One size fits all! In the fifties and sixties Madison Avenue would sell us any lie but any woman who ever tried to put on a pair of panty hose, quickly learned the truth. No piece of clothing fits every individual equally and no policy benefits every citizen equally.
In Federalist Paper # 10 James Madison elaborated on the conflict:
the most common and durable
source of factions has been the various and unequal distribution of property.
Those who hold and those who are without property have ever formed distinct
interests in society. Those who are creditors and those who are debtors fall
under a like discrimination. A landed interest, a manufacturing interest, a
mercantile interest, a moneyed interest, with many lesser interests, grow up of
necessity in civilized nations and divide them into different classes, actuated by
different sentiments and views. The regulation of these various and interfering
interests forms the principal task of modern legislation and involves the spirit
of party and faction in the necessary and ordinary operations of the
At one time there was one theory of economics. That was Mercantilism. It was a theory devised by the merchant class around 1620 and unsurprisingly it benefitted merchants. Mercantilism had several aspects. It called for infrastructure development, development of domestic industry and the largest portion of bullion reserves possible. The nation states of France and England and their middle class were created in the entirety from Mercantilism.
Mercantilism had an aspect about it of common sense. In 1549 it was written “We must always take heed that we buy no more from strangers then we sell them, for so should we impoverish ourselves and enrich them.”
The other theory is known to us as the Free Market. It actually began as Lassez faire et laissez passer le monde va de lui meme’ Which translates into Let do and let pass, the world goes on by itself.” It was developed by the leaders of the French Revolution and the goldsmiths who financed them in opposition to the merchants and royalty.
The defining work in Mercantilism was “Treatise of Taxes and Contributions “ written in 1662, by Sir William Petty. Petty’s collective works and his reliance on data become the basis for the science of economics. Relying on extensive statistical data Perry argued for a progressive tax system, that paid for defense, governance, the pastorage of men’s souls, education, the maintenance of impotents of all sorts and infrastructure, or things of universal good. Perry argued that the traditional reliance on the hoarding of gold was unnecessary and harmful as gold was only a small portion of a nation’s true wealth. However he felt that government must have the right to restrict the export of gold if the balance of trade became too imbalanced.
As you probably know the defining work of the Free market is The Wealth of Nations written by the moralist Adam Smith in 1776. The Wealth of Nations was based on three precepts 1)No economic player has power over another 2) Everyone has equal access to information 3) All decisions are purely rational with no preference given to other players on non-economic factors. None of these Utopian ideas have ever been realized. Bankers worldwide quickly saw the advantages of Smith’s work and so promoted it and have continued to promote it to this day.
After the Second World War capitalism itself was in disrepute. The bankers and the stock markets needed a scapegoat and their old enemies the mercantilist came to mind. By lobbying state legislatures and supporting academics they were able to rewrite the history books and convince the country that the Taft Hartley Act, passed nine months after the beginning of the Great Depression, was the cause of the Great Depression.
By 1960 John F Kennedy had to pledge in his campaign that he would not interfere with the free market .Ronald Reagan said that without the free market there could be no “growth, prosperity and ultimately human fulfillment. What happened to the differences between: “A landed interest a manufacturing interest, a Mercantile interest, a moneyed interest”,? Poof, gone –one size fits all.
In the thirty years since only Ross Perot has voiced real opposition to the free market. For the rest of the political establishment Free Trade has become a part of the American character. It should not be surprising. Our politicians rely on contributions and the capitalist have the money.
Some authors place the last rise in real wages at 1974. Many others at 1979.In 1985 the United States became a debtor nation for the first time in 70 years. There can be no doubt of the negative effect of our Free Market policies on the majority of Americans. Recently the middle class has become aware of it’s losses and though they have no idea as to the cause are marching in the streets demanding change.
It may seem I am advocating a return to pure mercantilism. As noted by Perry in 1662 pure mercantilism had its problems. It is often argued that both World Wars were the result of pure mercantilism. That is not what I am advocating. Rather I ask that we do our duty as citizens. That as James Madison said in Federalist 10 we engage in informed and Refined Public Opinion. That we acknowledge that one size never fits all.