A Commercial Republic: America’s Enduring Debate over Democratic Capitalism. By Mike O’Connor (Lawrence, University Press of Kansas, 2014) 287 pp. $34.95

Abstract

O’Connor’s engaging survey of leading debates about political economy throughout American history helps to explain why many of us are oblivious to the role that the federal government necessarily plays in our market economy. Despite the enduring popular appeal of laissez-faire from the Jacksonian era to the present, the “American government cannot help but alter market outcomes, often significantly” (243). Echoing Alexis de Tocqueville’s influential analysis in Democracy in America (1835, 1840), O’Connor posits an ongoing tension between “liberty and equality,” the central concepts around which controversies over capitalism and democracy have pivoted in the history of American liberalism (244). As they “struggled to reconcile their commitment to the political sovereignty of the people with their equally fervent desire to ensure the integrity of markets and to protect private property,” Americans have perpetuated a tension that defies resolution and defines democratic capitalism.O’Connor’s study begins with a Hamiltonian tradition of “stewardship” that linked the federal state with elite investors and the promotion of manufactures. Despite resistance from reactionary Republicans, Alexander Hamilton established a central role for the state in fostering a “diverse and healthy economy” (47). Jacksonians resisted federal intervention—most notably in banking—but embraced markets. Their “laissez-faire populism” proved ill-equipped to deal with the business cycle and paved the way for a return to power by neo-Hamiltonian Whigs and their successors (61). But suspicions of state power remained the democratic default in future decades, disabling efforts to curb concentrations of private wealth and power. However significant the federal government’s role has always been in the economy, American voters have been reluctant to use their power to promote egalitarian outcomes. The collapse of the New Deal consensus and the triumph of the populist right’s anti-tax orthodoxy confirm the democratic legitimacy of supposedly free markets.O’Connor’s best chapters help to explain why Americans are reluctant to interfere in markets. Led by Justice Stephen F. Field’s influential dissent in Santa Clara County v. Southern Pacific Railroad (1886), the Supreme Court transformed the corporation from a grant of power to achieve a public purpose to a “sort of placeholder for individual interests,” thus providing “a Liberal, individualist justification for what was effectively an illiberal, collectivist enterprise” (110). Field’s jurisprudence showed the importance of ideas in determining the character of democratic capitalism. In contrast, modern liberals fell short on the intellectual battleground, failing to elaborate a rationale for social democracy and the welfare state before it was too late. In O’Connor’s sympathetic analysis, John Rawls’ enormously popular Theory of Justice (Cambridge, Mass., 1971) ironically served as an epilogue to liberalism’s brief and limited ascendancy. Conservative, pro-market theorists and pundits would instead carry the day, as their “antitax message” developed into an “overarching theory of government” (203).A Commercial Republic does not pretend to be a comprehensive synthesis. O’Connor could have drawn on a rich new literature in American political development that has “brought the state back in[to]” our understanding of political economy. Moreover, any one of the themes that he addresses—from trade to currency policy to taxation—could have been much more systematically developed. But O’Connor has succeeded admirably in showing how previous generations have engaged with the policy controversies that continue to define the character of political economy in America.