President Trump’s platform of “economic nationalism” appears to be crumbling as he seeks to survive his early-term thrashing from the Establishment, but there is a more positive history to his ideas, writes Andrew Spannaus.
By Andrew Spannaus
With most of the media and political commentators focused on the Republicans’ failed attempt to pass a healthcare bill, some of President Donald Trump’s most significant words appear to have gone almost unnoticed. The President was away from the political fight in Washington on March 20, conducting one of his periodic attempts to sustain excitement among his base.
Rep. Henry Clay, a Nineteenth Century promoter of what was called the “American System.”
At a rally in Louisville, Kentucky, Trump repeated his standard lines about putting America first, starting with economic policy. When he got to his push to “Buy American and Hire American”, something new emerged though, a reference to a key figure in US economic history: Henry Clay – who was a member of Congress in the early 19th century.
Trump spoke of the need for a new economic model, and then recalled how protectionism is far from a bad word in US history; rather, it was seen as a means to promote manufacturing and build industry.
Trump said, “Like Henry Clay, we want to put our own people to work. […] “Clay was a fierce advocate for American manufacturing. He said that free trade would throw wide open our ports to foreign production without duties while theirs remained closed to us […] Clay said that trade must be fair, equal and reciprocal.”
Trump then went on to use the term “American System”, associated with the current of economic nationalism promoted by figures such as Alexander Hamilton, Clay and Henry Carey, champions of investment in industry and infrastructure, and protection against the free market claims of European empires, which sought to undermine American economic independence in order to defend their own pre-eminence.
“In explaining his American System, Clay argued that the sole object of the tariff is to tax the produce of foreign industry with a view of promoting American industry,” Trump said. “For too long our government has abandoned the American System.”
Historical Reference Point
The President’s words have been ignored by much of the commentator class, although not surprisingly they were picked up by some websites that wholeheartedly support his agenda, such as Brietbart. Yet the reference to Clay and the American System make it clear that something new is afoot, an attempt to link Trump’s populist rhetoric to some of the most important and effective periods of economic growth in U.S. history.
A portrait of Alexander Hamilton by John Trumbull, 1792. Hamilton promoted the growth of an American manufacturing and financial structure that would secure its economic independence from Europe.
In the first half of the 19th century, Henry Clay was the most identifiable promoter of the American System of political economy. His vision was to continue the long-term goal set by the founding fathers Benjamin Franklin, George Washington and Alexander Hamilton: create an independent republic that would break not only its formal ties with the British Empire, but also demonstrate the superiority of a society free from the aristocratic structures present in Europe. The precondition for such a project was the development of a productive economy, which would provide a foundation for lasting independence. This meant the promotion of “internal improvements” – what today we would call infrastructure, manufacturing and strong links between agriculture and industry.
In the early years of the republic, adherence to this vision was certainly not unanimous; there were factions that preferred to live off trade with Europe and strongly opposed decisive actions by the federal government. The mantle of free trade was used then – as it is now – to oppose policies such as tariffs, national banking and other forms of state intervention that granted preference to domestic production as opposed to unrestricted competition.
Henry Clay was one of the great champions of the American System view, a giant in his time who is too often overlooked. A lawyer and state legislator in Kentucky, Clay first came to Washington in 1806 when he was named to fill a temporary vacancy in the Senate. After two brief stints as a replacement Senator, Clay returned to the Capitol in 1811 as a member of the House of Representatives, where he was immediately elected Speaker. Years later Clay would help found the Whig party, in opposition to Andrew Jackson and his so-called “populist” vision opposing big government. One of the great ironies of today’s political upheaval is that those who identify as populists now call for a return to protectionism, a view quite different from the States’ Rights concept promoted in the past, and also by much of the modern Republican Party.
A Manufacturing Base
Already from the time he was a replacement Senator, Clay began promoting his vision for the nation. In 1807, in line with the efforts of John Quincy Adams, he worked to obtain passage of a resolution binding the Secretary of the Treasury to prepare a plan for the construction of a national network of canals and roads, subsequently drawn up by Secretary Albert Gallatin.
President Donald Trump being sworn in on Jan. 20, 2017. (Screen shot from Whitehouse.gov)
It was not immediately implemented due to opposition from President Thomas Jefferson, among others, but this approach to internal improvements, accompanied by measures such as the founding of the Second Bank of the United States, and tariffs to protect manufacturing, formed the basis for the American System policy that would last for decades, making the Kentucky statesmen one of the idols of Abraham Lincoln.
It is important to note that the goal of protectionist policies was not to block international trade. Rather, trade conducted on the terms dictated by the British (and the French) was seen as stifling the growth of the United States, and perpetuating the pre-revolutionary condition of colonies whose main vocation was the export of raw materials.
In the first 20 years after the birth of the new nation there had been an initial period of strong growth. However, the benefits were felt principally by the states of New England and a few others that profited from the carry trade of products from the Indies that were then re-exported to Europe.[See Douglass C. North, The Economic Growth of the United States, W.W. Norton & Company Inc., New York, 1966, p. 53.]
Many in the merchant class were content to continue in this mold, despite the restrictions on trade and vexations imposed by Great Britain, but the nationalists bristled at the limits on the growth of domestic industry, seen as thwarting the national mission set by the American Revolution. The result was that Clay and his allies in Congress, known as the “War Hawks”, agitated in favor of again going to war with Great Britain, with the goal of finally obtaining full independence, allowing not only for unrestricted commerce, but also for the expansion of industry and domestic trade towards the Western areas of the country. Clay has been called “the man whose influence and power more than that of any other produced the war of 1812 between the United States and Great Britain.”[Quote from Josiah Quincy in: Quentin Scott King, Henry Clay and the War of 1812, Jefferson, North Carolina, McFarland & Company, Inc., Publishers, 2014, p. 148.]
The American System as defined by Clay has represented a crucial reference point for various periods of economic growth in U.S. history. The approach can be defined as economic nationalism, but it is essential to understand that the enemy of this view is not the expansion of international trade or economic initiative, but rather the attempt by colonial interests to prevent the development of industry and thus the growth of a strong, educated working class able to sustain an independent democratic republic.
Indeed American System economists such as Henry Carey, whose ideas would form the basis for the birth of the Republican Party in the 1850s, demonstrated that protection for American industry actually benefited trade, as “every man is a consumer to the whole extent of his production.”
Modern economic theory does not look kindly on the notion that a nation should promote its own industries at the expense of the efficiency of international markets. The events of recent decades have shown, however, that the basic concepts that emerged in the 1800s still apply today: the search for low costs leads to a race to the bottom, and weakens the economic and social fabric of countries that aim to grow the middle class.
As the Trump administration seeks to develop a coherent policy on global trade and the promotion of American manufacturing, looking to the current of Hamilton, Clay, Carey and Lincoln could, in the best case scenario, lead to an important shift in modern politics; at the least, it should allow for a deeper discussion of what protectionism actually means in U.S. history, beyond the caricature that has dominated the public discussion to date.
The President is clearly picking and choosing his references, not without some confusion; indeed he speaks glowingly of Andrew Jackson, whose economic approach was diametrically opposed to that of Clay and other representatives of the economic nationalist current.
Nevertheless, a serious discussion on how to implement a modern version of the American System’s emphasis on investment and fair trade, would bring an important new element to the debate over how to address the failures of globalization in the past 25 years.
Andrew Spannaus is a freelance journalist and strategic analyst based in Milan, Italy. He is the founder of Transatlantico.info, that provides news, analysis and consulting to Italian institutions and businesses. His book on the U.S. elections Perchè vince Trump (Why Trump is Winning) was published in June 2016. [This article originally appeared as Aspenia online at http://www.aspeninstitute.it/aspenia-online/article/donald-trump-henry-clay-and-american-system]
The Civil War and the American System: America’s Battle with Britain 1860 – 1876
Allen Salisbury
1992
This has the most complete anthology of writings for the American System, featuring an introductory essay by Allen Salisbury (deceased in 1994), documents by Henry C. Carey, Abraham Lincoln, William D. Kelley, William Elder, Stephen Colwell, and Mathew Carey.
Clay is amply documented in the introductory essay.
Carey in particular was written out of American history books by 1900, but that was not possible to do to Lincoln.
Trump, whatever his many faults may be, did an enormous service to American history when he “revived” Henry Clay in his Louisville speech. No other American President since Lincoln has done this.
Moneyed elites do as they damned well please. That is the only framework at play. The courts, the government, and even our own middle class countrymen on the right side of the aisle all serve moneyed elites. The USA as a force for moral guidance is ridiculous. The USA is a temporary clearinghouse for the Kings of Cash. Even that will change. There is no country. There is no solidarity. There is wealth and subsistence servility.
By the way, England itself never develop under free trade, but develop through a systematic interventionist state, a wall of protection, subsidies to manufactures and arbitrary used of violence; it adopts free trade once it was more powerful than all its neighbors and as Henry C.Carey correctly argued, it was nothing more than the continuation of colonial policy by other means. What was this last one? To keep colonies as raw resources providers, which history and real economic analysis show to be the surest path to stay poor. What was the new free-trade policies, especially in its Ricardo variant, pushed by England in mid 19th? To make themselves the workshop of the world (and the creditor of the world) and to transform the rest of the world into producers of raw materials under a free-trade regime: the same end, with different mean (in the first, colonial regulation, in the second, ‘free trade’).
Who became the developed nation in 20th century? The one who fought to industrialize and keep at bay free trade interest long enough (planters and merchants’ communities often pushed by UK empire). Thus, US was the most protectionnist nation the world, but Germany, France, Belgium, Canada, Australia, Japan, Russia (not long enough though! But as Engel admit it, enough to avoid the fate of India), etc.
Who became the third world countries in 20th? Those who adopted free trade (or more often were forced to adopt free trade, more often than not by the British Empire, either directly under colonial control as Ireland or India or by old version of ‘regime change’ in other place) and where the ‘South’ won over the ‘North’ of their country, especially in Latin America, Middle East and other.
Students are brainwashed by comparative advantage theory put forward by Ricardo and they never studied the real impact of Ricardo’s example between UK and Portugal: far from having benefited from the bounty of a static and unrealistic economic theory that doesn’t even consider ”increasing return” as a real phenomenon possible under the theory of static equilibrium, Portugal became a poor country, deindustrialized and completely dominated by English merchants and bankers…
Some reading as the overall effect on contries in 19th:
Paul Bairoch, Richard Kozul-Wright, Globalization Myths : Some Historical Reflections on Integration, Industrialization and Growth in the World Economy (onlyine)
John Vincent Nye, « The Myth of Free-Trade Britain and Fortress France: Tariffs and Trade in the Nineteenth Century »
Michael Hudson, Trade, Development and Foreign Debt 1, 2
Erik S. Reinert How Rich Countries Got Rich and Why Poor Countries Stay Poor
etc.
The best account of the ”American System” economist against the British free trade has been written by Michael Hudson in its book «America’s Protectionist Takeoff, 1815-1914 : The Neglected American School of Political Economy», Dresden, Islet, 2010 [1975].
As he said:
”The growth of productive powers, protectionists concluded, tended to exceed the growth in private profits out of which capital was formed. Neither profits nor the increase in money incomes was the mainspring of economic growth, but the progress of technology and invention, and the increasing productivity of the nation’s labor, capital and land.”
“In this respect, it would be erroneous to view American protectionist thought primarily as a doctrine of international trade. It was rather a theory of the means by which a nation could most rapidly increase its economic activity by augmenting both the number and the productive powers of its population. Raymond and Rae, List and Carey were in fact able to set forth their basic principles independently of direct reference to the issue of protective tariffs.”
Actually, the economic fight was between, mainly, Middle States wanting US industrialization and those who sought to keep the US as a raw exporter as the South and Wall Street and Northeast merchants (the South planters were backed and support by England, they like to have cheap cotton and sell manufacture and fear a growing US industry; actually, in any land they intervened in 19th UK backed the planters class and import/export merchant communities and support/control it through credit loan from London. They pushed free trade propaganda developed by Jeremy Bentham – as the one that is better for the consumer to buy cheap as some southerner still believing it, forgetting that no consumer exist without being a worker and not much well-paid work is ever to be found in agricultural communities… but slave owners didn’t really care, they just wanted cheap products to make their slave the more profitable… ) and diffused by notorious figures as John Bowring who used every trick, from journalist bribery to the creation of ‘think tanks’ and organizing revolt as in South France in the wine community base explicitly on the South Carolina model (see David Todd, « John Bowring and the Global Dissemination of Free Trade »; not unlike some US liberal today…)
As Hudson put it, the fight in 19th was: ”It also found itself at odds [Middle State] with the class and political prejudices of these two regions: their anti-labor attitude; their deflationist hard-money attitude, hence their opposition to a national bank; their opposition to an active program of federal internal improvements; their desire for any doctrine that would endorse westward expansionism; and their belief that national and world economie development connoted a growing role played by international commerce. Both the Northeast and the South sought to maintain America’s dependency pattern as a raw-materials exporter to England, and therefore espoused the Ricardian doctrine of comparative advantage.”
During the ”Civil” war, UK help the confederates to secretly build ships in the UK (after the war, UK had to pay a huge amount of money in reparation, USS Alabama claim) and gave them based in its Canadian colonies (not unlike UK and US today arming the rebel in Syria). The secret spy agent of the Confederacy was James D. Bulloch, whose nephew was … Theodore Roosevelt, the Anglophile imperialist (he was a fan of his uncle) who took power after the last president defending explicitly the American system was shot dead (ie McKinley… to note, there was ‘progressive’ and ‘conservative’ American system defendant: McKinley was more the second type)
See the apologetic Wilson, Walter et Gary L. E. McKay. James D. Bulloch : Secret Agent and Mastermind of the Confederate Navy for that matter; they don’t even care to mention he was a racist or share the imperialist outlook of UK instead of the American revolution outlook… but that seem the US today, forgotten the day of Republic ideal and common good: once US developed, instead of developing other, they seem to want to emulate UK empire bringing back other nation to Stone Age through bombing and/or free trade financial loothing.. well, as for UK, this is good only for the 1%: shall US citizens be better than their English counterpart in UK 19th and fight back for a government for the people and play a positive role in the planet?? Better to follow the foot of Kenney to the moon and Mars than to follow Palmerston and British East company free trade loothing policy… (to have a very good example of ‘British free trade’ at work, don’t miss the excellent book An Era of darkness: The British Empire in India, by Shashi Tharoor.)
I am a Hungarian American, and we know that Kossuth was a Mazzini agent of the (racist) Young American movement that Mazzini and others infected the United States.
Clay picked up the American system torch from Alexander Hamilton and carried it to Lincoln, who said he emulated Clay as a statesman in all things.
The Southron Henry Clay was indeed the Dick Cheney of his day, as the driving force behind the opportunistic war the U.S. declared against Britain in 1812. The U.S. government was dominated by southern pro-slavery interests in its early years; the purpose of the war was not “free trade and sailors’ rights”, as publicly proclaimed, but the seizure of land for the expansion of slavery. It was a particular thorn in the American side that Britain still supported the right of indigenous Native Americans to live unmolested on their ancestral homelands, which were eyed so greedily by the slaveholders.
Let us not forget that the United States soundly lost that gamble, by the way. Britain, ultimately triumphant after a ground war disastrous to Americans, and weary of its two-decade war with France, agreed to a cessation of hostilities only after the defeated U.S. agreed to accept nothing more than the restoration of the prewar status quo. Initial British demands for peace had included the return of Maine and the northern parts of the New England states as a DMZ against future armed invasions of Canada, and the payment of substantial war reparations. The British burned Washington in 1814 in retaliation for the burning of York, modern Toronto, by American invasion forces in 1813, and the first American “peace societies” sprang up in the wake of the useless waste of lives and treasure.
Interestingly enough, Clay was opposed to the radical secessionists of his region, saying in Congress in 1850 that if the right to sunder the Union were held by any state under the Constitution “we must cease to boast of the wisdom of our forefathers who founded it.”
After his son was killed in the Mexican War, Clay finally came to repent his role in his country’s aggressive militarist policies. When the Hungarian nationalist Louis Kossuth sought American aid in the struggle for Hungarian independence, Henry Clay remarked that “the cause of liberty” is better served by “avoiding the distant wars of Europe.” We should instead “keep our lamp burning brightly on this Western Shore, as a light to all nations, than to hazard its utter extinction, amid the ruins of fallen or falling republics in Europe,” he said.
Indeed…Henry Clay is comfortable approach to massive transition…glad Trump sees challenges to USA and found appropriate historical model to emulate. Always.liked HenryClay &his speeches to Congress.
iconoclast -“Twisted by attending Antebellum College (where “moderates” refer to the American Civil War as “The War of Northern Aggression”), where history is written by the losers, and his degree in philosophy likely argues that the Civil War wasn’t about slavery, it was about fundamentalist economics.”
A little off topic, but I respectfully post this in the interest of education.
Lincoln invaded the South over taxes, not slavery. He pretended to free the slaves in the middle of the war to win over Europe. The myth of this war being over slavery is the myth that holds the war machine together. It must be torn down. Here are his own words in his First inaugural address in March 1861: Pay special attention to: “…and to collect the duties and imposts…”. Those are taxes, collected down south and sent up north. A fight over money, i.e., control of commerce and trade.
……..
“Apprehension seems to exist among the people of the southern States that by the accession of a Republican Administration their property and their peace and personal security are to be endangered. There has never been any reasonable cause for such apprehension. Indeed, the most ample evidence to the contrary has all the while existed and been open to their inspection. It is found in nearly all the published speeches of him who now addresses you. I do but quote from one of those speeches when I declare that —
I have no purpose, directly or indirectly, to interfere with the institution of slavery in the States where it exists. I believe I have no lawful right to do so, and I have no inclination to do so.
………
“In doing this there needs to be no bloodshed or violence, and there shall be none unless it be forced upon the national authority. The power confided to me will be used to hold, occupy, and possess the property and places belonging to the Government and to collect the duties and imposts; but beyond what may be necessary for these objects, there will be no invasion, no using of force against or among the people anywhere.”
Wow…an excellent reminder of historical facts putting different perspective on it all…explains a lot also…Lincoln started war over taxation of agricultural poor south ..by richer industrial north…seems pretty darn hateful &devalue Life:620K Precious IS.lives dead over freaking taxes…sounds like Ireland vs. England landlords amid potato famine 45 yrs earlier…
We want to put our own people to work… I guess his own people are Chinese, Vietnamese, and Mexican?
We cannot go back, the runaway monster of global predatory capitalism has left the station and can’t be stopped, only checked a bit here and there as the monster continues on its unsustainable orgy. Trump has never said a word about inequality nor fair taxation. Stopping the monster, which is fueled by greed, seems improbable other than by chaos and collapse, economic and ecological.
Sorry to sound so doom and gloom, but I see no desire on the part of humans to change how they live on the earth. The Iroquois nation, known as the Haudenosaunee, hold the Seventh Generation concept, that the tribes should live with forethought of the success of seven generations following in time. They made a visit to the UN about a generation ago to give a declaration of warning that the white man’s seventh generation after industrialization was approaching, and that they saw many warning signs. Of course, they were ignored.
And as I wrote this, NPR news reported that the US dropped a MOAB, “Mother of All Bombs” on Afghanistan in a terrorist stronghold. I was half expecting to hear “Syria” when I heard Afghanistan instead, so where indeed can we be headed? Not good.
I respect NativeAmericans wisdoms~prophetic advisories…”7th gen white mans success” ~unbridled deregulated capitalism,privatization of public services,globalizes business profit models,…have all come.to fruition…but Trump supporters elected Trump outside the establishment to stop that locomotive pulling world over cliff into “MadMax” movie…Trump temporary deregulation to kicksyart biz recovery but tariffs to stop globalization of biz economics …tax rewrite to follow NatHealthService model sorted =ppl first…He understands.all factors of the economy &trying to tweak each appropriate to USA society&biz economy needs..
I AM STILL HOPEFUL…BATTLE AGAINST.GLOBALISM COLLAPSE US CONSTN DEMOCRACY BY OB_HC_nazisoros …is still fierce but slowing …
Hope…?????
I am astonished that ConsortiumNews would run this Larouchian drivel.
“some of President Donald Trump’s most significant words appear to have gone almost unnoticed”
Really? Does the author not know one of the first principles of politics (“watch what they do, not what they say”)? The Emperor in Chief drops a gigantic bomb on Afghanistan while stumbling his way into WWIII and we should be concerned with the daily bombs he drops on MSDNC?
Spannaus’s history, and his economics, are a bit twisted and I wonder what planet this international “journalist” lives on. Twisted by attending Antebellum College (where “moderates” refer to the American Civil War as “The War of Northern Aggression”), where history is written by the losers, and his degree in philosophy likely argues that the Civil War wasn’t about slavery, it was about fundamentalist economics.
Twisted as well by going to work for such as Lyndon Larouche (god, he’s still alive!!!), pioneer of the conFusion Movement.
Henry Clay/Andrew Jackson economics at a time when the world, more and more, is ruled by predatory financial capitalism? Really?
Taking Schrump’s “America First” and “Bring Back Manufacturing” seriously?
It’s over. Pay attention to those critics of capitalism in these comments. Capitalism is more than simply an “idea”. It is inherently unstable, irresponsible, inequitable, unsustainable, and amoral. It, like the way economic growth is bandied about as if it meant more than preaching from the Church of Materialism, is a belief system that will bring us all down.
Great post. I needed to hear that. Whitewashing capitalism will only get us deeper into it’s suffocating coils. It needs to be stabbed through the heart. Cutting off a few tentacles won’t help, because it will grow back two for every one you lop off. Look at history, that’s what it has been about with this soul eating monster.
What a ridiculous hit job on LaRouche and the AmericanSystem of Political Economy. People can read it for themselves and draw their own conclusions…and THAT is EXACTLY what the people YOU are shilling for, are afraid of. I overcame such shameful attempts to shepard me away from looking into the LaRouche sites, and was amazed at the wisdom and insights I found there. I vowed never again to be influenced by character assassins, who could be responsible for promoting WWIII via promotion of ignorance and false conceptions.
“I am astonished, ASTONISHED I tell you!” What drivel.
Henry Clay was the monumental force for the American system, and the model statesman for Abraham Lincoln, as he repeatedly said during the 1840’s – 1865. Clay lost his son in the illegal Mexican war to annex New Mexico and California, which followed the illegal annexation of Texas. Clay started the first real anti war movement in American with a speech in Lexington, Ky (attended by Lincoln) in 1847, which the newly invented telegraph spread nationwide in hours and minutes. Lincoln opposed this war in Congress during his short two year stay in Washington. President Polk had claimed the Mexicans had spilled American blood on the Rio Grande; Lincoln replied “show me the spot”, and was mercilessly taunted for his anti war stand for year afterward. Reflecting on this years later, Lincoln said, “that is the last time I opposed a war; since then I am for war, pestilence and famine.”
Thanks to Andrew Spannaus for this article.
glenn – sounds like Trump is being Lincolned, mercilessly taunted for his anti-war stance until he fell in line.
The problem for many of us modern children is that we want to have our cake and eat it too. We want to hang on to capitalism and have peace. That will never happen. You can have one or the other but not both. Same with all the doodads of modern technology and a sustainable environment. Americans especially cannot imagine existence without all the toys they have become addicted to. They will be fondling all this junk, refusing to let go of it when the mushroom clouds begin blooming all around them.
The London-Wall street axis that runs NATO is currently overthrowing the elected U.S. government, to try to prevent a return to the American System. John F. Kennedy faced down the predecessors of these London-oriented fascists (Allen Dulles at CIA and Lyman Lemnitzer, Pentagon chief), who proposed World War III against Russia. They demanded 1960s false-flag fake terror incidents (Operation Northwoods, etc.) as world-war pretexts, just like the 2002 lies against Saddam Hussein or today’s lies against Assad. But JFK faced them down, and fired them! That faction murdered JFK, but not before he had saved the world from incineration. Now Trump has been fooled by these same fascists aiming at nuclear World War Three. Shame on the neo-liberals, whose hysteria to conform with the Establishment may kill us all including their own children. It’s time to FINISH WORLD WAR TWO — by breaking up the power of the London-Wall Street axis that backed Hitler and now wants to kill us all.
Great to hear from you, Mr. Chaitkin. I’ve been trying to do my little bit here on CN to make people aware of EIR and LaRouchePAC. It is a bright flashlight to use when walking through this dark, fog-filled World. You sure don’t pull any punches either…great.
Anton – great post. Yep, Trump is being sucked in. Stupid, stupid, stupid. They’re surrounding him and telling him, “You’re doing what Obama should have done. You’re better than Obama. You’re great!” And Trump is falling for it, or at least that’s what it looks like. A complete idiot if that’s the case.
Hey Back, put his name into the EIR searchbox. He’s one of their heavy-hitters. Great historian.
I think that the politicians and their handlers, the powerful financial special interests of today, are creating a muddy narrative to confuse people on trade. So thanks to Mr. Spannaus for his efforts to tease out some of the conflicting terms. The terms capitalism and socialism have both been politicized. Both terms that have been confused and used as political weapons.
The key words, I think, from Mr. Spannaus are FAIR TRADE.
In this article about David Ricardo, the 19th century political economist, the various theories and practical applications of “trade” are discussed in a very informative way, I think:
https://en.wikipedia.org/wiki/David_Ricardo
Fair Trade, I would like to think, can be accomplished by setting rules such that unfair predatory exploitation can be kept at bay.
The ruthless application of secretive trade deals like NAFTA that allowed capital to exploit wage differences and environmental exploitation in third world countries leading to the collapse of sustainable jobs here at home and exploitation of cheap labor and the environment in third world countries could have been avoided. It would have required a public discussion of the rules of engagement for trade. That is the type of “protectionism” that might have worked.
Setting tariffs is not the answer. An inefficient system that encourages retaliation, IMO.
Setting rules to
tax capital flows so that they cannot ruthlessly capture predatory profit from exploiting foreign labor at the expense of domestic labor and they are not permitted within the rules to degrade the environment of other countries in order to exploit vulnerable communities but instead – if they must go overseas – they have to pay out of their profits to maintain environmental standards in the less developed country and see to it that any wage differentials are not exploited but made available to provide alternatives – retraining, education, unemployment insurance to people in the country losing the jobs and equivalent benefits to labor in the less developed country.
There has been a free for all in the corrupt oligarchic banking, trading, secretive trade deals that is ruthlessly undemocratic to say the least. Avoiding this exploitation can be accomplished within a fair ‘capitalist’ system if that is deemed the preferred choice.
Capitalism as it functions today would appall the esteemed father of capitalism, Adam Smith. He was a moral guy and did not approve of exploitation.
He invented the idea of the “invisible hand” – that even though no one individual or group of individuals is “the best and the brightest” and capable of “managing the economy”, if the rules are transparent and fair, then the interaction of all parties will help achieve a system that “miraculously”, perhaps, works for all without having to resort to a brittle control of pruduction and distribution of goods and services at the top, which would surely lead to unintended consequences and corruption.
Unfortunately unscrupulous and greedy people have always found ways to subvert the laws and principles supposed to make capitalism “fair.” The very system of capitalism rewards people for cheating it, and using it as a handy cover for their depredations. It has never worked for equality and justice, and it never will. We need an entirely different system, or else this one will destroy us. Those who dream of fixing it are like those trying to tweak apartheid to make it work more fairly. We need to remove this diabolical capitalism root and branch. How bad does it have to get before people see this? Unfortunately we are going to find that out very soon.
Anarcho syndicalism is an interesting idea, if I understand it correctly….
Small (or not so small but) local syndicates, maybe like guilds in earlier centuries? so that people have more control over their day to day lives?
But consider, after the Great Depression, institutionalized rules were put in place (e.g. the SEC ACTS of 1933-34 including Glass Steagall). Those ACTS used enforced rules to keep banking “honest”. The insured deposits of Commercial Banks were only available to strict lending guidelines. When Reagan and then Clinton deregulated, all hell broke loose and systemic destabilizing bets were made with taxpayer insured money. People who ran the big banks and were primary dealers (responsible for maintaining liquidity in return for favorable access to the Federal Reserve Bank lending rates) knew or should have known that it was wrong to gamble with the public purse. But since they were allowed to get away with it – they gambled.
An excellent book on this by James Galbraith “The End of Normal” articulates the theme that people behave badly (as you point out) but that institutionalized rules with attached penalties and jail time made a huge difference from the 1930’s through the 1960’s.
Bill Clinton was supposedly a smart man, a Rhodes Scholar, but failed big time as a president and not because of his fooling around with woman. He shifted the Democratic Party away from the New Deal which had worked, IMO.
thanks!
stan – “Capitalism and the free market are concepts, i.e., ideas. War is not about ideas. War is about the necessities of life – conquering territory and resources and controling the terms of commerce and trade. Donald Trump is now the spokesman for the business interest group called the Republican Party.”
https://www.google.com/?client=safari&channel=mac_bm#channel=mac_bm&q=hjalmar+schacht+rothschild
I can’t help but add that some “primitive” cultures have pulled off the model of economics I shared above with quite good success. I can hear people saying, “But we couldn’t live like that, no car or television or refrigerator!” I am not talking about an excessive technological deprivation exercise, just a moderate and wise simplicity. Some modern technics could still be viable in a population controlled world. Like the early Quakers say, as opposed to the strict Amish.
The key would be the fact that they are genuine Quakers who walk it like they talk it.
In all fairness I should share my vision of a better economic system so most people can dismiss me as an irrelevant crank, and move on to “serious” ideas. In my society there will be no private property as we currently understand it, and everyone will be paid the same amount from the one universal currency which is funded from the total collective work done. They will be paid this sum whether they “work” or not, simply as a gift of their being born into a compassionate loving culture. All projects whatever will be planned and carried out on the basis of collective decisions. There will be no accumulation of special power through money or other means. A true economic equality will prevail. There will be no basis for war or poverty, nor great wealth.
There! Now please go on with your realpolitik and economics, and watch your world go down in flames. But by all means enjoy a mint julep with Mr. Clay and your capitalist friends while watching the show!
And still there will be the amassing of capital (financial instruments, machinery & equipment, buildings, a labor force) to be applied towards some end (hopefully productive of some useful development). Playing around with HOW such process is organized still doesn’t guarantee the elimination of greed, powerlust, abusive relations, ignorance, etc…this is a moral issue. I’ve often thought the old Soviet Union was much like any old Company Town in turn-of-the-century America. An old Soviet joke: “under Capitalism, man abuses man. But under Communism, it is the other way around.”
Capitalism and the free market are concepts, i.e., ideas. War is not about ideas. War is about the necessities of life – conquering territory and resources and controling the terms of commerce and trade. Donald Trump is now the spokesman for the business interest group called the Republican Party.
The Republican Party’s first president was Abraham Lincoln who attacked the South because they would not submit to the business interests and pay their taxes to the North. The southern states “left the union”, much like England is “leaving the union” of the EU.
After the business interests of the North conquered the territory and people of the South, they went on to conquer the Philippines, Japan, half of Korea, Vietnam and Southeast Asia, and many overthrown governments (competing businesses) in South America and Africa. The Democratic party saw where the money was and joined them. Now they are both the party of big business and big guns.
When they got their butts kicked and left Southeast Asia they began planning for an invasion of Southwestern Asia. As soon as the Soviet Union (a competing business) collapsed, the US businesses started their murderous bombing of the Muslim oil lands. This invasion and bombing was planned and prepared for during the Reagan military buildup of the eighties.
The planing and preparation for US business to conquer the world began about 1980. All this talk of free trade, different economic systems, and tit-for-tat wars is a false narrative, and people who believe it are missing the big picture. Conquering territory, resources, and markets is what business interests do, if you let them. Ask Al Capone or the Mexican drug cartels.
I think what has changed the most since the time of Clay, and Jackson, is how big business has been able to go global seeking out low wage employment, and by doing so create itself an empire of labor without borders. In America big business saw this off shore low wage worker as them being their savior to free their corporate interest from what these big business tycoons saw as a heavy burdened and overbearing American labor union shackle of profit constriction.
As we enter into the Model T era of man’s ever evolving automation technology, it would appear that even the poorer nations inside the emerging third world are threaten by the very mention of machine over manual labor. Off shoring labor is certainly going to reverse itself, and be replaced by a continuously steady working population of busy robots. Would it be worth to ponder that man’s very existence of being relied upon to fund our consumer based economy will be replaced with a robotic repair and upkeep market?
Seriously though maybe it’s too soon to worry yourself to death, because we are now on the verge of an even newer technology where people will have computer chips implanted within them, and work will be a programming function. Your boss will also always know where you are, and what your doing, every working and possibly every nonworking hour of the day….1984 on steroids. So for now enjoy your hammer and screwdriver if they are not electric, and jump for joy over the freedom you still have.
Glad to see an article on the American System of Political Economy. This happens to be Lyndon LaRouche’s precise area of expertise (also an awesome historian). I believe Andrew and Nancy Spannaus cut their teeth over at Executive Intelligence Review, as did Webster G. Tarpley.
I was a student of Clay, Carey and Hamilton, among others, in my days. Even then, protectionism wasn’t very fashionable… I used to try to find similarities in the policies that created strong economic growth in the U.S. and elsewhere throughout history. A case could be made that the basic policies of what could be called the american system created strong economic growth in many instances when they were implemented. Germany post 1850. Russia pre-world war 1. South Korea post 1950. Etc.. If you narrow the criteria to protectionism, investment in infrastructure and development of the manufacturing base, you can get quite a huge sample of cases. On the other hand, free trade doesn’t look soo good, and it’s been around for ever.
Anyhow, it’s refreshing to read that people are rediscovering these idea’s. How unexpected that Trump would be the cause.
Perhaps because I was born and now live in Kentucky, I found the stuff about Henry Clay interesting. However in my mind the article and the figures mentioned, all uncritically endorse the basic mechanisms of capitalism, which is unfortunately on the way to ruining the planet and leading the human species towards extinction. No matter how you paint it, this pig stinks and is highly dangerous to boot.
I see capitalism as a loaded phrase, having been emptied of useful meaning. Small-c capitalism is merely the amassing of capital (financial instruments, machinery & equipment, a labor force) to be applied towards some end (hopefully productive of some positive development). The arrangements of this procedure are many, ranging from completely private & unregulated by anything, to completely public, replete with regulations, and many combinations in between (various forms of Dirigsme). We often use the phrase “capitalism” when we’re really speaking of greed, powerlust, abusive relations, and ignorance.
I feel that historically greed, powerlust, abusive relations, ignorance, war and oppression have been the fruits of capitalism as practiced, as opposed to capitalism in theory This pig is dangerous and it stinks; cosmetics will not help.
Ruining the planet? Life expectancy, well being, art, leisure, music, all things human have been on an upward trend for centuries. Environmental quality improves as people become more wealthy. What stinks are authoritarians who would have mankind dance only to the tune that suits them.