Abstract: Although there are many scholarly treatments of the Founders’ understanding of property and economics, few of them present an overview of the complete package of the principles and policies upon which they agreed. Even the fact that there was a consensus among the Founders is often denied. Government today has strayed far from the Founders’ approach to economics, but the older policies have not been altogether replaced. Some of the Founders’ complex set of policies to protect property rights are still in force. America has abandoned the Founders’ views on the gold and silver standard, the prohibition of monopolies, the presumption of freedom to use property as one likes, freedom of contract, and restricting regulation to the protection of health, safety, and morals. But in other respects, America continues to offer a surprising degree of protection to property rights in the Founders’ sense of that term.
In light of the stark differences between the economies of the present day and the late 18th century in which the Founders lived, can we learn anything about economics by studying the principles and approach of our Founders? Perhaps surprisingly, the answer is “yes.” If we look to the actions they took and the rationale they offered for their actions, we will see that the Founders’ approach still offers us a guide to pressing economic questions of our day.
Although there are many scholarly treatments of the Founders’ understanding of property and economics, few of them present an overview of the complete package of the principles and policies upon which they agreed. Even the fact that there was a consensus among the Founders is often denied. Scholars who study this topic often focus on their differences rather than their agreements.
It is true that there were bitter disputes over particular policies during the Founding era, such as the paying of the national debt, the existence of a national bank, and whether to subsidize domestic manufactures, and these differences seemed tremendously important in the 1790s. But in spite of these quarrels, there was a background consensus on both principles and the main lines of economic policy that government should follow. John Nelson’s verdict on the 1790s is sound: “[W]hen the causes of the slow dissolution of consensus among America’s ruling elites after ratification of the Constitution are detailed, the evidence points to specific disagreements over programmatic issues and not fundamental schisms over the essential role of government.”[1]
The danger is that by concentrating on these and other Founding-era contests, we will fail to see (as the Founders themselves often failed to see) their agreement on the three main policies that, taken together, provide the necessary protection of property rights: the legal right to own and use property in land and other goods; the right to sell or give property to others on terms of one’s own choosing (market freedom); and government support of sound money. Their battles were fought over the best means to those ends and over such subordinate questions as whether and how large-scale manufacturing should be encouraged.
The Founders’ approach to economics, when it is discussed by public figures and intellectuals, has been much criticized. One reason many on the Left reject the Founders’ economic theory is that they think it encourages selfishness and leads to an unjust distribution of wealth. The prominent liberal thinker Richard Rorty believed that the “moral and social order” bequeathed to Americans by the Founders eventually became “an economic system which starves and mutilates the great majority of the population.” Such is the “selfishness” of an “unreformed capitalist economy.” For this reason, there is “a constant need for new laws and new bureaucratic initiatives which would redistribute the wealth produced by the capitalist system.”[2]
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