Introduction: The Industrial Policy Debate — Jefferson versus Hamilton
For nearly four centuries, Americans have debated the government’s proper role in developing the economy. Most Americans would agree in principle with Thomas Jefferson’s maxim that “the government that governs least, governs best.”1 Jeffersonians champion a radical individualism in which the government is restricted to guarding law, order, and, especially, private property. The government’s sole role in the economy is to leave it alone. Markets should be completely free. The “free market,” paradoxically, is not anarchical; the natural laws of supply and demand determine outcomes. Consumers desire something. Entrepreneurs supply it. “Greed is good” because in striving to serve one’s own needs through work, innovation, buying, and selling, one inadvertently serves others. Thus does the “invisible hand” of the market solve all of society’s problems and desires.
KeywordsFree Market Industrial Policy Invisible Hand Visible Hand Emergency Agency
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- 1.Thomas Jefferson, Notes on the State of Virginia (Chapel Hill, NC: University of North Carolina Press, 1955), pp. 164–5.Google Scholar
- 2.Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Oxford University Press, 1993), pp. 220–1.Google Scholar
- 3.Alexander Hamilton, “Continentalist No. V” (18 April 1782), “Opinion on the Constitutionality of an Act to Establish a National Bank” (23 February 1791), “Report on the Subject of Manufactures” (5 December 1791), in Morton J. Frisch (ed.), Selected Writings and Speeches of Alexander Hamilton (Washington, DC: American Enterprise Institute, 1985), pp. 279, 312, 296, 294, 57, 299, 58-9, 311.Google Scholar