Wow. In the comment thread on Naked Capitalism, regarding my final New Deal 2.0 “Founding Finance” post, the commenter Peripheral Visionary offers the best-informed, most gracefully and concisely written summary I’ve ever seen of the classic interpretation of the American founding from which my work is precisely intended to dissent. This is so commonly believed, so perfectly put, and so utterly the reverse of what I’ve come to think that I quote it at length:
An interesting assessment, and I generally agree that the Founders’ views were quite complex and varied, and not easily summarized.
It needs to be pointed out, however, that social democracy ultimately had its roots, not in the American revolutionary state, but in the French revolutionary state. That explains its particular emphasis on class, and its focus on the division between capital and labor; both were key features of Western Europe, but not as prevalent features of the American state, which was dominated by independent farmers and craftsmen (hence, with capital in many if not most instances being owned by labor, and therefore with only vaguely-defined class distinctions, the South being the major exception).
In the founding American state, the route to relief of poverty was not through the state (and it is difficult to believe such a thing would even have been considered), but rather through the frontier. The frontier served as an enabler of the otherwise disempowered, who by way of the homestead acts could secure property, independence, and the means of supporting themselves (all at the expense of Native Americans, of course–but then, redistribution programs are zero-sum and therefore always come at a cost to someone else). That “outlet” consistently relieved pressure on the impoverished areas of the East and the South, which would go a long way toward explaining why socialism gained little traction in the 19th Century. Only in the 20th Century, with the last of the frontier exhausted, could socialist tendencies, in the form of social progressivism, gain traction. When Steinbeck’s Joad family goes west in the California of the 1930′s, they find an oppressive class state; had they gone west just fifty years earlier, they would have found open land and opportunity.
That’s the reading that I think a realistic look at finance in the founding period turns upside down.
For example: No, social democracy does not have ultimate roots in the French revolutionary state. For better and for worse, the French revolutionary state had roots in the Pennsylvania revolutionary state. (more…)