Radical Hamilton: Economic Lessons from a Misunderstood Founder

Abstract

Parenti argues that Alexander Hamilton would support a “green reindustrialization” today on the basis of his discovery that Hamilton was an economic interventionist with “profoundly statist economic views” (237 [emphasis in the original], 2). All three claims are demonstrably false. A novel, nuanced, and empirically defensible view would hold that Hamilton sought to nudge the economy, not to manage it.Serious Hamilton scholars like Michael Newton understand that four types of Hamilton biographies exist. Two of them laud Hamilton, one because he augmented state power and one because he bolstered economic liberty; the two others deprecate Hamilton on the same grounds. Parenti’s book falls squarely into the pro-Hamilton, pro-statist camp made infamous by Clinton Rossiter in Alexander Hamilton and the Constitution (New York, 1964).This is Parenti’s fifth book; his earlier work concerns only contemporary carceral, environmental, and peace studies. Factual errors abound, including a reference to financier “Roger” Morris (68). More importantly, the book’s methodology cannot sustain the claim that Hamilton believed in dirigisme. No archival research went into the book: All cited sources are printed, and most are secondary, with a smattering of well-known printed primary references. Moreover, the cited secondary sources are often old, nonacademic, or New History of Capitalism titles discredited by economic historians. None of the major works that question the “good statist” view of Hamilton find their way into the narrative or notes: Forrest McDonald, Alexander Hamilton: A Biography (New York, 1982); Richard Sylla, Alexander Hamilton: The Illustrated Biography (New York, 2016); Sylla and David Cowen (eds.), Alexander Hamilton on Finance, Credit, and Debt (New York, 2018); and important studies of various aspects of Hamiltonian political economy by Brown, Edling, Flaumenhaft, Irwin, Michener, Nelson, Salsman, and this reviewer, among others.1Had he read more widely to develop his own understanding of economic context, Parenti may have realized that one cannot write a convincing intellectual history of a statesman’s thought without considering policy implementation. Texts, especially long, complex ones like the Constitution, The Federalist Papers, and the Report on Manufactures, can be interpreted in many ways, but only the one intended by the author(s) is correct. Authors sometimes comment on their own texts, but even better is when scholars can test their textual interpretations by observing real-world implementations of authorial intent. Parenti ignores or cursorily dismisses detailed, nuanced interpretations of Hamilton’s manufacturing report by economists who argue that Hamilton presented Congress with a didactic and theoretically sophisticated textbook of policy options rather than a blueprint for a national economy—“the means proper” assuming what economists call a “second best world.” Methodologically, however, Parenti should not have ignored that Hamilton never implemented a protective tariff or planned a federal system of internal improvements, and he urged testing America’s manufacturing capabilities with voluntary private, not public, investment.Like most Hamilton biographers, Parenti completely misses Hamilton’s role in the rapid development of America’s voluntary corporate sector. Hamilton not only championed open access to perpetual succession and the other benefits of incorporation, he literally led the way by forming banks through voluntary association rather than legislative charter. An economic planning dirigiste a la Parenti would instead have tried to maintain barriers to entry. Space precludes discussion of numerous additional examples of disconnects between Hamilton’s actions and claims about his beliefs based on naive textual analysis.Logical errors also abound in the book. Glibly claiming that “planning was not always planned” is argument by assertion (10). Arguing, contra Stephen Knott’s Alexander Hamilton and the Persistence of Myth (Lawrence, 2002), that protectionists like Friedrich List and Wakayama Norikazu found inspiration in Hamilton’s policies commits several logical fallacies. Parenti’s claim that planning sparks growth has long since been rejected by the institutional economics that Hamilton and the other Founders inspired.Those wishing to remain cloistered in the increasingly fanciful and self-referential New History of Capitalism will find Radical Hamilton reassuring: The Founder most adored at present was a statist and environmentalist who would eagerly embrace a Green New Deal, because Parenti says so. Scholars interested in Hamilton’s actual thoughts and deeds, however, should read the work of the scholars referenced above instead.