“Radical Hamilton: Economic Lessons From a Misunderstood Founder,” a new book by Parenti, takes a deep dive through Alexander Hamilton’s writing, along with his public reports as the nation’s first secretary of the Treasury, and emerges with a portrait of a man wildly misunderstood by his most strident critics and his most slobbering followers.
The Hamilton of the imagination of liberals is an immigrant who strived for a better life and built it in America, while setting down the cornerstones of our key institutions. He is a good Davos man, with just the right amount of skepticism in democracy — a skepticism rooted, of course, in good will, with nothing but the interests of the people, misguided as they often may be, at heart.
“’Hamilton,’ I’m pretty sure, is the only thing that Dick Cheney and I agree on,” quipped President Barack Obama, speaking before a White House performance of the play in 2016, telling the audience that playwright and actor Lin-Manuel Miranda “identified a quintessentially American story. In the character of Hamilton — a striving immigrant who escaped poverty, made his way to the New World, climbed to the top by sheer force of will and pluck and determination — Lin-Manuel saw something of his own family, and every immigrant family. And in the Hamilton that Lin-Manuel and his incredible cast and crew bring to life — a man who is ‘just like his country, young, scrappy, and hungry’ — we recognize the improbable story of America, and the spirit that has sustained our nation for over 240 years.”
That’s all fine, but it’s not what mattered about Hamilton, Parenti argues, implicitly making the case that liberal fans of the musical should follow Hamilton where he would lead in this moment of planetary and civilizational crisis. It’s cliched by now to say that the Constitution is not a suicide pact, but for Hamilton, a weak government put the national project at risk. Hamilton saw imminent doom and disintegration around the bend and understood that only a government vested with the ability to actually execute an agenda stood a chance of surviving.
As Parenti relates, Hamilton’s fears were borne out in real time — with the War of 1812 being the greatest indictment of the rival Jeffersonian approach to small government — but his warning is even more urgent today because it’s not one just for Americans, but for the globe. Only by embracing an activist Hamiltonian public response to the perils of climate change do the people collectively stand a chance. In order the for the United States to transform its economy rapidly enough to stave off cataclysmic climate change, let’s look to Hamilton, Parenti argues.
Hamilton’s legacy has been confused in part because he didn’t live to help shape it. While his arch rivals John Adams, Thomas Jefferson, and others — Hamilton made enemies prolifically — spent decades burnishing their legends in letters to each other that historians have pored over, Hamilton stupidly got himself killed in a duel in 1804, before he turned 50. And 19th century politics largely kept his ideas from being fully realized. After George Washington, the Federalist Party won just one presidential election, and John Adams was no fan of Hamilton, once calling him the “bastard brat of a Scotch Pedler.” Parenti returns the favor to Adams, knocking the Federalists for their penchant for authoritarianism, writing that “the second administration, which Hamilton was not part of, was even worse, for it bore the character of its central figure, the mean-spirited, begrudging, and self-regarding John Adams.”
Hamilton, a proto-keyboard warrior who could never log off despite the pleadings of his more level-headed friends, helped torpedo Adams’s reelection bid in 1800, publishing a searing takedown of his party’s incumbent. That led to 24 unbroken years of Jeffersonian rule, first by Jefferson himself, then James Madison, followed by James Monroe, leaving the federal government in the hands of slave owners intent on stifling the growth of a rival political economy that they saw as a competitor to the Southern way of life. Under their guidance, the economy and government both shrank, the army withered away, and, precisely as Hamilton had warned, that weakness led to a British invasion and the torching of the Capitol and White House.
HAMILTON’S ALTERNATIVE VISION for the role of the American government within the Constitution is what animates Parenti’s book. It is one that was only haltingly carried out in the United States, but has been studied and followed, Parenti finds, by some of the Asian governments that most successfully designed their own economic development, such as South Korea and Japan, as well as the early developmentalist German governments.
Hamilton’s vision matters today, Parenti argue, because in order the for the United States to transform its economy rapidly enough to stave off cataclysmic climate change, we need not look to socialist experiments in foreign countries or the writings of Karl Marx, but simply to Hamilton, a key architect of the Constitution, the lead author of the Federalist Papers, and, as Treasury secretary, the government official most responsible for shaping and structuring the executive branch as it exists today. While Hamilton only succeeded in implementing roughly half of his agenda, we should now drive home the other half.
Among those Hamiltonian accomplishments, he managed to empower the federal government to assume all Revolutionary War loans and create a “funded debt” — debt whose financing is backed by government revenue, which helped centralize power in the federal government and also powered economic growth and development by creating financial instruments needed to make investments. He created a national bank and built government revenue robust enough to begin to put together a standing army.
The half Hamilton accomplished likely saved the U.S. from falling into a postcolonial enfeebled state status, as befell Central and South American governments that largely failed to carry out a national project on a similar scale. Parenti compares Hamilton’s vision to that of Simon Bolivar, arguing that if Bolivar had succeeded and Hamilton failed, the balance of power in this hemisphere would be reversed today. Still, there was much more to his project, which he laid out in various places, but most comprehensively in his “Report on Manufactures” delivered to Congress in 1791.
Hamilton’s statist political economy is all there in print, yet most recent literature on Hamilton shies away from addressing his profoundly statist economic ideas. The Report is occasionally name-checked but almost never read, taught in college courses, or publicly discussed in any detail.
In his otherwise highly readable biography of Hamilton, Ron Chernow devotes only four pages to the Report. Chernow’s lines feel correct to the modern ear: “In the best of all possible worlds, Hamilton preferred free trade, open markets, and Adam Smith’s ‘invisible hand.’” Hamilton was, he says, “reluctant to tinker with markets.” But that is not correct.
In reality, Hamilton sought to create a national market from thirteen semi-integrated pieces and then transition that national economy from a lopsided dependence on export agriculture to a balanced and diversified economy centered on manufacturing. In the Report Hamilton lists, in meticulous detail, exactly how government should not merely “tinker with” but fundamentally overhaul, and create from the ground up, whole markets. His set of tools was labeled with a phrase that should be famous: “the Means proper.” These included carefully targeted state subsidies; protective tariffs; strategic exemptions from the same tariffs; selective export bans of strategic raw materials; quality-control standards and inspections; public investment in infrastructure; research and development; recruitment of skilled labor, and other measures that are detailed later. Hamilton’s means proper were the tools of economic planning, and their presentation in the Report on Manufactures was not merely a list, but also a blueprint for the orchestration and execution of a grand national plan aimed at nothing less than fundamental economic transformation. Asserting, as many do, that Hamilton was deep down a free marketeer serves to elide the progressive and immediately useful elements in Hamilton’s thinking.
His one-time Federalist Papers collaborator, James Madison, turned on him over Hamilton’s broad interpretation of the General Welfare Clause of the Constitution: “The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” That spring, he sent Henry Lee III, father of Robert E. Lee, a copy of Hamilton’s Report on Manufactures. “What think you of the commentary … on the terms ‘general welfare’?” asked Madison. “The federal Govt. has been hitherto limited to the Specified powers. … If not only the means, but the objects are unlimited, the parchment had better be thrown into the fire at once.” The reckoning of a climate crisis, if not properly addressed, will make Cockburn’s revenge look like little more than a late-night statue-toppling.
But there were fires on all sides. Thanks to Jefferson and Madison’s deliberate weakening of the government, the British invaded, and on the way to a near-reconquest, did more than metaphorically torch a piece of parchment. After a delightfully vivid portrait of the burning of Washington — including the Capitol building and Madison’s White House — by a British admiral, Parenti warns that much worse is in store from the next foe: “If the lesson of this history for the era of climate change is unclear, in your mind’s eye replace the ‘Mongolian vengeance’ of the young Admiral Cockburn, the flames illuminating his manic laughter, with ferocious tree-toppling winds, surging street-flooding tides, floating cars, and a government response in chaotic default and ruin. Then imagine the next day, sweltering hot, sodden, soggy, and starting to stink of rotting garbage and the occasional corpse.” The reckoning of a climate crisis, if not properly addressed, will make Cockburn’s revenge look like little more than a late-night statue-toppling.
Hamilton’s vision became known as the American School, later developed by Henry Clay as the “American System” and, in his home state of Kentucky, the “Bluegrass System.” It represents Hamilton at his most radical and expansive, wielding the General Welfare Clause to claim for the federal government the power to, more or less, centrally plan and develop the economy. Hamilton’s report, contra Chernow, argues directly with Adam Smith’s economic ideas, dismissing Smith as having little to say about real-word, as opposed to theoretical, economics. It takes on the Jeffersonian vision for America, that the country ought to remain a primarily agricultural society, arguing instead in favor of state development of a manufacturing industry as a means toward building a better, safer, and more prosperous nation.
The “American System,” which was the ideology at the heart of the Whig Party, argued that internal improvements — roads, canals, bridges, rail, etc. — and a coherent national economy and currency were essential to developing the country. It was a school of thought adopted by longtime Whig Abraham Lincoln and pushed forward through Reconstruction by both radical and moderate Republicans, while it was rejected by the conservative Republicans who came to dominate that party in the latter part of the 19th century. It would finally gain favor among New Deal Democrats, who by then had shorn it from its founder Hamilton, who was reviled as no better than the wildly corrupt Treasury Secretary Andrew Mellon, who served every Republican administration from Warren Harding to Herbert Hoover.
HAMILTON WAS ATTACKED in his time, and still is today, for his unapologetically pessimistic appraisal of the American people and the many checks he hoped to put on popular democracy. “We ought to go as far in order to attain stability and permanency, as republican principles will admit. Let one branch of the Legislature hold their places for life or at least during good behaviour. Let the Executive also be for life,” he argued unsuccessfully at the Constitutional Convention.
He did not believe the people were irredeemable, however, and developing the nation’s economy was the key to that redemption. Hamilton is often knocked as a pawn for the merchant class or the elites, and certainly that’s where he found his greatest support. His federal assumption of war debts amounted to the first major U.S. government bailout for the rich. But there’s no evidence that he personally profited from any of his relationships with his elite allies and instead saw in them the vehicle for development of an American manufacturing base. Where Marx half a century later identified a working class capable of ruling and producing an equitable society, Hamilton needed first to create one. Building up a manufacturing base had all sorts of positive knock-on effects for American society, he argued in his report, as increased wealth and jobs would bring with it a citizenry more committed to the national project. Economic distress, he often warned, was fodder for would-be tyrants.
In Hamilton’s reading of history, “of those men who have overturned the liberties of republics, the greatest number have begun their career by paying an obsequious court to the people; commencing demagogues, and ending tyrants.”
At times Hamilton almost sounds like Lenin in “Left-Wing” Communism: An Infantile Disorder, in which the Russian revo- lutionary criticizes the ultra-left for “mistaking their desire, their political ideological attitude, for objective reality.” Hamilton would likely have agreed with Lenin that such a miscalculation “is the most dangerous mistake for revolutionaries.” He probably also would have agreed with Lenin’s pronouncement that “our theory is not a dogma, but a guide to action.”
In the final section of Hamilton’s report, he arrives at a proposal that was not taken up by Congress, but was put into place elsewhere. It reflects the profound role he saw for the government in the economy. He proposed a ““Board, to be established, for promoting Arts, Agriculture, Manufactures and Commerce,” which would have been much more than that had he managed to push it through. Among other expansive, state-funded powers, the board would “encourage by premiums both honorable and lucrative the exertions of individuals, And of classes, in relation to the several objects, they are charged with promoting”; and it would “afford such other aids … as may be generally designated by law.” There’s very little economic activity that wouldn’t be implicated by that mandate. “Though not as statist as the USSR’s Gosplan (State Planning Committee), Hamilton’s proposed board sounds a lot like one of the greatest developmentalist bureaucracies in world history: postwar Japan’s famously effective Ministry of International Trade and Industry,” Parenti writes.
In order to transform the global economy rapidly, and move away from fossil fuels before it’s too late, policymakers need to look no further than Hamilton’s report on manufactures. There’s no Green New Deal too radical that couldn’t be vouchsafed by Hamilton. As Hamilton understood, the alternative is destruction.
The Jeffersonians were unnerved by Hamilton’s ideas, blocking them where they could and rolling them back later when they couldn’t. For the failure to execute on the vision, Parenti is unsparing in his criticism of the Federalists and, at times, of Hamilton, who he has no interest in defending as a person or in total. The Federalists, he argues, were too distracted by their authoritarian, paranoid tendencies and their personality clashes. The second Federalist president, John Adams, signed the Alien and Sedition Act and, with Hamilton’s encouragement, went about jailing political opponents, up to and including critical newspaper editors, which Hamilton cheered on, often finding too timid.
A person walks a dog under the marquee of “Hamilton: An American Musical” at the Richard Rodgers Theatre on June 29, 2020 in New York City.
Photo: Cindy Ord/Getty Images
Only recently, with Chernow’s biography and Miranda’s musical, has Hamilton’s reputation been not just rehabilitated, but burnished beyond recognition. Obama, speaking from the White House stage where Miranda had first unveiled some of his rap lyrics about the Treasury secretary long before the play was on Broadway, said that he hoped audiences understood the meaning of the musical. “We hope that they’ll walk away with an understanding of what our founders got started — that it was just a start. It was just the beginning. That’s what makes America so great. You finish the story. We’re not yet finished. This is a constant work in progress, America. We’re boisterous and we’re diverse. We’re full of energy and perpetually young in spirit. We are the project that never ends. We make mistakes. We have our foibles. But ultimately, when every voice is heard, we overcome them. It’s not the project of any one person. America is what we make of it. And we only need to look at this cast — performing in front of George and Martha — to know that our founders could not have dreamt — I think it’s fair to say that our founders couldn’t have dreamt up the future that they set in motion. And it’s only by exercising their greatest gift to us — the gift of citizenship — that we keep our democracy alive, and continue the work of creating that more perfect union.”
Let Obama continue to believe that, Parenti might argue, but let Hamilton, and the power of the federal government, guide and unleash the work.