Abstract
In this chapter, Jeffersonian and Jacksonian traditions in economic theory were reviewed. We found the basic continuity with the essential libertarian motiffs of the revolutionary thought (free trade, low taxes) but with an increasing level of theoretical sophistication: drawing inspiration from Adam Smith and French liberals, Jefferson, John Taylor and their followers, as well as Jacksonian economists like Leggett, Ragouet, or Gouge forged a powerful theoretical models explaining monetary and banking theory, free trade, nexus between the government and the economy, in a libertarian manner, anticipating some of the motives and arguments of the free market economic thought of the twentieth century. Also, we find further evidence of a deep affinity between political decentralization and economic liberty. These findings cast a strong doubt on the conventional treatments of Jeffersonian and Jacksonian economics as being variously “agrarian” or egalitarian or proto-socialist. It is shown that this is incorrect and that the main reason for these misguided interpretations is a conceptual confusion about what capitalism means—historians very often treat mercantilist and protectionist policies as synonymous with “commercial liberalism” because it is enacted for the benefit of some business interests, and free market thought as agrarian.
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Notes
- 1.
- 2.
In his “Report on the National Bank” Hamilton writes: “[paper money causes] augmentation of the active or productive capital of a country, gold and silver, when they are employed merely as the instruments of exchange and alienation, have not been improperly denominated as dead stock; but when deposited in banks to become a basis of a paper circulation, which takes their character and place…they then acquire life, or, in other words, an active and productive quality” (Hamilton 1957: 54–55).
- 3.
“Cantillon effect” is often used to refer to a phenomenon that the credit expansion by private banks does not affect all prices equally, but rather disproportionately increases the prices of financial assets and producers good, whereas the agricultural and consumers’ goods are increased latest. This change in relative prices leads to a redistribution of income from people on fixed incomes toward speculators and investors in the long-term projects, see Hayek ([1933] 2009).
- 4.
See Taylor (1822).
- 5.
Adam Smith (1907: 457). The quoted passage referred to the trade restrictions but is equally applicable to all other aspects of economic policy.
- 6.
“Letter to James Monroe, April 17, 1791” in Jefferson, Collected Works, Federal edition, Vol. VI, p. 243.
- 7.
Compare this with Hamilton’s view, Footnote 2 above.
- 8.
- 9.
- 10.
Philp Barbour was old school Jeffersonian, but he lived through the Jacksonian era and participated in that movement too, so could be classified either way.
- 11.
For the classical formulation of this problem, see Hayek (1945).
- 12.
This (the application of Hayekian knowledge argument to any kind of government intervention) is an argument that, to best of my knowledge, is yet to be made by modern economics. This author has a work-in-progress manuscript making similar kind of argument, but it is still unfinished and unpublished.
- 13.
Compare this with Hayek (1945: 2): “The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.”
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Jankovic, I. (2019). Free Market in a Small Republic—Economic Doctrines of Jeffersonians and Jacksonians. In: The American Counter-Revolution in Favor of Liberty. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-03733-8_9
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