philosophy. If anything is a clear

testimony to the dual nature of American libertarian thought, its simultaneous emphasis on

6 For Cattanneo’ s philosophy see Carlo Cattaneo. Civilization and democracy : the Salvemini anthology of Cattaneo's writings; edited and introduced by Carlo G. Lacaita and Filippo Sabetti ; translated by David Gibbons.Toronto : University of Toronto Press, c2006. For Geotthe, see Hans Hermann Hoppe. Democracy. The God that Failed. Transaction Publishers, 2001.7 For a comprehensive overview of the political dynamic in the period 1780-1787 see Jensen, 1963 and Rothbard, 1995.

localist decentralization and free markets – that’s the debate surrounding the creation of the first

America’s quasi Central bank.

That was a debate first on economics: the argument that the federalists, led by Alexander

Hamilton, put forward was a thoroughgoing program of economic mercantilism. Among other

policy measures that Hamilton came up with and which were at the bottom of the very idea of

imposing a new constitution included high protective tariffs for domestic industries, paper

money and national bank in order to increase the investment in domestic business, a generous

programs of subsidies and monopolies for domestic corporations, known later as “internal

improvements” or what would have been called nowadays “infrastructure investment”.8 It has

been argued oftentimes that the new Constitution, and federalists as its proponents, sought to

protect the private property rights, contracts and sound money, reigning in the paper money

anarchy that the states were inflicting upon the nation. Yet, it would be more appropriate to say

that Hamilton and federalists did not want the states to emit the paper money, but reserved that

privilege for the federal government.

Jefferson’s response to this challenge was two-fold: an affirmation of free market

economics, especially by translating and/or promoting the writings of the French and British

liberal economists, most notably Adam Smith, Jean Baptiste Say and Destutt de Tracey, and

entrenching their arguments into the American political mainstream; and on the other hand using

the states’ rights arguments to thwart the Hamiltonian protectionist schemes based on the

generous interpretation of the federal legislative and executive powers. On the one hand,

Jefferson was arguing that “Instead of embarrassing commerce under piles of regulating laws,

duties, and prohibitions, could it be relieved from all its shackles in all parts of the world, could

every country be employed in producing that which nature has best fitted it to produce, and each

be free to exchange with others mutual surplusses for mutual wants, the greatest mass possible

would then be produced of those things which contribute to human life and human happiness; the

numbers of mankind would be increased, and their condition bettered. (Jefferson, 1969: 216). So,

the entire Hamiltonian enterprise of using government to mastermind economic development

was fundamentally misguided from the purely economic point of view.

8 For Hamilton’s mercantilist program see Hamilton (1957).

However, it was also unconstitutional. In a letter to James Madison from 1792 discussing

what the Virginia legislation should do in regard to the newly enacted National Bank Act. Here

is Jefferson’s reasoning from a constitutional point of view:

The assembly should reason thus. The power of erecting banks and corporations was not given to the general government. It remains with the state itself. For any person to recognise a foreign legislature in a case belonging to the state itself, is an act of treason against the state, and whosoever shall do any act under colour of the authority of a foreign legislature whether by signing notes, issuing or passing them, acting as director, or any other office relating to it shall be adjudged guilty of high treason and suffer death accordingly. (Jefferson, 1990: 432-33).

So, according to Jefferson, executing an unconstitutional federal law was an act of high

treason punishable by death. In the subsequent Kentucky Resolves written in 1798 in the midst

of the crisis caused by the Alien and Sedition Act Jefferson would affirm this doctrine of the

state sovereignty and of derived nature of the federal powers by saying that “nullification” of

federal laws was a “rightful remedy” for the unlawful practice of a federal government not

respecting the constitutional compact. The most memorable passage of the first ‘Kentucky

Resolve’ written by Jefferson said:

Resolved, That the several States composing, the United States of America, are not united on the principle of unlimited submission to their general government; but that, by a compact under the style and title of a Constitution for the United States, and of amendments thereto, they constituted a general government for special purposes — delegated to that government certain definite powers, reserving, each State to itself, the residuary mass of right to their own self-government; and that whensoever the general government assumes undelegated powers, its acts are unauthoritative, void, and of no force: that to this compact each State acceded as a State, and is an integral part, its co-States forming, as to itself, the other party: that the government created by this compact was not made the exclusive or final judge of the extent of the powers delegated to itself; since that would have made its discretion, and not the Constitution, the measure of its powers; but that, as in all other cases of compact among powers having no common judge, each party has an equal right to judge for itself, as well of infractions as of the mode and measure of redress.9

Jacksonian writers and politicians who inherited the Jeffersonian libertarian-states’ rights

mantle further developed and refined the typical themes of this tradition. A band of economist

writers and advisers led by William Leggett, William Gouge, Amos Kendall and Condy Raguet

further developed and refined the Jeffersonian free trade and hard money doctrines coming close 9 For the treatment of nullification see Woods (2010) and Kilpatrick 1965.

to the modern Austrian schools doctrines of the paper money as a cause of business cycle and

upholding strenuously gold standard and full reserve banking.10

In addition to that Jacksonian continued the earlier Jeffersonian doctrine of states’ rights.

President Martin Van Buren in his book “The Origins of the Political Parties in the US” directly

traced the lineage of the Jacksonian party to the Jeffersonian republicanism (Van Buren,

1967[1867]). Actually, there has not been a discontinuity between the two; by and large the same

political forces that prevailed over the period 1800-1824, under the name Jeffersonian

republicans, seamlessly re-emerged in the 1830s under a different name of Jacksonians, but

carrying the same political doctrine and same old convictions: free market philosophy (even

more strictly elaborated) and the states’ rights emphasis on local self-government and the same

rejection of Hamiltonian economic and social program. The project of dismantling the Second

National Bank of United States and the creation of an independent Treasury were the signature

achievements of presidents Jackson and Van Buren which were right out of the Jeffersonian

libertarian playbook. We can follow the lines of this political tradition even after 1850s but it

was substantially eroded after the Civil War 1861-1865 which cemented the depiction of states’

rights as a sinister rationalization of slavery. In the coming decades of the 19 th century there were

some great statesmen who followed the broad Jeffersonian-Jacksonian tradition, most notably

Grover Cleveland but the tradition as a whole was defeated.

Conclusion

What we see these days as a reinvigorated resistance movement against the federal supremacy

and for state nullification, against the central bank and paper money, is not some new political

pathology, as both Left and “respectable” Right are trying to portray it, but rather an ancient and

long time ago mainstream American political tradition, lost in the collectivist and centralist furor

of the long 20th century. Radical libertarianism of states’ rights is as American as apple pie.

Literature:

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10 For Jacksonian economic thought see Leggett (1988), Gouge (1968) [1883], Byrsdal 1967, or Rothbard, 1995.

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