The American System of political economy was pioneered by Alexander Hamilton and advanced by the likes of Henry Clay, the early John C. Calhoun, Abraham Lincoln, Teddy Roosevelt, FDR, and Dwight Eisenhower. It emphasizes industrial development, robust public infrastructure, government-backed R&D, and a competent and dignified workforce, all aimed at securing national strength and shared prosperity.

The essays in this series have thoughtfully explored each of these core elements of the system, with an eye toward renewing the underlying principles for our time. Yet at its origins in the early republic, the American System also coincided with a specific legal form ordered to mobilizing economic activity for the common good. I’m speaking of the public-purpose business corporation, which explicitly tied private profiteering to national development.

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Today, policymakers of both parties are rethinking the neoliberal dogmas that over the past two generations hollowed out U.S. manufacturing, impoverished the American worker, and empowered a hostile industrial superpower across the Pacific. In doing so, they might give fresh consideration to the proper role of the corporate form in upholding a fairer and more resilient political economy.

As is often the case, the American past bears usefully counterintuitive lessons on this count: above all, that the purely profiteering corporation is by no means historically inevitable or bound to remain with us in perpetuity; and at the same time, that those who would seek to revive something of the spirit of the public-purpose corporation must grapple with the reasons for its demise in the Jacksonian era, the more tightly to tether today’s and tomorrow’s corporations to the well-being of the nation.

Asked to explain why we have corporations, most Americans nowadays would answer: to turn a profit. Getting a little more technical about it, they might say that corporations exist to allow shareholders to pool capital and maximize returns. Do-gooders, they might add, should launch a nonprofit. All this is accurate enough as a description of the prevailing corporate-law regime and how most of our corporations operate.

Yet this pinched account of corporate purpose is a relatively new turn. As the University of Michigan legal scholar David B. Guenther has written, for much of American history, both before and after the founding, corporations served “overtly public” aims, especially the “development of local transportation, finance, and other much-needed economic infrastructure.” And this wasn’t a matter of mere goodwill on shareholders’ part. Rather, corporations’ public purpose was enshrined in the charters that structured their relationship with the state.

The first such American-based charter was handed down in 1587 to 13 gentlemen-venturers from London to establish a colonial city in Virginia to be named Ralegh (the project failed when the would-be colonists disappeared). As organized life developed in the colonies, the corporate form, dependent on royal or parliamentary charter, was rarely used. Insofar as corporations were formed, it was mostly to advance religious, educational, charitable, and municipal aims; some, like the ill-fated Ralegh corporation, blended trade with municipal purposes.

By contrast, only a handful of business corporations were formed in the entire colonial period, and these were chartered in fulfillment of public infrastructure needs, most notably water supply. The linchpin of the colonial corporation, in other words, was its public purpose. Business corporations were an extremely rare subcategory of the form, and these were compelled to serve the public no less than the more prevalent corporations that created churches, cemeteries, towns, and schools.

This public-purpose requirement remained in place even as corporations proliferated in post-revolutionary America. The Hamiltonian order set about transforming a land of yeomen farmers into a commercial and industrial powerhouse, able to stand free from Europe and most notably a British imperium determined to reduce the newborn country into a resource pool and market for its own manufactures: the fate that would befall colonial India a few decades later.

American economic resistance rested on the triple pillars of import substitution, ample but disciplined credit, and “internal improvements”: tariff, canal, and bank, in short. The business corporation — expressly formed to serve the state and federal commonweal, even as it also profited its shareholders — played a crucial part in all three.

Start with industrial independence and the development of a competent industrial workforce. To bring these about, the Hamiltonian order didn’t rest content with tariffs on manufactured imports. It also granted the privileges of the corporate form to the nation’s burgeoning domestic manufacturing sector at the state level — in return for the factory owners promoting manufacturing self-sufficiency and employment.

This conditioning of corporate privilege on public service continued even as the New England and mid-Atlantic states began granting general charters for manufacturing firms in the early 19th century (more on the rise of the general-charter corporation, anon). Thus, for example, the Pennsylvania Society for the Encouragement of Manufacture was committed by its constitution to the “better employment of the industrious poor”; the Beverly Cotton Manufactory (of Massachusetts) was chartered in recognition of “the importance of employment” to the indigent; the New York Manufacturing Society was formed “for the purpose of establishing useful manufactures . . . and furnishing employment for the honest industrious poor”; and on and on.

The public-purpose corporation was equally essential to the infrastructure needed to engender a national market. Roads, canals, bridges, and (soon enough) railroads were prohibitively costly to a young nation that had just freed itself from under the yoke of a great European power. The public-purpose corporation filled the gap in return for the enrichment of its shareholders.

There was an explicit give-and-take in such cases: between the state and the corporation acting as an adjunct of the state. As a pair of legal commentators of the era pointed out, infrastructure-development corporations “have a concern with some of the expensive duties of the State, the trouble and charge of which are undertaken and defrayed by them in consideration of a certain emolument allowed to their members.” In such cases, the corporate charter bears “the most unquestionable features of a contract, and [is] manifestly a quid pro quo.”

Third and finally, the steady but responsible flow of credit depended upon state-chartered banks. While bank shareholders in the early republic clearly expected to profit by the money market —and profit handsomely they frequently did — the public purpose of the banking corporation wasn’t thereby lost. It was to facilitate the mercantile and industrial economies of the nation and the several states. And to serve the government itself, with banks required to offer “special rights to the state as a shareholder or borrower,” as Guenther notes.

The federally chartered Bank of the United States — especially in its second iteration, the Second Bank of the United States — was perhaps the emblematic public-purpose corporation of the early republic. Congressionally chartered, the BUS acted simultaneously as a depository for federal funds, a quasi-central bank, and a profiteering actor in the money market. For its visionary, Alexander Hamilton, the Bank was not just about binding the asset-rich to the fate of the new republic, but the provision of “sound and flexible credit and currency,” as the historian Robert Remini wrote.

Yet after the crash of 1819, the BUS became an object of special opprobrium among smallholders in the West and South, the urban working classes in the Northeast, and the enterprising petty bourgeoisie everywhere — that is to say, among the Jacksonian coalition. To its Jacksonian critics, not least Old Hickory himself, the Bank was a symbol of the corruption endemic to the Hamiltonian order, a populist suspicion that very much extended to grants of special corporate charters and privileges.

While general charters — measures allowing firms to self-incorporate — predated Andrew Jackson’s election in 1828, it was in the Jacksonian era that they exploded nationwide, eclipsing the notion of public purpose and leading to the purely profiteering business corporation as we know it today. For nearly 200 years, not only free-market ideologues, but also some progressive historians have celebrated this as one of the great democratizing achievements of the Jacksonians. The real story is more complicated.

To sum up so far: The business corporation formed solely for private shareholder gain was unknown to colonial America, and equally unthinkable to the early republic’s leading statesmen and jurists. “It seems difficult to conceive of a corporation established for merely private purposes,” declared the Supreme Court of North Carolina in 1805. If the corporate shareholders’ aims be “merely private,” said the Virginia Supreme Court four years later, “they have no adequate claim upon the legislature for [corporate] privileges.”

Public purpose, however noble, didn’t always win over a yeoman republic to the cause of corporations whose activities were closely bound up with the state’s. The agricultural majority at this time lived hand to mouth, and market exchange was at most a marginal activity for most. They thus experienced the Hamiltonian order as an imposition, often an oppressive one. It taxed them to finance far-flung infrastructure projects whose immediate benefits redounded mainly to market elites: to New England merchants, mid-Atlantic manufacturers, and the South’s planter-capitalist class — those possessed of the “money power,” in the coinage of the arch-Jacksonian senator Thomas Hart Benton of Missouri.

Giving voice to this discontent, Jackson and his cohort reprised older Jeffersonian strict-constructionist themes that had mostly failed to retard the steady march of the Hamiltonian state. To these themes the Jacksonians added a ferocious democratic sensibility that took issue with anything resembling insider advantage and privilege.

The BUS epitomized these tendencies. Although it was a creature of the U.S. Congress, and although the federal government supplied a fifth of its capital and appointed a fifth of its 25 board members, the BUS appeared — and in some ways was — unanswerable to the people and their elected representatives. It was a “hydra-headed monster,” in Jackson’s evocative phrase, that corrupted politicians and “the morals of our people” and menaced “liberty.”

It didn’t help that the institution’s third and final president, Nicholas Biddle, though an able banker, was almost cartoonishly arrogant. Biddle didn’t scruple to use the BUS’s vast financial resources to aid its political friends, while icing out those viewed as enemies. When Biddle’s branch managers intervened against Jackson Democrats in Kentucky, New Hampshire, and New Orleans in this manner in the late 1820s, they raised the ire of an unforgiving man; and when Biddle dismissed the Jacksonians’ complaints, he all but signed the Bank’s death warrant.

The Bank’s heavy hand on the nation’s economy was felt especially by state bankers and their upstart clients, men who seethed at being shut out of the Eastern business establishment. The special charters of the state banks limited their range of operations inside the individual states in which they were incorporated. By contrast, the BUS’s federal charter granted it national range — an asymmetry skillfully exploited by Biddle to squeeze the former.

Biddle could vacuum the notes of the state banks, either when state notes were used by Americans to pay federal taxes and duties at the BUS, or by buying up state notes in the money market and then demanding specie for them. But the state banks had a much harder time returning the “favor” in the other direction. That’s because Biddle limited redemption at par, or face value, of all BUS notes above $5 either to the branch of issue or the mother branch at Chestnut Street in Philadelphia. He compounded the state banks’ redemption problem by ensuring that “very few [BUS] notes were found circulating in the neighborhood of the Branch at which they were issued,” as Roger Brooke Taney, Jackson’s Treasury secretary in the heat of the Bank War (and later chief justice of the U.S. Supreme Court), observed.

Thus, for example, most of the BUS notes circulating around New York or Baltimore were actually drawn against branches in, say, Fayetteville or Nashville, making it costly and arduous to try to redeem them for specie at par. In this way, the BUS would maximize circulation of its notes, while at the same time depressing the circulation of the state banks’ paper and, moreover, threatening the state banks with ruin, since these institutions almost always floated more notes than they held specie in reserve. Money brokers would soon learn to take advantage of this disparity, by selling remotely issued BUS notes at less than par: a special boon to merchants, who could pay their duties owed to the federal government at a discount.

This was all quite deliberate on Biddle’s part: a strategy for disciplining the flow of credit and, not incidentally, putting competitive pressure on the state banks that they couldn’t countervail. The Jacksonians, then, had a point when they complained of the BUS as an overbearing institution with anti-democratic characteristics, wielding a market power greater than the political power of the government whose agent it was supposed to be.

The problem confronting the Jacksonian legacy is that, as it happens, Biddle was actually pretty good at doing what a quasi-central bank was supposed to do in the Hamiltonian vision. This became fully evident in the wake of Jackson’s triumph in the Bank War, when he smashed the BUS and — having neglected, in typical populist fashion, to put in place an alternative — was forced to improvise by having select state banks act as federal depositories in what became known as the pet-banking “experiment.”

The result: a brief depression, a plague of wildcat banking and consequent inflation, and chronic banking instability that set the United States apart from comparable industrial nations with better-regulated and more centralized systems — a state of affairs that would persist for nearly a century until the establishment of the Federal Reserve. Moreover, as Taney was to learn to his great anguish as the Cabinet official charged with implementing the pet-banking scheme, it turned out that state and local institutions could be just as prone to corruption as the federally chartered giant; indeed, local cronyism could more easily remain hidden.[1]

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The Bank War and its aftermath, to be clear, were distinct developments from the gradual demise of the special-charter business corporations. As mentioned earlier, some Northeastern states had already exempted manufacturing corporations from the special charter, beginning with Massachusetts in 1809, well before Jackson took office (though, again, the public-purpose requirement remained firmly implanted; what changed at this earlier stage was that firms no longer needed a special grant from the legislature to incorporate themselves).

Yet it was especially in the 1830s, in Jacksonian America, that more and more state legislatures enacted general-incorporation laws, basically allowing any group of shareholders to incorporate themselves for any legal purpose whatsoever. In addition to political ferment against what looked like special privilege or insider advantage, the rise of the general-charter, no-public-purpose corporation had structural causes. “The industrial revolution eroded the operation of charter-purpose provisions as legal constraints on corporate behavior,” as legal scholars Jill Fisch and Steven D. Solomon have written:

Increased demand for the corporate form to facilitate the aggregation of the substantial amounts of capital necessary for the growing scale of business activity led to growing acceptance of the corporate form for general commercial operations. This led states to shift from special charters to general charters that allowed corporations to define their purpose as engaging in any lawful purpose or business activity.

Yet the Jacksonians’ epic battle against the Second Bank of the United States was without question of a piece with this general tendency: eroding the connection, enforced by charter, between the corporate form and the needs of the commonweal; and in favor of a vision of the corporation as purely a vehicle for shareholder value.

It isn’t hard to see the compelling democratic logic driving this shift. The Bank — and, indeed, the whole Hamiltonian edifice — did privilege insiders and incumbent elites to a degree. It was thus eminently American to demand: Why shouldn’t this local banker or that upstart manufacturer have as much right to compete and potentially achieve incumbent status as the current, well-connected incumbent who enjoys his status on the basis of a some supposed “public purpose” inscribed on a document collecting dust somewhere? If there are truly public purposes, aren’t these better served by, well, the public government? And turning to conditions today, we might ask, isn’t a revival of the notion of public purpose even more nettlesome than it was in the 19th century, given our drastic cultural polarization and the fact that half of the public is bound to view any regulation around purpose as a means for injecting yet more progressive dogma into business life — “ESG” on steroids?

These objections are serious, but not insuperable for those rightly concerned that the purely profiteering corporation has harmed national security and development, especially in recent decades as Wall Street-driven returns maximization has brought about the hollowing out of American manufacturing might and of the real economy more broadly.

For starters, it’s worth restating the fundamental premise of corporation law in the colonial and early-republic periods: namely, that when it comes to corporations, a bright-line public-private distinction makes little sense. Given its size and capacity to pool capital and managerial talent — precisely what commended the corporate form to early lawmakers seeking to promote manufacturing, internal improvements, and a system of credit — the corporation will inevitably serve some public purpose. The only meaningful questions have to do with the nature of that purpose: whether it be rational, ordered to the good of the nation, and at least somewhat accountable to the will of the polity that grants the firm the immense privileges associated with the corporate form.

The threat of mounting insider or incumbent advantage, meanwhile, must be considered alongside several other factors. First, as even some Jacksonians learned to their chagrin in the course of the Bank War, upstarts and challengers are just as likely to seek undue advantage as large incumbents. Constraining this tendency should be a general imperative of good government as such, and it can and should coexist with a willingness to define and enforce corporate public purpose. Any regulatory regime, after all, is prone to capture by insiders, yet American policymakers and judges have long recognized that complex economies like ours demand complex regulation; and that one characteristic of a decent regulatory order is precisely the presence of checks against capture.

Second, incumbent advantage is a brute fact of economic organization in the age of the machine. The enormous industrial concentrations of the second half of the 19th century, it’s worth recalling, emerged under the general-incorporation regime — that is to say, in the absence of the public-purpose and special-charter requirements that defined corporate life in the colonial era and the early republic.

How to manage concentration — whether by raising up the countervailing power of actors on the other side of a given market dominated by oligopolies, or vigilant antitrust enforcement, or some combination of the two — is a separate problem from whether or not the grant of corporate form should be conditional on serving a public purpose. What matters for us is that incumbency, oligopoly, and insider advantage are inherent to industrial life as such, with or without public regulation of corporate purpose. Arguably, defining public purpose is one more useful mechanism for taming concentrated market power, by holding the corporation accountable to democratically defined parameters, however vaguely defined.

It was precisely on democratic regulation of the BUS, by the way, that the Jacksonians came up short. Jackson hadn’t contemplated, much less put into place, any alternatives to the Bank once he resolved to kill it in 1832. Yet as early as 1829, Sen. Felix Grundy of Tennessee had devised an alternative at Old Hickory’s behest. The Grundy plan would have created a national bank with its entire directorship elected by Congress, and thus under tighter democratic control, while its profits would be redistributed to the states for internal improvements. It was an eminently decent vision. Jackson had let it fall by the wayside, too rash to consider what it might mean to restructure the nation’s credit system on the fly.

Then, too, the resurrection of corporate purpose needn’t mean going back to special charters. In the 21st century, defining and enforcing public purpose will necessarily look different than in the age of the Ralegh corporation or the turnpikes and toll bridges of the early republic. For one thing, the requirement of public purpose should be limited to corporate actors in strategic industries, which are likely to be already characterized by great concentration and insurmountable incumbency: defense and aerospace, energy, transport, semiconductors, sensitive industrial components, communications, and the like. Meanwhile, the smalltime entrepreneur launching a corner café couldn’t and shouldn’t be held to a public-purpose requirement, much less compelled to obtain a special charter from the legislature.

Finally, as to polarization and the challenge of defining corporate purpose in a deeply divided United States, here, too, we might borrow a page from the early republic. Corporate purpose in those days was limited to a bare minimum of material needs and developmental aspirations related to infrastructure, transportation, credit flow, and the like. Those bare material needs and developmental aspirations haven’t gone away in our time. The demand, then as now, is nothing more or less than that corporate shareholders redouble to the national purpose on these fronts in exchange for the immense privilege of doing business in the United States of America.

This article is part of the American System series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Sohrab Ahmari is a founder and editor of Compact. His latest book Tyranny, Inc is published by Penguin Random House.

[1] As it happens, it was Taney who relayed to Old Hickory the idea for pet banking as an alternative to a national bank. The notion had originated with a Baltimore crony of Taney’s named Thomas Ellicott. Unbeknownst to Taney at the time, Ellicott was a crooked banker bent on seeing pet banking put in place as a way of rescuing local banks in Baltimore that had been engaged in reckless speculation, and to fund further gambling of the kind via another fraudulent entity. Under Ellicott’s influence, Taney had come to believe that the only danger to pet banking could come from the imperious operations of Biddle’s BUS. If the BUS’s local branch manager in Baltimore refused to do business with Ellicott and his cronies, well, it was yet another instance of the big Bank oppressing Main Street America. Only afterward, when Ellicott turned to blackmail in attempt to force Taney to cough up more taxpayer funds, did the Treasury secretary come to understand that smaller commercial actors are no more immune to corruption and insider games than larger ones. “BUS officials in Baltimore were merely acting prudently in refusing to deal with the Ellicott gang, following systematic procedures long in place for assessing the creditworthiness and reliability of smaller institutions. Had Taney followed similar methods, rather than gauging good and evil by the size of institutions, he could have avoided much anxiety. As Taney later reflected, “five minutes talk with Mr. White” — the Baltimore cashier who served the “enemy” Biddle — “would have put me on my guard, by shewing the impositions [Ellicott] had practised upon me.”

The principles that Alexander Hamilton enunciated in his Report on Manufactures and Report on the Public Debt still apply today, but policy implementation requires some updating to the economic circumstances of the 21^st century.

Tariffs are a useful, indeed necessary, part of the policy mix, but the enthusiasm for tariffs today recalls H. L. Mencken’s quip, “For every complex problem there is a solution that is simple, clear, and wrong”. The United States has a chronic trade deficit in goods, now running at an annual rate of nearly $1 trillion a year. It also has a negative net foreign asset position of about $18 trillion, the result of thirty years of cumulative deficits. Its manufacturing industry is so depleted that it found itself unable to manufacture a sufficient supply of 155-millimeter artillery shells to Ukraine and Israel during the ongoing conflicts. The United States is also dependent on China, whose benevolence cannot be taken for granted, for a wide variety of critical products, ranging from pharmaceuticals to electrical switching gear. That is a problem, and a complex one. But are tariffs the solution?

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The Limits of Tariffs

Some tariffs surely are part of the solution. But the United States is like a drug addict whose system is so depleted that cold turkey withdrawal would be fatal. Imports of capital goods are now equal to about two-thirds of nonresidential private equipment investment as reported on the GDP tables. The table below shows capital goods (excluding automotive) as a percentage of nonresidential private equipment investment. Because the latter figure includes some automotive investment (e.g., company car fleets), the actual proportion probably is higher.

Capital goods, of course, are goods used to produce other goods. To reduce the United States’ addiction to imports, we must produce more, which means we must invest in more capital goods. Our capacity to produce capital goods, though, is so diminished that we first would have to import more capital goods in order to be able to produce more, and thus import less in the future. We lack industrial capacity, infrastructure, skilled workers and engineers. Manufacturing is not a black box with a switch on the outside. It is an eco-system and a culture, that involves communities who provide skilled workers, educational institutions that train them, companies that hire managers who know their way around a factory, and governments that build the required infrastructure. Our eco-system has atrophied and our manufacturing culture has deteriorated. To restore it will require a set of remedies. This may seem complex, and it certainly would be expensive. But that’s the reality of the matter.

Tariffs raise the price of imported goods, giving domestic manufacturers an advantage. In some cases, they are indispensable. The United States has imposed a 27.5% tariff on imports of cars from China, which is now increasing to 102.5%. Without this, China would crush America’s auto industry. Whether this is due to Beijing’s subsidies to automakers or due to enormous economies of scale in the highly automated plants of the world’s largest producer is beside the point. No American manufacturer can compete with the $9,000 sticker price of BYD’s Seagull subcompact. The United States cannot afford to lose its auto industry, and there is a strong case for protection.

In other cases, tariffs may be harmful. To correct the trade deficit, we have to produce more at home, and to produce more we first have to invest more. For the first time in our history, though, we import more capital goods—the goods that make other goods—than we produce at home.

American industry depends on foreign components—especially Chinese components—for thousands of items that we no longer produce at home, starting with circuit boards, but including capacitors, switches, and a myriad of electronic parts. That is true even in the defense industry. Reported in the Financial Times on June 19, 2023:

Greg Hayes, chief executive of Raytheon, said the company had "several thousand suppliers in China and decoupling . . . is impossible". "We can de-risk but not decouple," Hayes told the Financial Times in an interview, adding that he believed this to be the case "for everybody".  "Think about the $500bn of trade that goes from China to the US every year. More than 95 percent of rare earth materials or metals come from, or are processed in, China. There is no alternative," said Hayes. "If we had to pull out of China, it would take us many many years to re-establish that capability either domestically or in other friendly countries."

Selective tariffs, for example on Chinese EVs, are a crutch that our auto industry cannot do without. But an across-the-board tariff will raise the cost of capital goods. Among other things, it is a tax on capital investment. Our biggest problem is the reluctance of Americans to invest in capital-intensive industries. After the 2000-2001 recession, the smart money figured out that we could produce expensive software and let Asia make the hardware—first Japan, then South Korea and Taiwan, and then China. The marginal cost of selling a download of a computer program from a website is zero; not so the marginal cost of fabricating another computer chip or building a plasma screen.

Declining Capital Stock

Our capital stock of manufacturing equipment stopped growing in 2001, according to Federal Reserve estimates. To get back to our long-term trend growth in manufacturing capital stock, US manufacturers would have to spend about $1 trillion for new equipment, nearly five years' worth of purchases at current rates.

There’s a clear correspondence between our trade deficit and the slowing growth rate of manufacturing capital stock. The growth rate of capital stock slowed well before the trade deficit ballooned during the 2000s.

Industrial production and employment in January 2024 were lower than in January 2007, just before the Great Financial Crisis. Manufacturing pay in constant dollars has not risen since 2009. Our stock of manufacturing capital equipment has not grown in 20 years. Even at depressed levels of employment, manufacturers cannot find skilled workers. The trade deficit remains close to $1 trillion a year, and the United States’ net foreign asset position, now at negative $18 trillion, continues to drift further into negative numbers.

Robert Lighthizer, Donald Trump’s Special Trade Representative, wrote in his book No Trade is Free: “Stable manufacturing jobs are a primary way for people without college degrees to comfortably support themselves, while enjoying the sense of dignity and pride that comes from making things.” That is how it used to be, and how it should be – but it is not that way now.

The average hourly manufacturing wage after adjustment for the Consumer Price Index has not grown since 2009. When real hourly manufacturing wages fell by nearly 10% between 2021 and 2023 due to inflation, manufacturing job openings reached the unprecedented one-million mark, before coming down to a still-elevated 600,000 as real wages improved.

The skilled labor shortage, to be sure, is not the only obstacle to US manufacturing. Excessive regulation and a tax code that favors “capital light” industries, e.g. software, at the expense of capital-intensive industries present stumbling blocks to manufacturing investment. The United States has an industrial policy that actively discourages industry.

It is a vicious cycle. Companies do not invest enough in new equipment, productivity stagnates, wages decline, and workers will not take low-paid manufacturing jobs. The National Association of Manufacturers worries that the United States will be unable to fill 2.1 million manufacturing jobs by 2030.

But manufacturers have not invested in new equipment. The rate of growth in the US capital stock of manufacturing equipment, according to the Federal Reserve, fell to nearly zero after the 2008 crisis and has not recovered. Real wage growth in manufacturing parallels the change in the capital stock, just as the textbook tells us: More investment means more productivity and higher wages, and vice-versa.

Dependency on China

Another challenge is that the Trump tariffs have not kept Chinese goods out of the United States. China's exports to the US surged to a post-COVID seasonally-adjusted peak of $52 billion a month in March 2022 from $38 billion in August 2019, when the tariffs were announced. China exported a seasonally adjusted $36 billion to the US in October 2023, according to US customs data. Chinese data show an increase from $34 billion in August 2019 to $42 billion in October 2023. The Chinese data probably are more accurate, according to a Federal Reserve study, because they include exports routed via third countries. More to the point, America’s trade deficit in goods and services was $48 billion in August 2019 (or $576 billion annualized). In October 2023 it rose to $64 billion, or $768 billion annualized.

According to recent studies by IMF economists,  the World Bank, the Peterson Institute, Bank for International Settlements researchers, and others, tariffs have not made the US less dependent on Chinese supply chains. The Chinese shipped semi-finished goods and components to third countries for final assembly and re-export to the United States. As the BIS wrote:

"Firms from other jurisdictions have interposed themselves in the supply chains from China to the United States. The identity of the firms that have interposed themselves in this way can be gleaned from the fact that firms from the Asia-Pacific region account for a greater portion of suppliers to US customers than in December 2021, as well as accounting for a greater portion of the customers of Chinese suppliers.”

The World Bank economists put it this way:

“US imports from China are being replaced with imports from large developing countries with revealed comparative advantage in a product. Countries replacing China tend to be deeply integrated into China’s supply chains and are experiencing faster import growth from China, especially in strategic industries. Put differently, to displace China on the export side, countries must embrace China’s supply chains.”

The chart below sums up what has happened since the Trump tariffs on China went into effect in 2019. China’s exports to the Global South doubled from about $85 billion a month to $170 billion a month, while US imports from the Global South rose from $45 billion a month to $70 billion a month.

The United States imported less from China only because it imported more from countries dependent on Chinese semi-finished goods, components, and capital goods.

The Biden administration has done nothing to counteract these perverse effects. However, to its credit, the administration did adopt an industrial policy for semiconductors, namely the CHIPS Act. The main motive for the CHIPS Act is national security rather than economic efficiency. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip foundry and the largest single investor within the CHIPS Act framework, has said that the chips it produces in the United States will cost considerably more than the chips it sells from its foundries in Taiwan.

The Manufacturing Skills Gap

The stumbles and fumbles associated with the CHIPS Act should be an object lesson. TSMC will not open the first of two promised plants in Arizona until 2025, and delayed the second until 2026 and 2027, citing shortages of skilled labor. Samsung plans a Fab in Texas but delayed its opening by at least a year and is now considering delaying the project indefinitely.

The CHIPS Act started a construction boom, but the United States lacked the infrastructure and skilled labor to meet the subsidy-stoked demand. An all-time record 450,000 construction jobs were unfilled as of January 2024. The jump in construction job openings since 2020 coincided with an unprecedented 40% increase in the cost of new industrial building construction.

The United States also has a shortage of engineers. The biggest problem at US engineering schools—excluding a few top-rated schools—is finding students qualified to major in the subject at the undergraduate level. A key indicator of student demand for engineering programs at highly rated state universities is the engineering school acceptance rate.  For many of the best state universities, the acceptance rate is 50% or higher, indicating an absence of demand for the major. Only 6% of American undergraduates major in engineering, compared to 33% in China and Russia.

In 1957, the National Defense Education Act responded to Russia's leadership in the space race after the launch of Sputnik, offering low-cost student loans and subsidies for university instruction in mathematics, science, and foreign languages.  As a result, the number of engineering bachelor's degrees soared from 143,000 in 1955 to a peak of 350,000 in 1985, before falling in the 1990s.

The dumbing-down and diversification of American education undermines manufacturing. A commercial firm that recruits manufacturing workers advises prospective applicants that they require proficiency in decimals and fractions, coordinate geometry, and trigonometry. In 2009, 34% of US 8^th graders tested at “proficient” (26%) or “advanced” (8%) on the National Assessment of Education Progress test. By 2020 that had fallen to just 24%, with 20% at “proficient” and 4% at “advanced, according to the National Center for Education Statistics. The 24% who are proficient in mathematics almost certainly will go on to university rather than apply for manufacturing jobs. Public policy that undermines mathematics and science at all levels of education requires correction by public policy.

For that matter, only 1.4% of American undergraduates major in mathematics. In 2021 the United States awarded just 30,202 degrees in mathematics. The Bureau of Labor Statistics estimates that 33,500 mathematics-related jobs will open per month. Presently there are 1,413,345 math teachers in the United States, most of whom are trained in “mathematics education,” not mathematics. Most European countries require the equivalent of a bachelor's degree in mathematics as a prerequisite for teaching the subject in secondary school. At present graduation rates, requiring math teachers to earn a mathematics degree would take 47 years, provided that mathematics graduates did nothing but teach secondary school.

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Renewing the American System

What will it take to persuade US manufacturers to invest in expensive, capital-intensive manufacturing? There are several issues, including:

1. Tax policy: Manufacturers must write off, or depreciate, their capital investments over a period of years. Inflation reduces the value of depreciation allowances.

2. Environmental regulation: Excessive regulation by the Environmental Protection Agency is an important obstacle to investment. The National Association of Manufacturers claims that 65% of its members would invest more with regulatory relief.

3. Infrastructure: Deteriorating US infrastructure is a major obstacle to large capital-intensive facilities.

4. Skilled labor: America still has 600,000 job openings for manufacturing workers, down from a million in 2022, but still exceptionally high. The National Association of Manufacturers warns that they will be short 3 million workers during the present decade. A European-style apprenticeship system with private-public partnerships would help train Americans for skilled jobs.

5. Federal support for technology: Federal R&D spending was 1.2% of GDP in 1983, when President Reagan announced the Strategic Defense Initiative, but only 0.7% today. The great national laboratories at companies like Bell, GE, and RCA which produced so many of America’s signature innovations have disappeared along with federal funding.

Tariffs have a role to play in reviving manufacturing, but that role should be narrowly defined and industry-specific. Renewing the American System requires a comprehensive industrial policy. There is no way to climb out of the hole we have dug for ourselves without spending money – on tax relief for manufacturing investment, on infrastructure, and in rare cases such as semiconductors, on subsidies.

This article is part of the American System series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

David P. Goldman is deputy editor of Asia Times and a fellow of the Claremont Institute’s Center for the American Way of Life.

This article first appeared on the Institute for Family Studies blog, May 21, 2024

There’s a seldom-told history of how Americans mobilized to protect the family from encroaching market forces in response to the Industrial Revolution, eventually leading to the creation of an American social policy framework oriented to the family. When I taught American history to high school seniors, the curriculum never mentioned these reformers, sometimes called “maternalists,” despite their outsized influence on public policy for decades and the widespread popularity of their causes.

Mother’s pensions, for example, “spread like ‘wildfire’” across the country and were adopted by most state legislatures by 1920. (By comparison, the average Progressive-era legislation took two decades for 20 states to adopt, according to historian Mark Leff, who writes that no other reform of the era “mustered a better legislative record.”)

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The context for this family-centered activism was the pressures families faced as many of them migrated from rural life on farms to urban life working in factories. This would eventually give way to better working conditions and higher material standards of living, but not without serious strain on human relationships. Mothers, fathers, and children alike now labored outside of the home. Settlement house leader Jane Addams told the story of a young child who was tied to the leg of the table every day for three years because his mother deemed it safer than the streets while they were away at work; his brother would untie him briefly midday when he was on his lunchbreak from the factory. The result was a crippled child.

In the face of these circumstances, the settlement house movement grew, and Americans, particularly women, did what they historically have done so well—form associations in response to the troubles that ail us. As the work of Harvard sociologist Theda Skocpol details, their collective work went beyond cultural change. Particularly influential were the General Federation of Women’s Clubs, the National Congress of Mothers, and the Parent Teacher Association (PTAs). Through the cooperation of these groups, maternalists successfully lobbied for public policy that would protect home life and family bonds. This included workplace regulation, mother’s pensions, and the 1921 passage of the Shepphard-Towner Maternity and Infancy Protection Act, which created a network of federally-funded maternal and prenatal health clinics staffed by nurses in white pinafores who visited new mothers in their homes, focusing their outreach in underserved rural areas and significantly reducing infant and maternal mortality rates.

In the 1930s to 1950s, the maternalists went to Washington. In his book, The American Way: Family and Community in the Shaping of an American Identity, historian Allan Carlson tells the story of their reign. When the Children’s Bureau was created in 1912, Julia Lathrop became the first woman to be bureau chief of a federal agency and helped to pioneer new forms of legislation, like child allowances for military families. As U.S. Secretary of Labor from 1933 to 1945, Frances Perkins became the first female presidential Cabinet member, an architect of the New Deal, and a fierce advocate of the family wage (much to the chagrin of equity feminists). Maternalist Grace Abbot helped to draft the Social Security Act of 1935, which in addition to the sections on old-age and unemployment benefits that we associate with social security today, included provisions specifically for women and children. Title IV established Aid to Dependent Children, and Title V gave grants to the states for “promoting the health of mothers and children, especially in rural areas and in areas suffering from severe economic distress.” And 1939 amendments to the Social Security Act added survivor and dependent benefits, further solidifying the family-oriented nature of the system by shifting focus from the individual worker to protection of the family unit. As Carlson writes, “The measure shifted the system from an ‘individualistic’ to a ‘communitarian’ basis.”

On the whole, the influence of the maternalists, as Carlson convincingly argues, gave rise to an era of legislation that prioritized family stability and laid the groundwork for the revitalization of family life in the post-war period. Marriage, birthrates, and homeownership rates increased. Divorce rates decreased. Working-class families moved into the middle class.

The story of how this family-oriented system eventually crumbled is a story worth exploring elsewhere. As no one needs telling, the trends above have reversed. We need a new framework for family prosperity, not borrowed wholesale from the maternalists, but nonetheless inspired by their vision of family responsibility and its vital connection to the American experiment of self-government.

For today, the family faces different but not dissimilar conditions. While families benefit from participation in free markets, they also suffer at their overreach. Especially for those in the service economy, irregular hours and just-in-time scheduling can make the idealized (and important-for-young-children) rhythms of family life impossible. Families with young children at home often require two working adults to pay the bills; parents may work opposite shifts to avoid child care costs, to the detriment of their marriages. Stagnating wages and high costs of family affordability, particularly when it comes to housing, healthcare, and transportation, contribute to low fertility rates that lag behind fertility desires.

When people do have children, they may not have the means to take time off to recover from childbirth and establish breastfeeding and bonding, a practice universal among mammalian species. The deprivation of that time for mothers and infants in this country is something viewed as appalling by people of other Western nations.

It’s possible that through civic renewal and public-private cooperation, a family ecology can be nurtured.

Through my work interviewing working-class young adults over the past decade, I came to know Tonya, who returned to work at Dunkin’ Donuts just three days after the birth of her second child. At this stage in my own postpartum experience, I was still wearing hospital pads and snuggling with my baby skin-to-skin, as my husband and family members brought me meals, and sleeping as often as I could in between breastfeeding. Yet despite a complicated pregnancy and pre-eclampsia, Tonya went against doctor’s orders and was reporting for 4 a.m. shifts to bake the donuts and coffee to power a nation.

She was understandably livid when she learned through a meme on social media that America is the only industrialized nation in the world without some form of paid leave. She says she wants to do something about it, so that her daughters will grow up in a world that is more hospitable to parents and more welcoming of children.

Indeed, some signs point to the possibility of a “family policy renaissance” on our own horizon. According to one American Compass report on the topic, between 2021 and 2023, “the share of parenting-age Americans who say the federal government should ‘provide more support for families with children’ has risen from 67% to 73%.” The most dramatic change has occurred among Republicans, with support jumping from 52% to 69% among those who identify as conservative.

Could common parental frustrations—and common joys—spark the renewal of engagement with and creation of civic associations working to lobby policymakers on behalf of the family? The ongoing “parent revolution” and recent “Strolling Thunder” march suggest this is possible. I also suspect that concern for the child has the potential to scramble political categories and draw new coalitional lines.

I imagine families meeting up at the park, pizza boxes piled like leaning towers, coolers filled with ice and juice boxes. Grandparents supervise playground play; parents meet under the pavilion to surface their shared concerns, to brainstorm possibilities, to make plans of action. This kind of civic engagement is essential if policy is to remain responsive to local needs rather than entrenched or burdensome.

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This will also require that policymakers take seriously—legislatively, not just rhetorically—the strong rationale for public investment in the child as “the citizen of to-morrow” (as maternalist friend and ally Teddy Roosevelt put it)—and of the family as the child’s foremost institution of formation. Rather than dismissing as “welfare” even GOP policies like the Child Tax Credit that include work incentives, conservative policymakers can take the lead on legislation to strengthen American family life.

Of course, government alone will not fix all the problems that families face. But it’s possible that through civic renewal and public-private cooperation, a family ecology can be nurtured, sowing seeds of a new social revival like the one that occurred in the middle of the last century.

This article is part of the American System series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Amber Lapp is a Research Fellow at the Institute for Family Studies and co-investigator of the Love and Marriage in Middle America Project, a qualitative research inquiry into how white, working-class young adults form families and think about marriage.

As election season continues and both Joe Biden and Donald Trump seek to win voters, America’s tariff policy has been a major topic of conversation. President Biden recently called for tripling tariffs on Chinese steel and aluminum, and President Trump has promised to raise tariffs to 60% if elected to a second term. Indeed, both parties seem to be pushing full steam ahead on a more protectionist industrial policy. But is this a good idea?

Published in partnership with the Mercatus Center during the 2018 tariff battles in the Trump administration, Pierre Lemieux’s What’s Wrong with Protectionism?: Answering Common Objections to Free Trade responded to eight arguments supporting protectionism–specifically tariffs–and claimed to show why free trade is better. As a leading advocate for free trade, Lemeiux provided the best case for free trade and against protectionism one could expect to find. However, tariffs remain the best way to reindustrialize and restore prosperity.

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Do Trade Deficits Matter?

In his book, Lemieux takes up the question of trade deficits. He argues that consumption is the goal of an economy, which is why GDP, though P stands for “product,” is a stand-in for how much a country consumes every year. The current accounts balance as of 2023 stood at a $773 billion dollar deficit. He then moves onto explaining the other side of this balance, the financial account balance, which describes the “flow of money and other financial instruments that corresponds to the flow of goods and services on the current account.” He emphasizes how the financial account balance must zero-out the current account deficit, which “as a matter of accounting” means that the $773 billion dollar deficit in America’s current account must be a $773 billion dollar financial account surplus since “debits equal credits.” What this means in practice is that foreign investment in the United States is strong.

Lemieux also emphasizes that these two measures, while a mathematical identity, are independent of one another. He claims that “it is at best misleading” to say that we fund our current-account deficit through foreign investment. But, how else would we fund it? Lemieux argues that we “export in order to import” (another way of saying that consumption is the goal of economic activity), and that the trade deficit really means that we are getting more imports for our exports. In this way of thinking, the difference between exports and imports means that we are “getting more for less.”

In reality, the difference between imports and exports is financed by either debt or selling assets. The net U.S. International Investment Position at the end of 2023 was -19.77 trillion dollars, meaning that foreigners owned 19 trillion dollars more of US assets than Americans owned abroad. This is equal to our cumulative trade debt. While Lemieux argues that this investment is a good thing that offers capital inflows into the United States to help finance business, it means that foreigners increasingly own American assets, and that this is how America is able to consume so much relative to what we produce. As David Goldman has pointed out, “Substituting cheap imports for domestic manufacturing may have been a policy error, but it was an affordable policy error because of America’s leadership in the digital age.” However, the continuation of this current model means that America would continue to import more, export less, and sell more assets to compensate; ultimately it means a future owned by foreigners. While Lemieux may not care because he only sees countries as “individuals and companies,” being beholden to potential rivals sounds like the makings of a hostage situation.

Lemieux seems to understand that this model is unsustainable. Even as he touts the benefits of a trade deficit, he adds a key assumption to his defense of “import[ing] as much as [a country] can and export as little as possible (assuming it were possible to maintain this regime for long).” [emphasis mine] This is an important—and wrong—assumption. Businesses that are consistently unprofitable are forced to close. Why is this any different with an economy writ large (especially if, as Lemieux insists, the economy is only the summation of all firms and households)?

How would tariffs help rectify these problems? As already mentioned, they would help preserve what we already have while also altering the incentives to make reshoring more attractive. They would also serve as a disincentive to consumption of foreign goods, driving down imports over time and fostering greater demand for domestic products, creating even more opportunity for companies to reshore and hire Americans.

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Why is America Losing Its Factories?

There is no satisfactory  answer to the above question from Lemieux, but rather he responds to the objection that “The United States is Losing Its Factories.” He doesn’t dispute the claim so much as explain why it is not a problem. After reminding us that “American factories” mean factories owned by American corporations, not the government nor its employees (implying that they have the right to move wherever they want, consequences be damned for those “left behind”), he explains how manufacturing has changed. Manufacturing employment has decreased by seven million jobs since 1979, manufacturing share of GDP dropped from 25% to 12% from the 1940s to 2015, and the total percentage of manufacturing employment across the workforce has decreased from 26% in 1953 to 8% in 2016.

Despite this, Lemieux states that “real manufacturing production has increased by 180 percent from 1972 to 2007, and has nearly recovered the reduction suffered during the 2008-2009 recession.” Immediately following this point, he says “manufacturing output has not dropped like employment because labor productivity has increased as a result of a number of factors, including technological progress and long (often multicountry) supply chains.” However, much of that output growth is frontloaded in the timescale. As St. Louis Bank data shows, after making that “near recovery,” total manufacturing production flatlines, which makes sense given that manufacturing productivity (output per manhour) has declined each year for the last decade. Where trends go from here remains to be seen, but the story of continued efficiency in manufacturing has not panned out.

Lemieux finishes by dubbing the objection as “misleading,” but he does concede that “the old manufacturing jobs for low-skilled workers have disappeared and will not come back unless the world gets much poorer,” as American manufacturing has become more advanced as well as shifted to the aforementioned service economy. Efforts at protectionism are dubbed as “Luddite resistance” instead of “helping workers and communities adjust to inevitable change.”

But who is to say that the change is inevitable? The trends that we have seen thus far are a function of decisions about what counts and how to conduct business, like lowering tariff rates and opening American companies to increased competition from abroad, while allowing China’s entrance into the World Trade Organization and excusing their “dumping” and other policies such as capital allocation for new businesses and ventures using the state-owned China Investment Corporation. There was nothing inevitable about either of those decisions, or of funding decisions to fund student college tuition rather than trade schools. David Goldman lays out a list of what he describes as America’s “industrial policy,” and they were all choices, not “inevitable” forces.

Tariffs would help resolve some of these problems through a combination of preservation but also shifting incentives. Additionally,  tariff revenue collected by the government could be used towards other policies, be it capital allocation, investment in R&D as Goldman promotes as a way of innovating and increasing labor productivity and thus output, or simply towards creating a more balanced budget and putting a dent in the government deficits that Lemieux is concerned with.

Jobs, Wages, and Opportunity

Further on in his book, Lemieux addresses the objection that “trade destroys jobs” and “trade lowers wages,” respectively. His central argument on the jobs question is that net jobs are created by trade because economic efficiency and comparative advantage increases total employment and opportunity. While some jobs are destroyed in the short term, long-term job growth is the result of free trade. Moreover, the benefits to consumers from cheaper goods outweighs costs incurred to producers who lose out to changing economic conditions, and that’s what matters. On wages, he does not dispute that nominal wages have decreased, but rather argues that real wages (defined as what one can buy with wages) increase due to trade causing decreased prices for goods as well as boosting overall productivity, which is the main driver of wages.

But the key problem with Lemieux’s analysis on jobs is his eliding the negative side of the trade-offs. In part, it stems from viewing consumption rather than production as the driver of an economy as articulated above. Lemieux himself concedes throughout the book, some people do lose from trade. Using “net jobs created” hides specific clusters of lost jobs. When a factory closes down, that can devastate a community and leave a hole. For example, Charles Murray’s fictional Fishtown as described in Coming Apart paints this picture well. The decline in marriage, industriousness, honesty, and religion from 1960 to 2010 are all increasingly prevalent problems, and mutually reinforcing.

The “China shock” of mass importing goods from China at lower prices starting in the early 2000s was particularly harmful, as Lemieux notes, citing a study from Autor, Dorn, and Hanson, which states that “as many as 2.4 million jobs were lost in the whole economy. The researchers calculated that a large number of individuals who lost their manufacturing jobs to the China shock were not able to find new jobs or had to accept new ones with lower wages.” Those jobs sustain families, and are often concentrated in specific locations. Net jobs created also don’t tell us where those jobs are created. If factories shut down in Steubenville, OH or my hometown of Worcester, MA, are enough net jobs created in those communities, and do they pay well enough? Autor, Dorn, and Hanson seem to indicate that the benefits are to other parts and places in the economy.

Tariffs do have a particular benefit when it comes to jobs: they are both job preserving by protecting industries that are threatened by unfair trade practices or intense competitive pressures, as well as creating new jobs over time as reshoring takes place. Manufacturing jobs tend to pay well for people without post-secondary education, so taking the reshoring agenda for manufacturing seriously promises to help improve wages for people in those lower-income brackets, which is where economic thinking and development should be targeted.

The Real History of American Tariffs

Much of this discussion has been theoretical. However, it is worth looking briefly at America’s own history to rebut Lemieux’s general thesis. For most of American history, the United States had significant tariffs in place. Historically, it was the main source of government revenue prior to the income tax in the Progressive Era. It protected infant industries as part of the “American System,” as explained by Alexander Hamilton in the Report on Manufactures, and later championed by Henry Clay. From 1820 to 1950, the tariff rates ranged from a low of 14% in 1950 to as high as 50% in 1875 following the Civil War. As Troy Senik describes in his recent biography of Grover Cleveland, debates over tariffs were not over whether there would be tariffs, but how high. It was common sense that countries would pursue an industrial policy to its own benefit. Even once the United States began to pursue more free trade policies, that did not stop Ronald Reagan from using tariffs and other policies to protect American industry from foreign competition by Japan.

How did these policies turn out? Rather than being an economic disaster or leading to authoritarianism, America became an industrial powerhouse, and was in fact the fastest growing economy in the 19th and into the early 20th century. If this does not prove that tariffs were the cause of this growth in prosperity and global economic prominence (indeed, American industrial policy during the 19th century was more aggressive than merely using tariffs), it certainly disproves Lemieux’s theories that tariffs were a hindrance to growth. Tariffs were widely and liberally applied, and things turned out great for America.

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Lemieux closes his book with a focus on the politics of trade and the question of fairness, describing how cronyism is the underlying motivation of protectionism rather than fairness or sound economics. He also points to nationalism as a bogeyman in American politics as an impediment to free trade. On “nationalism,” Lemieux’s starting point that nations are not superorganisms predetermines his analysis against government involvement in its own interest. However, a nation does take account of its own good and sets policies and goals to achieve it.. On the point about “special interests” seeking corporate arbitrage and indefinite protection from the government, it is worth noting that at least in 2024, tariffs enjoy bipartisan support, and so reflect democratic choice. That does not make tariffs good policy by themselves, but as Lemieux has repeatedly affirmed the importance of individuals and their interests, perhaps a self-governing people ought to drive their own economies rather than be driven by “inevitable changes” that they do not like or support.

Tariffs are not a silver bullet—in politics, there are none. That said, our current trade deficit runs on an unsustainable business model rooted in a priority of consumption. Lemieux demands we make a choice between consumer sovereignty focused on consumption enabled by low prices from cheap foreign goods, and a “system where producers rule by vying for privileges from the state.” We have done the former since the late 1970s. It has given us a staggeringly large trade debt, declining output and productivity, increased income inequality and class stratification, and malaise for the bottom, which threatens the rest of the social order. While we must be careful to avoid corruption as much as possible and make sober-minded trade-offs, we should gladly accept producer sovereignty with all of the energy and dynamism that will entail. As such, tariffs should be utilized where they can protect our current capacity and move more companies onto American shores. Revenues should be spent in the most prudent way, either towards creating further industrial policy, or in fixing the mistakes of the past. More importantly than tariffs, however, is taking the blinders off by rejecting false assumptions about politics, economics, and the good life.

This article is part of the “American System series” edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Tom Sarrouf is the Senior Academic Programs Manager at the Intercollegiate Studies Institute and co-hosts the podcast, "Conservative Conversations with ISI." He was a 2023 Publius Fellow with the Claremont Institute.

Like so many other contributors to the American System, Carey did not live in abstractions. Carey’s thinking had deep roots in the business world of Philadelphia where he had previously supported local tax reform and the First Bank of the United States as a Philadelphia Selectman and a director of the Bank of Pennsylvania. He was concerned with designing solutions tailored for the specific needs of his time and place, rather than making theoretical observations or pursuing a universal theory. Carey wanted practical national policy, embracing the scientific method and statistical evidence, collecting as much information as he could through the limited means of his era. That is not to say he lacked ideals. Carey believed in maintaining “class harmony and balance” by harnessing the nation’s resources between West, South, and North. He published The New Olive Branch in 1820, outlining his theory of class harmony and toning down the fiery partisanship of his youth.

The nation could not be dependent on one source of wealth and employment and needed to move away from reliance on exporting agriculture and importing manufacturing. A large and competitive domestic market could accommodate both industries and support commerce too. Carey had no personal stake in manufactures, seeing his role as a public citizen working for the general welfare of his country. Hamilton’s 1791 Report on Manufactures was a crucial text for Carey, arguing that machinery enables the greater division of labor and increased productivity of national talent. However, the South opposed protectionism that might undermine the institution of slavery. Carey was opposed to slavery but did not see how it could be abolished so he attempted to reconcile slavery within his system, which was a serious flaw to be corrected by later generations of economic nationalists under Abraham Lincoln.

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Assembling the American System

When Carey first launched the Pennsylvania Herald in 1785, he was an ardent protectionist and favored home industry. This reflected his old feelings towards English trade protections against Ireland. In 1785, he wrote of “the highest degree of pleasure to find the legislatures of the different states turning their attention to every object that can check the progress of importations, and tend to the promotion of domestic manufactures”. Carey had closely followed the passage of the Pennsylvania Protective Act of 1785. These observations were based more on emotion and politics than theory and economics. But this was evolving beyond anti-Britishness. Protectionism would create jobs, protect specie, and deter against luxury. The Constitution had aimed to remedy these problems and a tariff bill was produced on July 4, 1789, for revenue that could reduce debt and support manufactures. After the War of 1812, Carey believed there needed to be a renewed push for protectionism.

The work began with grassroots campaigning, not writing a large tome on economics to rival Adam Smith or David Ricardo, though Carey did write a huge deal. In February 1818, Carey made his first major move towards backing a tariff to protect domestic industries by founding the Philadelphia Society for the Promotion of American Manufactures. This led to the formation of similar societies, such as the Philadelphia Society for the Promotion of National Industry. It had ten members from manufactures, medicine, science, and literature, and published 13 addresses, many of which were written or edited by Carey himself and were distributed nationally. Carey criticized the popular assumptions people held from Smith’s The Wealth of Nations. Smith’s teachings were helpful for a leading industrial power like Britain but not a nation in its early stages of development. Carey went on to found the Pennsylvania Society for the Promotion of Domestic Industry in August 1819. Carey wrote often to leading manufacturers to enlist their support. Circulars were distributed in the hope of inspiring similar local initiatives elsewhere and the addresses were widely referenced in Congress. A national convention of manufactures was held on November 29, 1819, in New York with Carey as one of the delegates and acting as secretary. Gradually and at a local level, Carey was building a movement.

Carey understood the importance of internal improvements from his time following local and state politics in Philadelphia. Business growth depended on the spread of trade routes, transportation, and communications. That is why Carey called for the funding of new turnpikes and canals to boost trade, create jobs, reduce freight charges, and raise land values. Carey had his sights on Pittsburgh where the freight charge was $45 per ton and could be reduced to match the $10 per ton rate for water transportation between Albany and Buffalo. In 1821, Carey started a campaign for the Chesapeake and Delaware Canal that had originally started construction in 1801 but had been given up in 1805. Carey held a meeting in Judd’s Hotel, Philadelphia on September 12, 1821, with 60 citizens who responded to Carey’s invitation. Carey had also been recently elected to the American Philosophical Society and gotten its support for the scheme.

On January 28, 1822, a general meeting of canal stockholders was held in Wilmington with Carey as chairman alongside a new board of directors. Subscription books were opened in May 1822, but the campaign ultimately failed. Carey tried to host another meeting in November with only six people replying to his invitation. Carey turned to the newspapers and memorials for legislative action, with thousands of signatures and resulting in $100,000 from the Bank of Pennsylvania. The next meeting was held on April 10, 1823. Strong attendance was achieved, with a committee of 25 appointed, 2,000 copies of an address sent out, and Carey was made chairman of a subcommittee of five people to take the next steps. They sold $360,000 of stock in five weeks but it still was not enough. By July 15, 1823, Carey was removed as a director. It showed the limits of private action and the necessity of government intervention in building the American System.

Reliable currency was another key ingredient as America needed a stable currency with reliable exchange of notes to carry out business. Carey published widely on banking and currency during the 1810s when the nation was struggling to finance the war with Britain. In response to the expiration of the first Bank of the United States’ charter, Carey travelled to Washington to persuade the Pennsylvania delegation to support renewal and published a pamphlet and a series of essays in the Jeffersonian press. The expiration of the charter was not immediately calamitous but certainly contributed to the crisis of 1814 as banks expanded and weakened. Carey also foresaw the problems that would blight the Second Bank of the United States. He believed that banks had a primary responsibility to the public welfare above shareholders. This meant banks should be responsible for managing periods of speculation and relieving periods of difficulty. As a result of these efforts, Carey became isolated from some of his old friends in Philadelphia, but he would still be appointed a director of the Bank of Pennsylvania in January 1819.

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Building the American School

To advance his movement, Carey began to look at journalistic and academic circles. In 1822, Carey offered to support a lectureship in political economy at the University of Maryland to the economist Daniel Raymond with a salary of $500 for a year’s course. However, neither the university nor Raymond accepted. While Raymond was more isolated, Hezekiah Niles was a close collaborator. German economist Friedrich List was based in Pennsylvania from 1825 to 1832 and a famous voice in the economic debates of the time. Henry Charles Carey, initially opposed his father’s teachings, became one of the American System’s leading voices after 1842. Grandsons Henry Charles Lea and Henry Carey Baird also defended the American System. The “friends of national industry in Wilmington and its vicinity” presented a silver urn to Carey as a token of gratitude in 1821 with similar rewards after his retirement as his leadership was widely recognized. After the 1828 tariff battle, Carey was also praised in Montgomery County as “a pillar of adamant to the American System; a hedge of thorns to British agents.”

Carey would eventually lose $300 on publishing protectionist tracts in collected editions. He proceeded with the “Hamilton Series” in 1822, using Hamilton and Colbert as pseudonyms for his writing. The essays were repetitive in content but kept the protectionist flame burning. This was a period of extremely high activity as Carey supported another unsuccessful attempt to form a national manufacturers’ society, sent circulars and memorials in 1824 to Delaware, Massachusetts, and Pennsylvania, and wrote a petition to the Board of Managers for the Pennsylvania Society for the Encouragement of American Manufactures in March 1824 and became vice-president of the Franklin Institute for the Promotion of Mechanic Arts in February 1824. Carey was also editor of The Political Economist which was a source of support for the American School from January 1824 to May 1824 with 150 subscribers but still leading to a loss of up to $70 for Carey.

Carey wanted to establish a Manufacturers’ and Mechanics’ Loan Company, but this also did not get off the ground. He continued as a bank director and supporter of the canal, chairing meetings and writing addresses. He set out plans in October 1824 for a Society for the Promotion of Internal Improvements with 25 members and $100 initiation fee to support the spread of information about canals, roads, bridges, and railroads, attracting 22 subscribers by November. A meeting was held in December and Carey became vice-president and chairman of the acting committee. He wrote as “Fulton” in favor of a canal between the Susquehanna and Alleghany rivers. Momentum continued to grow in 1825 for a canal through Pennsylvania as meetings, petitions, and travels abroad helped to support the society.

In June 1825, Carey went to Salem to push for manufacturers’ societies in New York, Boston, Sale, Hartford, and Providence. Interest in protection was waning and would not return until the following year. This led only to the Pennsylvania Society for the Promotion of Manufactures and the Mechanic Arts being successfully established. Protectionists began to rally when the depressed woolen industry was debated by state and national conventions in Boston, Germantown, Pittsburgh, Baltimore, Poughkeepsie, Albany, Wilmington, Harrisburg, Trenton, Rutland, Vermont, Newport, Rhode Island, Middleton (CT), and counties in Pennsylvania, New Hampshire, Kentucky, Ohio, Virginia, and so on. But Carey was cut out of the Harrisburg convention. This was the start of him stepping away from the cause, writing in November 1827:

“Oh God! How lamentable that such a glorious cause, in which the prosperity of a great and rising empire is so deeply involved, should be risqued, and probably shipwrecked, by the miserable saving of a few paltry dollars! And that on the part of men, many of them worth hundreds of thousands, and with fortunes at stake on the issue!”

Internal improvements were also held back by skepticism of railroads and the speculative bust in Britain. But still Carey pressed ahead. In 1828, Carey founded the Pennsylvania Society for promoting the culture of the Mulberry, and the raising of Silk Worms and wrote a rebuttal to the Boston Report which argued for free trade. On February 25, 1828, he chaired a meeting of protectionists with between 800 and 1,000 people in attendance. Carey wrote addresses in favor but failed to secure the support needed to circulate them in the South. Carey finally gave up the fight in the face of southern resistance and threats of nullification, announcing he had been:

“begging and praying other people in vain to defend their own causes – a cause in which I never had any interest whatever – but in which I have expended nearly 4000 dollars, and three-fourths of my time, for above nine years and a half, to an incalculable loss of business, friends, and enjoyment.”

Although Carey swore to never run for elected office in 1822 and was feeling increasingly jaded, he campaigned for Henry Clay’s 1832 presidential bid. Carey eventually supported a tariff compromise in his fourth Olive Branch publication in April 1832 as part of efforts to preserve the Union, retreating from the fight but still convinced of his opinions. “Every fact that comes to my knowledge, connected with the subject, serves, more and more, to confirm me in the soundness of the doctrines. Our national experience affords the strongest corroboration of it.” He criticized the Jackson administration’s Bank War and continued to write essays against the nation’s dependency on cotton and the blame wrongly assigned to the tariff. After the nullification crisis was over, Carey turned his attention towards charity and writing about poverty. When Carey died on September 16, 1839, “thousands followed Mr. Carey to the grave with grief for his loss, and reverence for his worth; but more mourned, in unobtrusive silence, their friend and benefactor.”

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Mathew Carey’s Legacy

Many achievements can be found in Carey’s career, such as the extension of canals in Pennsylvania, founding of institutions dedicated to the growth of manufacturing, and a collection of influential and insightful economic writing. The 1824 and 1828 tariff bills were shaped by protectionist principles, following the failed 1820 tariff and setting an example for economic nationalists after the reversals of 1832 onwards. Henry Clay paid tribute to Carey in March 1824 saying, “he merits the public gratitude, for the disinterested diligence with which he has collected a large mass of highly useful facts, and for the clear and convincing reasoning with which he generally illustrates them.” Carey was also burned in effigy in South Carolina and toasted together with Niles as “the big ourang-outang and baboon of the ‘monkey system’”.

It is hard to directly link the economic gains of 1824 to 1837 with the legislative initiatives backed by Carey. Neither can Carey claim to have invented his own system of political economy. But Carey was a highly intelligent and hardworking individual who used his place in public life to promote and advance the economic ideas of Hamilton and inspire future leaders such as Henry Clay and Friedrich List to champion “the American System”. Certainly, economic nationalism had roots going back to Jean-Baptiste Colbert in France and European mercantilism. But it was being applied to the unique historical and geographical circumstances of the early American republic, providing an example to countries as varied as Canada, Japan, and South Korea in developing their national industry. What Carey accomplished was to demonstrate the importance of building institutions and spreading networks that can advance economic ideas and influence policy. Carey should again be an example to those interested in reviving the American System.

This article is part of the American System series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

David A. Cowan is a Ph.D. Candidate in history at the University of Cambridge and a former staffer and researcher in the UK Parliament. He has been previously published at American Affairs, The American Conservative, Engelsberg Ideas, Fusion, and National Review.

Writing in the 1930s historian Kenneth Wyder Rowe called Carey “a little known figure in a period of importance in the economic development of the United States.” This should change. Hamilton is rightly held up as the Founding Father most responsible for the American national developmentalist tradition but there were public intellectuals who did much to keep the Hamiltonian flame alive in the years after his death. Carey gathered support around him in Philadelphia to advocate for the “protecting system” influencing future generations, including his son Henry Charles Carey. Rather than writing from the august halls of Harvard or Yale, Carey promoted his ideas through journalism and publishing to create an organizational movement for Hamiltonian economics. He also observed and commented on the first three decades of the nineteenth century with a consistent economic philosophy. This work left a major mark on individuals such as Henry Clay and the Whig Party, paving the way for Abraham Lincoln and the Republican Party.

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Irish Radical to American Patriot

To understand Carey’s economic thought, it is important to first appreciate the experiences that forged his nationalistic approach as it reflected the broader development of the American republic. Carey was born in Dublin, Ireland in 1760. Despite the disapproval of his father, Carey loved books from an early age and joined a circulating library, becoming apprenticed to a bookseller named McDonnnel, “a hard, austere, master of the most repelling manners” and printed his first work “On the Subject of Dueling” in 1777. After writing an essay in 1779 calling for a repeal of the laws that restricted the rights of Irish Catholics, a reward of £40 was promised by local authorities for aid in arresting him and a lawyer hired to prosecute.

Carey had no choice but to flee to Paris and temporarily lay low as a result where he was introduced to Benjamin Franklin and given a job with his Passy printing shop. He also met the future French general Marquis de Lafayette and returned to Ireland a year later to edit the Freeman’s Journal. In 1783 he then became the owner of the Volunteer’s Journal, to “defend the Commerce, the Manufactures, and the political rights of Ireland, against the oppression and encroachments of Great Britain” as Carey put it, providing a voice for Irish patriot and radical opinion. It covered issues as diverse as depopulation, land values, agriculture, commerce, trade, and credit, giving Carey a firm grasp on economic and financial affairs.

“Good God! How long will the misery of this nation be prolonged! And how long will the name of England continue to convey to our minds no other ideas, but those of monopoly, duplicity, corruption, and treachery”, Carey declared to his readers. This sparked incendiary essays and advertisements against his words, leading to Parliament ordering Carey to be arrested on April 7, 1784. Charged with libel, Carey sold the journal to his brother for £500 and emigrated to America disguised in women’s clothing with only 25 guineas in his pocket on September 7, 1784. A travelling companion, Mr. Wallace, later informed Lafayette that Carey was in the United States. They renewed their acquaintance in December that year in Philadelphia and Lafayette sent Carey a $400 loan (with Carey returning the whole sum to him in cash in 1824).

Carey began his new life in America by buying an old printing press at auction and launching the Pennsylvania Herald and aligning with the Jeffersonian Republicans. But again, his presence would provoke a strong response. Colonel Eleazer Oswald, editor of the Federalist-supporting Independent Gazetteer, did not want competition. For an injection of capital, Carey took on William Spotswood and Christopher Talbot as his new partners. In a brilliant move, Carey began publishing accounts of the state Assembly debates which saved his business from financial ruin. Oswald was offended that an Irish immigrant should take such a prominent role in public life, believing there should be “No office of honor, trust, or profit in the United States for any person of foreign birth”. Carey, however, supported his fellow immigrants and backed the new Society for the Lately Adopted Sons of Pennsylvania, which was patriotic and democratic in equal measure. Tensions between Carey and Oswald escalated until they fought a duel, resulting in the former being shot in the thigh.

Taking his profile to new heights, Carey launched the Columbian Magazine in September 1786, which featured an essay on building a canal between the Delaware and Ohio rivers, signaling his interest in internal improvements. He also started The American Museum in January 1787. The list of prestigious subscribers included George Washington and Franklin, publishing essays on the economic, social, and political life of the nation. Washington wrote on June 25, 1788, “A more useful literary plan has never been undertaken in America”. In 1790, Carey, Stewart, and Company was formed and the publication became the American Museum or Universal Magazine to broaden its appeal with more entertainment content until it ceased publication in 1792. It was more a literary triumph than a financial one due to Carey’s mismanagement of the subscription list, prices, and number of copies printed. He even asked to borrow money from Washington twice.

Becoming more established in his new country, Carey married Bridget Flahaven on February 24, 1791, whose family were well respected citizens in Philadelphia but left financially weak after the American Revolution. The end of the American Museum led to Carey concentrating solely on bookselling as head of M. Carey & Son and then M. Carey & Sons from 1817 to 1824. He published textbooks, novels, almanacs, atlases, pamphlets, and poetry, taking special care to promote American writers and native literature. But it was publishing Bibles, including the first Roman Catholic edition of the Bible to be printed in the United States, that ultimately kept his business thriving. The business started local before expanding its reach through itinerant booksellers, exchange methods, trade lists, and branch houses. The business reached the South as well as New York and Boston with, respectively, 14 and 16 correspondents in 1814. Carey would eventually retire in 1824 with $8,000 per year, leaving the business to his son Henry Charles Carey.

It was not only Carey who was doing well in the 1790s. The United States was booming. In September 1794, Carey wrote to an Irish relative, “Th human imagination can hardly reach to an idea of the prosperity and importance to which this country is rapidly verging”. The 1790s was a far more ambient economic climate with credit flowing, internal improvements built, agriculture doing well, and the country at peace. Carey corresponded regularly with family and friends in Ireland. Philadelphia in 1790 was home to 26 printers hoping to supply books and pamphlets. In 1795 this number grew to 39. By 1805 the number was 51. This was a decade in which “the process by which a group of late eighteenth-century Philadelphia printers and booksellers evolved into nineteenth-century entrepreneurs of the book trade.”

Colonial publishing had operated within the restrictions of British mercantilism. But the revolution, rise of parties, and the capital being based in Philadelphia drove forward this growth. French emigres, Irish immigrants, and British radicals contributed to a vibrant scene. This was a highly competitive environment in which American books were not as commonly produced as imported European works which were not covered by copyright. Carey set up the American literary fair, modelled on the Leipzig fair, to help booksellers to meet and exchange publications. It was held in June 1802 in New York with Boston and Philadelphia booksellers present. New York and Boston would not overtake Philadelphia until the 1820s and 1830s.

Carey did not run his publishing business according to his political interests. When the capital moved to Washington in 1800, many publishers followed for federal patronage. Those who remained focused on state-level patronage such as Carey pushed for state publishing business. But he was still actively engaged in politics personally. Carey supported ratification of the U.S. Constitution, opposed the Test Acts in the state constitution, and was attracted to the Jeffersonian Republican Party, which contributed towards his struggles with Oswald in 1785 to 1786 and the English radical William Cobbett in 1798. This led Carey to keep his politics separate from business, though still pursuing patronage through practical and nonpartisan means by publishing state laws.

These were active years, but Carey was beginning to comment on American public life just as he had done as a young man in his native Ireland. This started with the publication of an account of the yellow fever epidemic ravaging Philadelphia in 1793. It was translated into three foreign languages and even sent to England. Carey was appointed to a board to help handle the sick and orphaned and control the disease. He provided the nation with a detailed account of what had happened. This helped Carey become a leading philanthropist in the city. In 1790, Carey was already working with Bishop White of the Episcopal Church and Dr Benjamin Rush, a Universalist, to establish Sunday Schools to teach reading and writing as well as religious guidance. December 26, 1790, saw the creation of a formal association for promoting Sunday schools, the first of its kind in the United States. Supporting Sunday schools was good for public morals as well as the publishing businesses as it created more customers, hence Carey’s involvement. This made him one of the most well-regarded citizens in Philadelphia.

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The Rising Republic

Carey’s career and ideas were fundamentally shaped by the economic developments he experienced during his life in America. Philadelphia was one of the great cities alongside Boston, New York, and Baltimore. Population was growing and moved westward. The Louisiana Purchase in 1803 and Florida acquisition in 1819 encouraged further growth as new states entered the Union. In 1790, five cities had populations over 5,000. But there were also new challenges. Britain had restricted colonial manufacturing and commerce abroad, meaning the colonists mainly produced food and raw materials while importing British manufactured goods. After the war, Americans had currency to spend but little domestic production. British goods overwhelmed infant industries with £6,000,000 imported in 1784-85 but only £1,600,000 of exports and trade with the British West Indies still banned.

Neutrality in the wars between Britain and France led to increased demand for American agriculture and the merchant marine. Tonnage grew from 300,000 in 1793 to 1,268,548 in 1807. Ship building and milling continued but broader manufacturing was not incentivized. This drew attacks from both Britain and France on American merchant shipping. Chief Justice John Jay was sent to sign a treaty with Britain to resolve the crisis. Impressment was not covered by the final treaty with many unresolved issues such as western forts, commercial regulations, and the slave trade. Carey was against the treaty, transferring his pride from Ireland to America, and remaining staunchly anti-British.

When the Jay treaty expired in 1804, Jefferson rejected the new treaty negotiated by Madison. The 1807 Orders in Council and Napoleon’s Berlin decree caused further problems, leading to Jefferson’s trade embargo followed by the 1809 Non-Intercourse Act, paving the way for the War of 1812. Collapse in commerce during the conflict led to the rapid expansion of domestic industries such as cotton, iron, wool, flax, amounting to $200,000,000 in 1810, while tonnage of foreign commerce fell from 981,000 in 1811 to 715,000 in 1812. Many of these industries were present in Philadelphia and witnessed firsthand by Carey.

The end of war in 1815 and Britain’s protective tariff on corn cut off an important export market for American grain. But British manufacturers hoped to dump their products on foreign markets, including the United States. Hezekiah Niles’s Weekly Register in Baltimore, which would become another outlet for supporters of the American System, sounded the alarm when 50 ships arrived from Liverpool with a range of manufactured goods. This created fierce competition with domestic manufacturers. Britain’s struggle with harvests, depression, and unemployment created further instability. Nationalism and fear of European competition created a drive for protectionism in Congress.

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Finding the Nation’s Voice

What elevated Carey’s national status and began his contribution to national politics was the War of 1812. The conflict with Britain was going badly and the Madison administration was deeply unpopular. New England flirted with secession. Carey published The Olive Branch: or, Faults on Both Sides, Federal and Democratic in 1814, criticizing the seditious behavior of New England Federalists and the incompetent governance of the Republicans. It ran for ten editions until 1818 and captured the nationalist spirit of wartime, marking a key moment in his thinking as well as the economic thought of the nation more broadly. The book enhanced Carey’s reputation and helped his transition away from his previous Republican partisanship.

Carey’s work on the 1793 yellow fever epidemic and War of 1812 supported the rise of American national feeling and literature. In his autobiography, Carey placed The Olive Branch among his greatest achievements. But the return to peace would bring new challenges. The British politician Henry Brougham spoke in Parliament for flooding the American market with British goods to stifle manufacturing, which only employed 14 percent of Americans in 1820. This caused huge outcry in America and supported the calls for boosting domestic manufacturing. Recovery from the 1816 depression was weak and credit contracted in 1818. Economic crisis returned in 1819 with bank failures, unemployment, and stagnant growth. These experiences primed Carey for a highly productive period of writing and campaigning that would help establish the model of political economy known as the American System.

This article is part of the American System series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

David A. Cowan is a Ph.D. Candidate in history at the University of Cambridge and a former staffer and researcher in the UK Parliament. He has been previously published at American Affairs, The American Conservative, Engelsberg Ideas, Fusion, and National Review.

Chamberlain’s belief in industrial strength, social reform, and national influence still resonates in the twenty-first century. More than most British politicians, Chamberlain was tied to the civic politics of a particular place: his home city of Birmingham. That is where he entered the family business, a screw manufacturing firm, and became a leading figure in Britain’s industrial elite. As a follower of Unitarian Christianity, Chamberlain adopted a rationalist view of the world and did not follow the mainstream Anglican faith at a time when religious convictions still dictated how high people could reach in public life. The city was imbibed with a civic spirit driven by prominent dissenting Protestants, such as the Cadbury family. This background put Chamberlain firmly outside of the aristocratic and traditional hierarchy that had long dominated the country. But it also helped Chamberlain be among the first industrialists to attain high office.

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Chamberlain showed great concern for the wellbeing as well as the productivity of his employees. He saw the social consequences of industrialization firsthand in Birmingham, such as poor sanitation and dire housing conditions, and hoped to ease the class tensions it produced. This took Chamberlain into public life when he joined the Liberal Party and founded the National Education League in 1869. In an era of democratic change, many Liberals believed the state had a responsibility to improve the education and moral character of the newly enfranchised. Chamberlain’s favored solution was universal, publicly funded, and non-denominational education. Liberal opinion, still rooted in the laissez-faire doctrine of David Ricardo and John Stuart Mill, was largely divided in its attitude toward such schemes. But Chamberlain continued to push for ambitious social reform that could empower the British middle and working classes.

Elected Mayor of Birmingham in 1873, and stepping back from the family business, Chamberlain put his ideas to the test. He introduced “municipal socialism”, taking water and gas into public ownership, which helped provide the city with much needed revenue. Slums were cleared and replaced with decent housing. Birmingham city center was transformed by the creation of Corporation Street as the main thoroughfare. Partnership between local government, local business, and the local community made Birmingham a shining example of civic excellence. Later Chamberlain would help found the University of Birmingham and become its first Chancellor, pushing for practical learning alongside traditional subjects. This legacy is, sadly, a far cry from the current state of Birmingham where the local council was recently declared bankrupt, reflecting years of mismanagement and poor leadership.

After entering Parliament in 1876, Chamberlain hoped to take these ideas to the national level and reshape the Liberal Party. With his youthful appearance and charisma, armed with an orchid in his jacket lapel and a distinctive monocle, Chamberlain had a powerful personal appeal. Building up his local powerbase by establishing the Birmingham Liberal Association and then the National Liberal Federation, Chamberlain also led a grassroots movement for reform, marking a significant innovation in a country still adjusting to the arrival of mass democracy. By 1885, he was able to launch the “Unauthorised Programme”, a policy platform containing a number of radical proposals, building on the milestone social reforms of Benjamin Disraeli, such as local government expansion, free education, land reform, and progressive taxation. Chamberlain earned the affectionate nickname “Radical Joe” from his supporters but terrified the aristocratic classes, Liberal and Conservative alike, with his ideas for social change. This all made Chamberlain an unlikely source of inspiration for the British Right.

What made Chamberlain leave the Liberals and join forces with the Conservatives was the issue of Irish Home Rule. He opposed the Prime Minister William Gladstone’s proposal to devolve power to an Irish Parliament separate from Westminster, which would undermine the constitutional integrity of the Union. Chamberlain and other “Liberal Unionists” rebelled against Gladstone and worked with the Conservatives to block his Irish Home Rule legislation. After supporting the Conservative government in 1886, the Liberal Unionists would join them in coalition in 1895. In 1912, the two parties would formally merge to create today’s Conservative and Unionist Party. Birmingham provided a bloc of Unionist MPs, excluding Gladstonian Liberals, lasting well into the twentieth century. Unionism soon evolved beyond simply opposing Irish Home Rule. It came to represent a commitment to a national compact between all classes and regions.

In partnership with Lord Salisbury, leader of the Conservative Party, Chamberlain was able to shift the Unionist forces towards backing stronger measures of social reform. He successfully lobbied for the creation of county councils in 1888, scrapping fees for state-aided elementary schools in 1891, and introducing workplace injury compensation in 1897. But Chamberlain also turned his attention towards establishing old-age pensions, inspired by Bismarck’s reforms in Germany. The problem was that such an expansion of the state was a bridge too far for many Unionists, carrying too large a fiscal cost. This would, in time, become linked with Chamberlain’s tenure as Colonial Secretary, a position he specifically requested rather than the more powerful position of Home Secretary which could have been used to push for radical social legislation.

This counterintuitive move further facilitated Chamberlain’s shift to the Right. Like most members of the political class, he supported the British Empire and its interests. Anti-imperialism would become a more pronounced part of the British Left at the turn of the century following the Boer War and accelerate after the First World War. As a good businessman, Chamberlain thought that Britain’s colonies were a vast source of untapped potential that could fuel national greatness. This led to new projects such as the funding of research into tropical medicine. However, as British power declined relative to emerging industrial powers such as the United States and Germany, Chamberlain tried to use the Colonial Office to cultivate Britain’s imperial possessions to a greater extent and support economic and industrial growth. Chamberlain came to be known as “the first minister of the British empire”.

Alongside colonial development, Chamberlain supported a forward policy of imperial expansion that contributed towards the “scramble for Africa”. British imperialists dreamed of establishing colonial control from Cape Town to Cairo. This culminated in the Boer War when the British Empire struggled to subdue the autonomous Dutch-speaking Boer republics. This stimulated imperialist and patriotic sentiment at home, then known as “jingoism”, handing the Conservatives and Liberal Unionists a large majority in the 1900 “Khaki Election”. Chamberlain, the radical reformer, had become a symbol of British nationalism, sealing the breach between his followers and the old Liberal Party which would become more internationalist in its politics.

But this still left major questions unresolved. How could the British Empire consolidate further and maintain its influence in a more geopolitically competitive world? What could be done to reverse British industry’s relative decline and protect domestic manufacturers and workers? How could the British state fund new social reforms such as old-age pensions? These are questions that bear some resemblance to modern problems in the face of deglobalization, deindustrialization, and ageing societies. Much like today’s neoliberal order, the old laissez-faire consensus was breaking down in the face of serious change at home and abroad. Mass democracy also made new demands of British politicians, putting expectations on them to produce positive platforms for change rather than simply managing and responding to events.

Chamberlain’s solution was tariff reform. Protectionism had not been the ruling elite’s economic creed since the eighteenth century. It had declined and fallen during the nineteenth century, ending with the repeal of the Corn Laws that protected British agriculture. Sir Robert Peel’s struggle to expand free trade had permanently split the Conservative Party and put it in the political wilderness for a generation. But rather than being a retreat to an older generation’s comfort zone, Chamberlain was displaying his political entrepreneurial flair by proposing a new system of imperial preference. Protective tariffs on goods traded within the British Empire would support domestic companies and workers, bind the empire into a consolidated economic bloc, and fund new social programs such as old-age pensions.

The tariff reform campaign, launched in 1903, was undeniably popular and sparked a mass movement with rallies and demonstrations. But it also tore the Conservative government apart. Shortly thereafter, the Conservatives suffered an historic defeat in the 1906 General Election and Chamberlain was immobilized by a stroke. Old-age pensions would be introduced under the new Liberal government, and become more generous under Chamberlain’s son, Neville, as Health Minister. Imperial preference would also be implemented by Neville Chamberlain during his tenure as Chancellor in the 1930s. By this stage, it was too late for the full scope of Chamberlain’s tariff reform vision to become a reality. The British Empire would then be dismantled after the Second World War, leaving Chamberlain’s vision behind. But Chamberlain’s skills as a political entrepreneur left an indelible mark on his country.

The Radical Alternative

Later generations of conservatives have still looked to Chamberlain for inspiration. His combination of social conscience and patriotic passion has influenced the Conservative Party in different ways over the past century, including recent years. David Cameron and Theresa May namechecked Chamberlain in speeches during their attempts to modernize the Conservative Party. Leading thinkers such as David Willetts and Nick Timothy have written eloquent pamphlets defending Chamberlain’s contributions to conservatism. When people on the British Right discusses economic and social reform, Chamberlain is never far from their minds.

In the post-Brexit era, Radical Joe is more relevant than ever before. Leaving the European Union resolved the political stalemate of the late 2010s but left conservatives with new questions about how to respond to the disintegration of the liberal world order and the failings of Britain’s economic model. Nation states matter again. Economies are decoupling from each other. Citizens expect their governments to make their countries more resilient in the face of global shocks. New technologies threaten to fuel further economic and social disruption. The Covid-19 pandemic, wars in Ukraine and the Middle East, and global inflation have all accelerated the search for a radical alternative.

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Twenty-first century problems require new solutions, but this can be achieved by learning from past political entrepreneurs like Chamberlain. There are themes from his career that are particularly worth developing and applying to modern Britain and American. Chamberlain was also a fierce political organizer, experimenting with policy and campaign organizations. Generating fresh ideas is futile if conservatives cannot communicate with voters. Emerging forms of new media and grassroots activism can help if properly harnessed.

To draw together a Chamberlainite program for change, conservatives should think imaginatively about the following themes:

1. Industrial Policy. Manufacturing decline has made many Western countries more dependent on imported goods, created vulnerable supply chains, reduced the number of mid-skill jobs, and driven too much foreign investment towards specific regions. The state should intervene strategically to address these problems with a focus on economic resilience and reindustrialization.

2. Social Reform. An ageing society has caused increases in health and welfare spending, putting more pressure on working-age taxpayers. It has also widened intergenerational inequality between the asset-rich elderly and the young who struggle to own a home and start families. The welfare system needs to be overhauled to create a fairer balance between the generations.

3. Civic Renewal. Love of country is important. But communities are not just defined by national boundaries. People are also proud of their regions and towns, too many of which have been neglected by elites based in the major cities. Placemaking should become a more prominent way of implementing policy across government, thinking about how to improve localities.

4. Democratic Renewal. Too much power has been transferred from citizens and their representatives towards the administrative state, lawyers and the judiciary, and international institutions and treaties. Populism is a direct response to this transfer of power. Political decisions should be actively shaped by democratic processes so that elected governments can carry out the will of the people.

5. Foreign Policy. Britain is searching for a new role and America has passed its unipolar moment. But the current era of multipolarity means that politicians must put the national interest ahead of ideological considerations. Defense spending and military alliances should be reinforced to help the West confront the rise of authoritarian powers like China, Russia, and Iran.

This is an outline for a more patriotic and communitarian conservatism adapted to the West’s new place in an increasingly unstable world. An active state that acts strategically in the market and society can bring about change that is not possible under neoliberalism or a revived social democracy. It is yet to be seen if and when the British Conservative Party will pursue this course of action. But it remains their best chance to make the weather again just as Radical Joe did over a century ago.

This article is part of the American System series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

David A. Cowan is a Ph.D. Candidate in history at the University of Cambridge and a former staffer and researcher in the UK Parliament. He has been previously published at American Affairs, The American Conservative, Engelsberg Ideas, and National Review.

Property ownership has long been a central aspect of what it means to be an American. From the ratification debates and discourse around suffrage and citizenship in the early Republic to the suburbanization of the 1950s and 1960s, to own one’s own home is bound up in the idea of “the American dream” and how we understand American citizenship. President Thomas Jefferson’s “yeoman farmer” ideal has retained currency in our political and cultural imagination.

Yet homeownership today seems to be becoming more difficult due to cost. A 2023 survey showed that cost is the biggest limitation in buying a home, especially for millennials. We also know that increases in housing prices have outpaced income increases since the Great Recession. From a purely economic perspective, this is not a problem in and of itself; markets fluctuate, and renting is a viable alternative. Likewise, government policy in the Great Recession has left us distrustful of government interventions in housing. After all, they can have disastrous consequences.

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From a more holistic perspective, housing policy and owning homes is a significant problem, and indeed, a significant political problem. What does it mean for citizens who cannot achieve the American Dream? What does it say about the country where the American Dream is unattainable? How are property rights to be secured when the voting masses own nothing? Can citizens be independent without their own holdings? What virtues, practices, and outlook does being tied down cultivate and engender in property ownership? All of these questions have occupied the talents and energies of American statesmen from Jefferson and Madison to Clay and Lincoln. The same questions have also been the root of government policy to make homeownership attainable. The Homestead Act of 1862, a government policy meant to encourage home ownership, was a vital part of the “American system” of political economy and the development of American economic and political greatness.

Passed during the Lincoln administration, the Homestead Act was an expansion of pre-existing land sale laws that offered individuals up to 160 acres for just ten dollars. In return, they would move to the frontier lands of the Midwest and Great Plains, live on their holdings for five years, and “improve” them through agriculture. The goal of the Act was to help increase settlement and help ordinary people realize the goal of owning property. Prior to the Homestead Act, public land sales made it such that people of meager means were unable to buy such land. With the law, ownership was able to shift to ordinary Americans, many of whom would leave to strike out on the frontier and claim vast swaths of open space.

In his 1863 message to Congress, Lincoln spoke of the aim of the law and its consonance with the principles of American statecraft. He wrote, “It has long been a cherished opinion of some of our wisest statesmen that the people of the United States had a higher and more enduring interest in the early settlement and substantial cultivation of the public lands than in the amount of direct revenue to be derived from the sale of them.” From this, we can gather that, while the revenues to the government from selling the land were significant, the higher priority was in settling these territories and thereby expanding the American Republic.

Territorial expansion of the United States was controversial in the antebellum period because of the controversy over expanding slavery into new states. The Missouri Compromise settled how new territory would be settled in the balance between slave and free states, but by 1850 the Missouri Compromise had become undone, and in his last speech to the Senate, John C. Calhoun argued it as the cause of “the loss of equilibrium” between North and South. The Compromise of 1850 effectively ended the Missouri Compromise, but the struggles over settling new territory would continue with “Bleeding Kansas” and the debate over “popular sovereignty.” In the context of this deadlock, legislation like the Act failed to appear.

Lincoln, as a devotee of Henry Clay’s “American System” of political economy, supported homesteading. He believed it would have all of the benefits mentioned above; it was also tied to his philosophy of ownership and “free labor” in a vein similar to Jefferson’s idealized self-sufficient yeoman farmer. In his speech to the Wisconsin State Fair, Lincoln explained:

The prudent, penniless beginner in the world, labors for wages awhile, saves a surplus with which to buy tools or land, for himself; then labors on his own account another while, and at length hires another new beginner to help him. This, say its advocates, is free labor—the just and generous, and prosperous system, which opens the way for all—gives hope to all, and energy, and progress, and improvement of condition to all.

Lincoln’s view favors free enterprise. Historically speaking, many tenant farmers and sharecroppers would eventually rise from a position of being hired to eventually owning their own plots of land. The Homestead Act took this understanding and extended it to the frontier, and kept land open for ordinary Americans by preventing speculators and major business interests from taking it. Those concerns would receive their own parcels of land.

Much has been made of the fact that significant acreage was set aside to be sold to the railroads, including some of the most agriculturally fertile land. This criticism suggests that the homesteading policy, although giving the appearance of helping out “the little guy,” was really a form of crony capitalism that prioritized the business interests of the railroads.

This neglects the fact that both sides of the homestead policies work in the same direction: settling the country. Federal funding or subsidies for roads, canals, railroads, and other “internal improvements,” was an essential part of the American System; it helped further integrate the diverse parts of the country into a Union. Arguing in favor of internal improvements, Clay argued that “physical causes will have their influence” in the future of the country, making the people drift apart and undermine the Union. Internal improvements, Clay said, would be “a stronger tie to connect the various parts of the country together.”

Arguing in a similar vein, Lincoln noted that “the grants to railway companies of alternate sections of land upon the contemplated issues of their roads, which when completed will so largely multiply the facilities for reaching our distant possessions.” The railroads would help connect the farthest reaches of the American continent so they could be settled.

While the railroads could be expected to put the land to good use for the profit of the nation, the homestead policy offered a necessary inducement to move and speed up the process of settlement. This type of inducement—the cheap land and offer of land ownership—is consonant with the Hamiltonian theory as put forward in his Report on Manufactures. Contrary to Adam Smith’s position that “industry, if left to itself, will naturally find its way to the most useful and profitable employment,” Hamilton argued that:

The spontaneous transition to new pursuits, in a community long habituated to different ones, may be expected to be attended with proportionably greater difficulty…these changes would be likely to be more tardy than might consist with the interest either of individuals or of the Society. In many cases they would not happen, while a bare support could be ensured by an adherence to ancient courses; though a resort to a more profitable employment might be practicable. To produce the desireable changes, as early as may be expedient, may therefore require the incitement and patronage of government.

This mode of thinking about economics and the interests of society is too often neglected today, but the Homestead Act reflected Hamilton’s way of thinking. As we know, life on the frontier was nasty business. How likely is it that Americans would have bought land at the market value and moved to live in a wasteland? If one considers also people’s ties to their existing communities, the impediments to becoming frontiersmen were even greater, so the offer of cheap land and the promise of ownership served as an incitement to help aid settling.

Even though only 40 percent of homesteads were ultimately successful and converted to private land, the homestead law should be considered a success, in speeding up the settlement of middle America and creating wealth. Robert Gordon’s analysis of farm productivity compared to urban productivity in the 1870s also shows how farming families were wealthier on average than working-class urban families. On top of this, farming families were more subsistent and largely owned their own land, keeping expenses lower relative to the urban classes.

Homesteads were also available to immigrants who intended to stay and become citizens. Many immigrants took advantage of this opportunity, and by 1870, more immigrants were settled in the West than in the East. The openness to immigrants receiving land had two benefits. First, it required immigrants to become naturalized citizens before receiving full ownership of the land, thus inducing migrants to settle roots and Americanize themselves. Second, it benefited the United States to have more migrants come and help settle a relatively empty continent. At least 24 percent of homestead claimants were immigrants, and in some places they were a majority.

In criticism of the Homestead acts, Robert Gordon argues in The Rise and Fall of American Growth that the intervention altered the economic outcomes of settling the frontier, suggesting “absent the Homestead land gifts, the unregulated role of land speculation might have induced an equivalent number of land settlers hoping to make profits by buying and then selling the land at higher prices.” By itself, it could be true that wealth creation would have been higher under a purely laissez faire system.

Nevertheless, the Homestead policy’s goals were primarily political, rather than economic; in these terms, it worked as intended, giving opportunities to the commons to become landowners, implicating them directly in the American polity. Had the statesmen of the era outsourced their decision-making to the economists, we could imagine a scenario where the federal land was purchased by the wealthiest men or other corporations with a consequent proletarianization of the commons.

We see this similar problem in our own day as corporations and hedge funds invest in single-family homes, often paying above market price to crowd out competitors. Economy-wide, “institutional investors” only own 15 percent of homes, which is significant but not dominant; yet housing markets are local rather than state-wide or national, so these property investors can—and often do—have significant impacts in local areas.

For example, in Ohio, the company “American Homes 4 Rent” owns some 4,000 homes, which it uses as rental property. Invitation Homes bought up almost entire ZIP codes in Atlanta, drastically increasing costs for single-family homes. With lower interest rates relative to the average home buyer, they have a significant advantage allowing them to outbid normal Americans.

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In light of these troubling trends, policymakers have critiqued the power of these institutional investors. Senator Sherrod Brown, an Ohio Democrat, has introduced the “Stop Predatory Investing Act,” and Representative Adam Smith, a Washington Democrat, has introduced the “End Hedge Funds Control of American Homes Act.” These laws would reduce special benefits available to large institutional investors or outright ban them from owning single family homes. Eliminating the power of large investors would create greater opportunities and decrease the overall demand for housing, thus making homeownership more attainable for the middle and working classes. Other, more aggressive government measures to help people buy homes could include government-sponsored housing loans for families, which are partially forgiven with every extra child born, a policy recently taken up in Hungary.

The job of American statesmen is to look to the great men and women of our past for the principles that have made America free and prosperous and adapt them to our current situation. Homesteading was one policy rooted in the principles of the American System of Henry Clay and Abraham Lincoln, combined with the yeoman farmer ideal of Thomas Jefferson. A new homesteading philosophy would seek to fortify property ownership for Americans, and thus secure the American Dream, and all of the virtues needed for true American citizenship.

This article is part of the “American System series” edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Tom Sarrouf is the Senior Academic Programs Manager at the Intercollegiate Studies Institute and co-hosts the podcast, "Conservative Conversations with ISI." He was a 2023 Publius Fellow with the Claremont Institute.

This article first appeared on The American Conservative, February 1, 2024

Do democracy and capitalism go together? We would be wrong to think that the tensions between the two are unique to our own time. Anxieties about the viability of a capitalist economy within a democratic political order were present in 1920s Britain with the introduction of universal suffrage, as they were present in the American founding. Would capitalism’s inequalities undermine the sense of shared solidarity required in a self-governing society? Would democracy’s tendency towards equality undermine the incentives for enterprise and industry that a vibrant and free capitalist economy depends upon? Most fundamentally, would capitalism spread the proceeds of economic growth sufficiently to stabilize democratic society, or would it concentrate wealth in such a way as to expose it to division and rupture?

These tensions seem particularly pronounced today, though. In the U.K., according to a 2017 poll, as many people think capitalism is actively harmful and that an alternative economic model is required as believed that it is working well. Just 13 percent of those under the age of 49 thought capitalism was operating effectively. Four years ago, 30 percent of the public were so disillusioned with the way society is economically structured that they voted for a self-professed socialist to become prime minister. Support for capitalism might generally be higher in the United States, but the view that capitalism is the source of socio-economic problems rather than the best vehicle for solving them is creeping in among younger American cohorts too. 

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These attitudes towards capitalism spill over into people’s views about democracy. Recent polling in Britain found that the least economically secure fifth of voters are twice as likely to say democracy is a fairly bad or very bad system of governing the country. Contemporary capitalism might be creating too many ‘losers’ who are questioning whether democracy really has their interests at heart. Once again, capitalism and democracy are having to compete in the battle of ideas, and right now, they are losing. 

The institution in which these tensions are most obviously crystallized is that of property ownership. Ownership is a foundational idea in both capitalism and democracy. It enables people to capture the benefits of their enterprise and industry, and thus constitutes the core of the incentive structure that makes capitalism such a powerful way of organizing the economy. Yet the importance of ownership transcends mere economic incentives. Capitalism’s legitimacy partly hinges on the idea that acquiring property is an opportunity open to all. Ownership, as has been long recognized, breeds the sort of moral psychology that undergirds a responsible, participatory politics. Whilst long ago this was thought to mean that only those with property should participate in the political process, in the context of democracy, the imperative is instead that as many people as possible ought to be property owners.

Once, property ownership was a unifying aspirational value. Today, it is a marker of privilege, unfairness, and division. Nowhere is this more manifest than in the housing market. In the U.K., property ownership in general is falling slightly, and it is on the rise for older demographics. For those under the age of 34, it is utterly collapsing. Amongst 25–34-year-olds, homeownership has fallen by 26 percentage points since 1991. Britain is increasingly bifurcating into an older, wealthier, propertied class, and a younger propertyless substratum. Only those in the latter group with inherited forms of wealth can join the former group and get onto the property ladder. And as house prices continue to rise, younger generations are required to transfer more of their limited wealth to those who already own residential property, both because of the price tag of a home and because of the increased amount of time younger workers will have to remain in rented accommodation as they save up for a deposit.

We instinctively associate property with real estate, but property comes in all sorts of forms. Across the economy, the ownership of businesses, assets, infrastructure and so on appears to be narrowing. In 1963, 54 percent of U.K. listed shares were owned by individuals; now just 12 percent are. Only 4 percent of household wealth is invested in listed equities. Upwards of 56 percent U.K. shares are now owned overseas. Of course, many individuals and households are “technically” owners, as Merryn Somerset Webb has put it, through pension funds. But even then, the proportion of U.K. listed shares owned by U.K. pension funds has shrunk to 4 percent. What’s more, the relationship that the pension policy holder has with their invested wealth is an extremely thin form of ownership. Fund managers effectively take on the rights and responsibilities that are usually assumed by an asset owner. Popular capitalism is being supplanted by managerial capitalism.

Property is becoming more concentrated, and, for those who do own property, their relationship with their assets is frequently becoming less direct and more distant.

This is certainly bad for capitalism. If the vital incentive provided by the ability to acquire property and wealth (and to pass it on to subsequent generations) is dampened, we risk losing one of the most elemental drivers of economic growth and prosperity. 

But this decline of ownership is also bad for democracy. Property ownership gives people independence and self-sufficiency, and a practical medium for self-expression. It also gives responsibility and a sense of stake, and it is a sense of stake which encourages someone to make decisions in the interest of a community. Taking these things away risks sapping the ethical reserves that a democratic society depends upon: Fewer property owners means fewer people with independence, and thus more people dependent on the state. At the same time, increasingly concentrated ownership produces jealousies and resentments that undermine solidarity and a feeling of mutual obligation amongst citizens. 

We are not short of big public policy dilemmas to unknot, from climate change and energy independence to the housing crisis and low investment rates. But the core problem that sits behind all these challenges is the imbalance that has opened up between those who own property and those who do not. The question of ownership relates to who feels responsible for the maintenance of the natural environment. It relates to investment patterns and the need to get capital to the places where it is needed the most. It relates to the preparedness of people to make the trade-offs required for economic growth. Finally, it relates to people’s sense of mutual obligation as a society.

How do we redress this situation? Two putative solutions are frequently offered, both skeptical of the benefits of diffuse property ownership. The first, call it the Marxist standpoint, sees property as the problem to be addressed. In this perspective, it is the institution of private ownership that is making society less balanced, less cohesive, and less fair. Private property, argue Adrienne Buller and Mathew Lawrence, is “inherently” exclusionary and productive of dynamics of “dispossession, concentration [and] dependency.” Capitalism, they go on, is a “contract for legalized economic exploitation,” at the heart of which is private ownership.   

Such a perspective might not always be held in such a strident form. But the sentiment underlying it is expressed in numerous ways, from those suggesting that we should move away from a homeownership society and towards one in which there are high levels of social renting, to those that want more state ownership of British companies. By taking property from those who already have it and placing it in the hands of the state, so the thinking goes, more people can participate in “collective” ownership.

A second potential solution—which we might term the social democratic standpoint—is to compensate for the gulf between the propertied and the propertyless through the tax system. Here, increasingly progressive taxation is advocated to redistribute wealth. Edmund Fawcett has written that welfarism and redistribution represents a compromise that has been struck between democracy and capitalism in modern politics. And since wealth disparities have grown, we ought to increase the taxation of wealth and redistribute the proceeds to wage earners. Given the painfully high marginal tax rates on young people, such a course of action is alluring.

These two “solutions,” however, are fundamentally flawed because they fail to address the core problem set out above. The Marxist perspective rails against the concentration of capital and power yet proposes to concentrate ownership even more by placing it in the hands of the state. The social democratic alternative suggests we try to equalize the relationship between owners and earners by taxing wealth more and more progressively. But as the great American economist, Louis Kelso, who pioneered the employee stock ownership plan (ESOP), argued, the productive potential of capital vastly outweighs that of labor, such that the burden of taxation would have to rise continuously to mitigate a growing gulf between the propertied and propertyless. Higher and higher levels of taxation would be self-defeating; they would undermine incentives for enterprise and empower the state at the expense of the citizen.

Most importantly, neither of these putative solutions would widen the ownership of property. The idea that state ownership is a meaningful form of ownership for the many is a chimera; what is owned by everyone is really owned by no one. An ever-increasing tax burden on capital would erode and attenuate the value of property without producing any more property owners. The problem is that the opportunities for ownership are being denied to a growing proportion of the population. Far from making that aspiration and ideal more accessible, the Marxist and social democratic approaches would render it increasingly unattainable.

These two perspectives display a detachment from the desires, hopes and impulses of real people. They are based on a political economy that begins not with the individual, the household, or the local community, but with the aggregate. The basis of a successful economy and a strong democracy is that the institutions, systems, and structures of a society make sense at an intimate, human level. Economic growth does not occur because the state set’s optimal levels of consumption, savings, and investment by fiat. Growth occurs because the incentives for a particular worker or a particular family to be enterprising or thrifty or industrious are sufficiently compelling. Likewise, democracies make effective collective decisions not because the answers to questions of burden sharing are already intuitive and obvious; rather, they depend on a sufficient number of people possessing a genuine stake in the local and broader national community and a sense of personal responsibility for their health. 

People feel distant from the material of economic life in this country, and disconnected from the political decisions made on their behalf. They are playing the role of passive observers, rather than of active participants. The current economic moment requires us to renew a sense of responsibility. Surely such a feeling will emerge only if we diffuse property and genuine ownership more widely throughout society.

Property is too concentrated, and this is threatening to sunder Western societies. But to give up on the very idea of private property is to throw out the baby with the bathwater. The great challenge of our time is to widen and strengthen property ownership, not to deny it to people. But how? 

We must start with the housing market. Homeownership is plummeting amongst younger people, but that isn’t because they are choosing not to own. It is because we have as a society systematically privileged the interests and concerns of existing owners over those of aspirant ones. We have an obligation to extend the opportunities and responsibilities of home ownership as widely as possible, and today, that can only be achieved by making housing more abundant.

Yet spreading property ownership is not just about housing. Indeed, the privileging of residential real estate investment over other forms has had detrimental effects for the U.K. economy more broadly. British investment at the aggregate level is analogous to an overleveraged and insufficiently diversified portfolio, and critically, most investment in the housing market is not going towards building new homes, but to extending credit to those trying to accommodate ever rising house prices. Capital is pouring into the housing market and fueling house price inflation, whilst other, productive parts of the economy go capital hungry.

We must help more people become owners of different forms of capital, then. That means helping people to save, yes, particularly those on the bottom of the income distribution, but it also means translating those savings into investment. We should embark on a crusade to incentivize retail investment in the stock market through a proactive advertising campaign modeled on the highly successful “Tell Sid” commercials of 1980s Britain. 

We must also restore a sense of ownership at the level of the community. Regional policy is politically and morally hollow if it simply equates to the pork-barrel politics of government subsidies. Such an approach merely inculcates further dependency on the state. If we truly want to tackle the inequalities between regions, we need to support local communities in becoming owners again of their local economies and infrastructure. 

Finally, we need to greatly expand the number of people with a direct equity stake in the firms that they work for. Data suggests that those companies with employee share ownership schemes vastly outperform those without, but take up of plans like CSOPs, SIPs and Sharesave remain low. So we should incentivize employee share ownership schemes with a tax super deduction for the value of shares offered to workers.

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Of course, all of these things are designed before anything else to promote ownership and the values that being an owner inculcates. But advancing this cause is also tied to the quest to revitalize the economy. It will improve the quality and quantity of investment; it will focus incentives for enterprise and industry; and by enabling more people to share in its proceeds, it will help to generate support for the trade-offs and compromises that will be required to achieve meaningful economic growth.

Somewhere along the line, we lost our way. We have become apathetic about the type of society we inhabit, and what is required to sustain it. Most fundamentally of all, we appear to have lost sight of the basic truth that the viability of a political community depends on it having broad foundations. We need a new political economy configured around a profound moral mission: to give more people a proper stake in their local community, in the national economy, and in British society more generally. And we need politicians with the courage and conviction to deliver it.

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

James Vitali is the Head of Political Economy at Policy Exchange, a leading London think tank.

This article first appeared on The American Conservative, January 11, 2024

The debate over single parenthood has reemerged thanks in large part to The Two-Parent Privilege, a book from economist Melissa Kearney. Restoring marriage, and especially married parenthood, is a worthwhile goal. Yet, in this essay, I would like to take a step back and explore some major theories as to why marriage fell and single motherhood rose to begin with—trends that date back half a century or more.

One can argue about the relative importance of each of the following factors, and I make no pretense of offering a comprehensive explanation of these enormous, complex social phenomena. My overarching point is this: The pro-marriage movement must grapple with the massive societal shifts that drove marriage’s historic decline—many of which are, for all practical purposes, irreversible—if they hope to make concrete plans and set realistic goals for restoring the institution through public policy.

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To establish the basic trends, here are the percentages of births to unmarried women, the percentage of minor children with no father (including stepfathers and cohabiting fathers) in the household, and the percentage of women 35–44 (when female fertility starts to decline) who have never been married. They tell different versions of the same story, a collapse in two-parent families especially since 1960. The birth data are from the CDC, the marriage and household data from census surveys.

Of note is that these patterns differ markedly by race and education. Less than 30 percent of white kids but more than 70 percent of black kids are born out of wedlock, for example; among 35–44-year-old women in 2020, 18 percent of those with a B.A. or higher, but 26 percent of those with less education, were never married.

Why did this happen?

The economist Gary Becker (in the works that jumpstarted the economic analysis of family life, including A Treatise on the Family) famously pointed out that it often makes sense for household partners to “specialize,” each doing a disproportionate or even exclusive share of the things he or she excels at. This is true even among partners who are biologically identical, so long as they have different experiences and skills, and thus different comparative advantages. But for much of recent history, in large part because men and women are not biologically identical, this has meant men working for pay and women managing the home.

Yet the drivers of this pattern have weakened over time. Put simply, work outside the home used to be far more physically demanding than it is today, and work inside the home used to be far more time-intensive.

These changes are often discussed in the general context of mothers working, but they were a precondition for widespread single motherhood as well. The less life demands two specialized roles to operate a home, the less mandatory it becomes to have two parents present. Or, as the economists Adam Isen and Betsey Stevenson once argued, marriage becomes less of a necessity focused around Becker-style “production,” and more of a way to share in the consumption of disposable income.

In 1900, about two-thirds of employed Americans worked in manufacturing or agriculture. This sank to two-fifths in 1950 and less than a quarter in 2000. As agriculture and manufacturing declined, service jobs such as teaching expanded (with mandatory schooling expanding in the first half of the 20th century and college enrollment surging in the second), and the entrance of more women into the labor force—with participation for women (including the elderly) rising from 1 in 5 in 1900 to a majority starting around 1980—boosted demand for child care, restaurant meals, health care, and much else thanks to the new time demands, the added income, and the onward march of technology.

Tied into this are changes in the relative incomes of men and women. The overall gender pay gap (median earnings of women vs. men, among full-time year-round workers) fell roughly from 40% to 15% between 1960 and 2021. Less-educated men especially have seen weak-to-nonexistent wage growth, and declines in their earnings relative to women’s has been shown to contribute to declining marriage rates in that demographic.

Meanwhile, before the advent of modern technology, maintaining a household was a far more laborious task. It is not an exaggeration to say that washing machines liberated women. Jeremy Greenwood and two coauthors in a 2005 paper estimated that the typical household performed 58 hours of meal prep, laundry, and cleaning per week in 1900—a full-time job and a half. This fell to under 20 by 1975. A different analysis showed that, between 1965 and 2003, women’s overall housework time (more broadly defined, including shopping) declined from about 35 to 22 hours per week, while men’s rose from 10 to 14; on net, a couple gained about a full work day.

When housework was a demanding job and paid work often required brawn—not to mention that family sizes were larger and women more frequently pregnant due to a lack of birth control—it simply made sense for fathers to work and for mothers to handle the home. Indeed, supporting children outside of that context was difficult, resulting in a variety of workarounds in cases of premarital pregnancy, ranging from the norm of shotgun marriages (which have fallen from 43 percent of marriages in the early 1960s to under 10 percent  today, by one estimate), to homes where unmarried pregnant women would live until giving their babies up for adoption. Sometimes grandparents would adopt the child, who could grow up thinking his or her mother was a much-older sister.

Culture, religion, and norms contributed immensely to all of this, of course—single motherhood was intensely stigmatized—although I would conjecture that such norms are far more likely to develop and far easier to maintain in a time when single parenthood, as we know it today, genuinely is not a viable option and this fact is obvious to everyone. They are likely to erode when it is an option, economically, for a single woman to have a baby, support the household herself, and procure child care while she’s working.

There are still, of course, surviving and perhaps immortal aspects of the old ways. Some parents, especially married mothers, still stay home with their kids; as I’ve shown using data from the American Time Use Survey, even when moms and dads both work, the dads tend to work longer hours while moms do more housework and child care. But the declining demands of housework, coupled with expanding opportunities for women in the workforce, make this division far less pronounced than it once was. It is now more attractive for married women to work—and possible for unmarried women to have kids.

The above developments explain why single motherhood is possible today in a way it wasn’t previously, but they’re perhaps not entirely compelling as an explanation of why the shift has been most dramatic at the bottom of the socioeconomic spectrum. Less educated, lower-earning men may be less attractive as marriage partners, but at the same time, higher-earning women might have the easiest time going it alone.

A recent paper from Jeanne Lafortune and Corinne Low views these dynamics through a different lens, focused on how marriage functions as a legal contract. The gist of their theory is that marriage turns wealth into “collateral” in the event of a breakup, and that this advantage of marriage persists even when marriage weakens in other ways. It’s especially valuable to married women who bear children and, even today, sacrifice more career progress than their husbands raising them. Of course, collateralizing wealth is only an advantage to those with wealth, which is why this is so valuable to our understanding of the growing education gap in marriage.

Lafortune and Low test this theory against real data. For one thing, the added security of wealth does seem to affect how married women behave: when home prices are lower in the year a couple gets married, women are more likely to specialize and reduce their paid work, because they are more likely to be homeowners with shared wealth that serves as an insurance policy. Such marriages also produce somewhat more children.

It’s also true that as the marriage contract weakens legally—something Michael Toscano explored in a previous entry in this series—the remaining benefit of collateralization rises in importance. Unilateral divorce laws provide a test of the theory because they expose partners to abandonment but don’t change the fact that wealth is split up during a divorce. In other words, they get rid of the leverage that comes with marriage except for collateralized wealth, and thus should strengthen the relationship between assets and marriage. This is in fact what the paper finds. The same pattern is evident when states step up child-support enforcement for never-married mothers. These policies grant part of the benefit of marriage—access to some of the partner’s income to raise a child—but not full access to the partner’s wealth, and thus similarly strengthen the link between wealth and marriage.

It seems unlikely that America will end unilateral divorce or adopt a policy where fathers don’t owe child support unless they have formally committed to the mother through marriage, though both ideas have found some support among conservative intellectuals over the years. Yet when the legal aspect of marriage has been reduced to a promise to share wealth—if child support is available with or without marriage, and if either party may leave a marriage at any time, almost as easily as one could dissolve any other romantic relationship—the wealthy are the ones who still have a reason to enter that contract.

The idea that an expanding welfare state drove the increase in single parenthood has long been controversial, perhaps most famously through its appearance in Charles Murray’s 1984 work Losing Ground. Interestingly, Murray’s own views on the topic have softened, as he told me when I interviewed him for a 2022 City Journal profile: “There was something in the nature of modernity that was pushing these phenomena of family breakdown over and above the welfare system.”

Today, I would summarize the evidence this way: There’s a strong circumstantial case that welfare benefits increased single parenthood to some extent, but to what extent is difficult to nail down using scientifically rigorous methods.

The circumstantial case amounts to a combination of simple facts. Welfare benefits increased alongside the increase in single motherhood; welfare benefits grew competitive with less-educated men’s wages and had rules limiting benefits primarily to single mothers; and single mothers in fact used these benefits in large numbers. In addition, the welfare theory does a decent job of matching the timing of the single-parenthood increase as well as the fact it was most pronounced among those with lower-incomes.

An analysis from the Social Capital Project found that through the safety net, “a single mother can achieve about two-thirds of the standard of living she could get from marrying a sole breadwinner at [the 30th percentile of male compensation]. The safety net would put her about one-third higher, with no additional income, than the 10th percentile of male compensation.” It also found the big run-up in benefits for female-headed households took place from 1940 to the mid-1970s, during which time benefits more than doubled and the rise of non-marital births began in earnest.

During the 1990s, this assistance changed to encourage single parents to work. Policymakers expressed a desire to encourage marriage, too, and included some marriage incentives and programs in their efforts. But the new system’s work demands were far more insistent than its marriage demands—those who failed to work lost public support, but unmarried parents didn’t—and these goals may have even worked at cross-purposes. By one study, the rising work rate of single mothers induced by welfare reform discouraged them from marrying by making them more independent.

At any rate, total safety net spending did not decline; it just shifted away from cash welfare and into other benefits such as food stamps and the Earned Income Tax Credit, and also away from non-workers in favor of low-income workers. Per my own analysis of the Current Population Survey, about half of never-married mothers with minor children received at least some income from cash welfare from the mid-1970s through the early 1990s (based on survey self-reports); this proportion fell off a cliff after the reform, but to this day, about half receive the Earned Income Tax Credit and nearly a third receive food stamps. 

Quite frankly, it beggars belief that rising public support had nothing to do with the rise of single motherhood. The government in fact paid for something and got more of it. But nailing down the extent of the contribution is hard, and it may be small.

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Rather than analyze national trends, the most exacting studies look at more local sources of variation in benefit levels. Most of this research was done decades ago, making this 1998 review still a decent introduction. These studies’ results are muddier, and certainly cut against the idea that single women are meticulously budgeting their potential welfare receipts before having children. If the link between growing welfare benefits and single parenthood is a bit more diffuse than that, though—if, for example, growing public support contributes, along with the other factors we’ve discussed, to a gradual and society-wide change in norms and behavior—we wouldn’t necessarily expect these kinds of studies to pick it up.

There are ways to improve American marriage on the margins, such as eliminating marriage penalties in tax and transfer programs, allowing couples to opt in to stricter marriage contracts, and improving the economic circumstances of less-educated men. Yet there is no turning back the clock to bring back the conditions that led to almost all births to occur within marriage the better part of a century ago, and few of us marriage supporters are reactionary enough to want to go back anyway. 

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Robert VerBruggen is a fellow at the Manhattan Institute and a former managing editor of The American Conservative.

This article first appeared on The American Conservative, December 21, 2023

In the final week of his 1902 re-election campaign, the Minnesotan Governor Samuel Van Sant crisscrossed the state making his final pitch to voters. A key topic in these speeches was Van Sant’s crusade against the creation of the Northern Securities Company, a rail behemoth financed by James Pierpont Morgan that combined the rail empires of Edward H. Harriman and Minnesota’s James J. Hill. Van Sant would cruise to re-election and two years later when Northern Securities was broken up, he said it was the most impactful event since the Civil War. 

Van Sant’s battle against a would-be rail monopolist is part of Minnesota’s long history of populist opposition to concentrated corporate power. The ever-evolving fight for economic liberty against corporate tyranny that is threaded throughout the country’s history often has roots in Minnesota. As we look to address the pervasive consolidation that is choking off free enterprise, there is much to learn from Minnesota’s past. In particular, the efforts of Minnesota’s state-level policymakers point to a role that federalism and its inherent legislative experimentation can serve in addressing our monopoly crisis. 

Northern Securities was the culmination of a bidding war between Hill, the president of the Great Northern Railway, and Harriman, who owned the Union Pacific Railroad, for control over the Chicago, Burlington, and Quincy Railroad. Hill survived the bidding war, but the conflict convinced the men, along with JP Morgan, to bring their respective empires together. In late 1901, the Northern Securities Company was formed in New Jersey, creating a massive rail monopoly that would have controlled railroad traffic across the northern part of the country. 

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Van Sant had been in office less than a year when the rail merger was announced. A Republican and former two-term Speaker of the Minnesota House, Van Sant narrowly defeated the incumbent Governor John Lind in 1900. Tackling the issue of monopoly power was central to Minnesota’s politics at the time. Lind was elected in 1898 on a fusion ticket of the Democratic, Populist and Silver Republican parties. His election ended over 40 years of Republican control of the governor’s office in Minnesota and Lind made antitrust reform a key part of his one and only term as governor. 

Just days after Northern Securities had incorporated, Van Sant announced his opposition and urged Minnesota Attorney General Wallace Douglas to investigate the combination. “Believing it to be my plain duty I shall leave no stone unturned to prevent the contemplated consolidation,” Van Sant told the Minneapolis Tribune. At the end of December Van Sant had gathered together the governors and attorneys general of Idaho, North Dakota, Oregon, South Dakota and Washington in a conference in Helena, Wyoming. The group issued a unanimously adopted resolution voicing opposition to the merger, stating it violated various state laws and endorsing legal action by Minnesota to halt the creation of the company. 

Shortly after issuing the resolution, Douglas filed a lawsuit alleging the Northern Securities merger was a violation of Minnesota’s antitrust law as well as a state law prohibiting mergers that gave a company control over parallel or competing rail lines. In early August 1903 Judge William Lochren of the District Court of Minnesota ruled against the state and found the Northern Securities merger had not violated Minnesota law. While Van Sant lost his case, he had won public opinion, winning re-election by nearly 20 points in 1902. He would also have the last laugh. In 1904 the Supreme Court found the Northern Securities merger to be an illegal violation of the Sherman Act, which would solidify President Theodore Roosevelt’s stature as a trustbuster and mark a new era of antitrust enforcement. 

This was not the first time Minnesota’s populists had used state-level reforms to help drive important federal action against monopolists. Starting in the 1850s railroads had undergone an initial wave of consolidation that generated rising rates and discriminatory pricing for farmers who were then hit with collapsing crop prices during the Panic of 1873. That deep recession generated a popular backlash that spurred rapid growth in a young organization called the National Grange of the Order of Patrons of Husbandry. Founded in 1867 by Oliver H. Kelley of Minnesota and several of his colleagues from the U.S. Bureau of Agriculture, the Grange was created as a way to educate farmers and their families and enrich their social lives. 

With the foresight and leadership of populist politician Ignatius Donnelly, the Grange became a political force across the Upper Midwest. Grangers won state legislative seats and in Minnesota, Iowa, Illinois and Wisconsin passed new laws regulating rates and prohibiting price-fixing by grain and rail monopolists. In Minnesota Donnelly would eventually help establish the Anti-Monopoly Party, winning seats in the state legislature and pushing for even more stringent controls on the railroads.  

While the Supreme Court struck down the Granger Laws in 1886, this state experimentation demonstrated it was possible to challenge the grip of corporate power. The regulations inspired the creation of the Interstate Commerce Commission and spurred states to begin passing antitrust laws as a way to end the abuses of monopolists. Just two years after passage of the first antitrust law in Iowa, Congress passed the Sherman Antitrust Act, empowering the federal government to protect competition, which it started to do two decades later when it broke up Northern Securities.

This was not the last time state laws helped inform and inspire federal action to tame corporate monopolies. The late 1920s saw the development of a grassroots anti-chain store movement concerned about the growing power of chains like the Great American & Pacific Tea Company (A&P). By 1929 chains like the A&P, Kroger, and Safeway had captured nearly 40 percent of the grocery market. Although anti-chain organizations appeared across the country, they were particularly strong in Nebraska, Texas, Wisconsin and Minnesota.

In Minnesota the anti-chain movement was spearheaded by organizations like Break The Chains and the Association of Independents. They found a champion in Floyd B. Olson, Minnesota’s first Farmer-Labor Party governor. Olson, who had lost his first bid for governor in 1924, centered opposition to chain stores and support for a chain store tax in his successful 1930 campaign. He earned the support of small retailers and began to speak before anti-chain organizations across Minnesota. Olson rode the wave of anti-chain sentiment to an overwhelming victory at the polls and made a chain store tax a key part of his tenure in office. While Olson’s Republican opponent in 1930 supported the chains, his predecessor, Republican Theodore Christianson, would testify before the House Ways & Means Committee in 1940 about the threat of the chain stores with a prescient warning that a monopoly over distribution was much more threatening than one over manufacturing. Much like Van Sant and Lind at the turn of the century, combatting the most pressing corporate monopoly was a bipartisan fight in the early days of the Great Depression in Minnesota.  

In April 1933 Olson signed a chain store tax bill that created a license fee and a gross earnings tax imposed on chains. Passage of the tax was part of a wave of state chain store taxes that were put in place across the country as the efforts of anti-chain activists to secure Congressional action stalled out. These state laws eventually pushed Congress to pass the Robinson-Patman Act, prohibiting price discrimination or the special deals large retailers have the power to extract from suppliers. The legislation, which has sat dormant for the past four decades while big box stores have established a chokehold over distribution, was once referred to as the Magna Carta of Small Business and, when aggressively enforced, was credited with creating the conditions for a vibrant ecosystem of chain and independent retailers.

This history not only reveals the possibility for a broad political movement dedicated to protecting economic liberty, but provides a potential roadmap for dealing with our current monopoly crisis. Monopoly power is pervasive today in a way even our forefathers that lived through the era of the great trusts might not recognize. The problem is not just Big Tech, Big Ag, or Big Pharma. Since 2005, the economy has become 50 percent more concentrated and, at the current rate of consolidation, just one company will remain in each industry by 2070 according to the Economic Security Project. This extreme level of economic consolidation is at the root of the seemingly intractable issues we face. Stagnant wages, rising income inequality, the high cost of everything from healthcare to housing to groceries, the loss of family farms and small businesses, and even the extremism and division in our politics can all be tied back to the takeover of our country by monopolists. 

Addressing a challenge of this magnitude will require a sustained movement that generates constant grassroots public pressure on policymakers, which means giving people the opportunity to push their local officials in addition to those in D.C. The modern antimonopoly movement that has burst forth in recent years needs a modern version of the anti-chain store organizations that emerged in communities across the country or a spirited movement like the Grange that brings together farmers, workers, small businesses and others in state capitols across the country. Simply put, the movement must go local and work to organize with attorneys general, governors, state legislators and state-based advocacy organizations.  

The antimonopoly effort not only needs more local advocacy, it needs policy reforms and experimentation. Four decades of underenforcement and adherence to the consumer welfare standard has rendered antitrust law and other protections against monopoly power nearly unenforceable. The new generation of enforcers, best embodied by Federal Trade Commission Chair Lina Khan and Assistant Attorney General for Antitrust Jonathan Kanter, need better tools for challenging monopoly domination. With Congress largely uninterested in antitrust reform whether one party is in charge or the two chambers are split, bold policymaking has been left to the states. Antimonopoly reformers should embrace the opportunity to have legislators bringing forward new ideas that can help forge a path to enhanced antitrust enforcement, not only because state reforms can inspire federal reforms but also because federalism itself is a necessary part of protecting economic liberty. 

In addition to strong officials at key federal agencies, the scope of the monopoly crisis requires an army of state officials pulling on every antimonopoly policy lever their respective legislatures will provide them. Just like reigning in Northern Securities in the early 1900s took the efforts of both Governor Van Sant and President Roosevelt, reigning in Big Tech or Big Ag will demand the same.  

Minnesota’s battles against corporate monopolies helped create a future class of populists in D.C. Former Vice President and US Senator Hubert Humphrey, who helped broker the merger of the Democratic Party and the Farmer-Labor Party into what is still the Democratic-Farmer-Labor Party, was a champion for small businesses. Humphrey fought for a national fair trade law to protect independent retailers from predatory pricing and wrote that the New Deal had “broken the power of big business and returned the reins of government from Wall Street to Washington, D.C.”

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Decades later, Humphrey’s seat would be held by Paul Wellstone who arrived in Washington D.C. in 1991 at a time when a pro-monopoly consensus had taken hold in both parties. Wellstone did not buy into this consensus and built a record in the Senate of standing up to corporate monopolies. He was one of the few Democrats that voted against removing constraints on consolidation in the telecommunication and financial industries including voting against the repeal of Glass-Steagall, which had kept investment and commercial banks separate. While considering a run for the White House in 2000, Wellstone plotted out a populist campaign placing the concentration of corporate power front and center.

These national giants were standing on the shoulders of generations of local advocates and policymakers in Minnesota. Creating the next generation of populist economic champions will require the same, and that begins in our local communities.  

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Justin Stofferahn is the Antimonopoly Director at the Minnesota Farmers Union.

Antitrust laws operate similarly as a democratic codification of anti-bullying in the marketplace. For example, firms are not able to “compete” by using any method of competition they conceive. Property destruction, depriving dependent firms of an essential resource, or using privileged access to capital to price goods below cost to kill off rivals are all practices prohibited by our antitrust laws. These laws, in other words, channel corporate operations in a specific direction to compete fairly as based on commonly understood notions of morality.

The resurgence in antitrust enforcement under the Biden administration is a significant departure from every prior administration since the 1970s. Among other laudable actions, the Department of Justice has initiated a landmark antitrust lawsuit against Google that could restructure the entire digital advertising industry. The Federal Trade Commission has also initiated a rule to ban all non-compete agreements in the United States, liberating workers to choose a new employer and facilitating potentially over $300 billion in increased wages. The Biden administration can continue advancing its indelible mark on the arc of antitrust history and promote fairness and anti-bullying in our economy by reviving pioneering 1930s legislation that is little used today: the Robinson-Patman Act. Fortunately, the administration is already making strides to do just that.

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In 1936, Congress committed to anti-bullying and market fairness when it enacted the Robinson-Patman Act (RPA). At the time of its enactment, the U.S. was in the midst of the Great Depression, and the marketplace was dominated by powerful chain stores. Unlike local businesses, which are owned by members of the community, chain stores operate multiple outlets. In the 1930s, chain stores like JCPenney, Woolworths, Sears, and the Great Atlantic & Pacific Tea Company (more commonly known as A&P) operated thousands of outlets, designating them as some of the largest retailers in the world. By the middle of the 1930s, chain stores controlled approximately 25 percent of all retail sales and nearly 60 percent of grocery sales in the United States.

The success of the chain stores, however, was not solely the result of realizing economies of scale or pricing based on actual gains in efficiency of their operations. Instead, the chain stores decided to use their sheer size and purchasing power to coerce other dependent suppliers to give them highly preferential pricing. The discriminatory pricing the chain stores were able to obtain allowed them to unfairly crush their independent rivals. These chain stores were antithetical to the Jeffersonian conception of open markets, which centered around locally owned businesses that created economic opportunities, provided many options for consumers to purchase goods, and recycled wealth into their communities. To correct the distortion of America’s political economy created by the chain stores, Congress enacted the RPA.

The RPA’s proscriptions are straightforward: Firms must offer equal prices for purchased or sold goods, and variations in pricing are restricted to those based on actual cost differences, such as cost variations related to transportation or manufacturing, as opposed to some arbitrary decision. Critically, this means that dominant buyers like Amazon or Walmart must receive substantially similar pricing as a mom-and-pop store. In other words, powerful firms like Amazon cannot be bullies and use their sheer corporate size or privileged access to capital to demand or obtain discriminatory prices and terms from their suppliers. As one member of Congress cogently stated during the legislative debates preceding its enactment, the RPA was meant to establish “equal opportunity and fair play which…guarantees the integrity and wholesomeness of local community life against corruption and impoverishment.”

Despite the RPA’s sensible restrictions, it has attracted more criticism than any other antitrust law. The RPA is the most despised antitrust law enacted by Congress. A cursory glance at the literature describing the RPA allows one to witness the breadth of disparagements available in the English language. The RPA is described variously as the “Typhoid Mary of antitrust, a “hodge-podge of confusion,” and “one of the most tortuous legislative pronouncements ever.”

The near-reflexive criticisms of the RPA reveal a desire to promote a narrow conception of “competition” that heavily favors coercion by dominant corporations unfairly wielding their financial and market might. Critics of the RPA would like to see the law fully repealed based on the belief that the law prevents ostensibly beneficial competition and increases prices for consumers. Indeed, the law itself has been repeatedly described as “anticompetitive.” These assertions are either incorrect or distressingly deceptive. 

Instance after instance shows the need to restrict the conduct of powerful buyers through vigorous enforcement of the RPA and the deleterious effects of not doing so. None are more evident or notorious than the actions of Amazon and Walmart. Both leviathans are owned by some of the wealthiest individuals in human history and represent trillions in market capitalization and hundreds of billions in annual sales. 

Concerning Walmart, at a 2017 conference held in their Arkansas headquarters, the company flatly demanded that suppliers like Unilever and Kraft Heinz reduce their costs by 15 percent. During this period as well, Walmart leveraged its buyer power by repeatedly heightening its on-time delivery requirements from its suppliers. Starting in 2017, Walmart demanded a 75 percent on-time delivery rate. By 2020, in the middle of the tumultuous COVID-19 pandemic, the mandatory rate rose to 98 percent. 

In an effort to demonstrate its power, Walmart executives stated in a 2022 meeting that it would refuse to accept new price increases from suppliers. Indeed, historical accounts reveal that Walmart has routinely demanded that its suppliers reduce their costs by five percent annually. A 2005 book succinctly described Walmart as so enormous “it can (and does!) demand just about anything it wants from its vendors, from deeper-than-usual discounts to downright disadvantageous shipping policy to enforced returns on slow-moving merchandise.”

In regards to Amazon, journalist Brad Stone in 2004 detailed the company’s program to squeeze preferential prices from its most vulnerable dependents, which Amazon called the Gazelle Project—named to describe how a cheetah hunts and kills gazelles. In 2018, reports surfaced that Amazon was flagrantly demanding preferential pricing and terms from suppliers like Procter & Gamble to ensure its prices were the absolute lowest available on the internet. 

Suppliers incapable of capitulating to Amazon’s or Walmart’s bullying comes with severe punishment, such as being thrown out as a supplier, arbitrarily being imposed penalties, or, in the case of Amazon, products being demoted in online search rankings. For suppliers dependent on Walmart or Amazon, the choice is to capitulate to their demands or be shut out of the market. 

Rather than engage in socially beneficial competition, this kind of conduct by Walmart and Amazon is highly corrosive to our political economy. While the prices may be low on Amazon or Walmart, due to a phenomenon known as the “waterbed effect,” suppliers, seeking to make up for their lost margins by offering favorable terms to Amazon, are likely forced to raise their prices for other, less powerful firms. This circumstance creates a snowball effect where because Amazon has the lowest prices, consumers are dissuaded from shopping elsewhere and then shift even more of their buying to Amazon, which entrenches the company’s dominant market position further, giving it even more clout to demand privileged pricing and higher prices for everyone else. Amazon then can kill off its competitors by wielding its sheer size and access to preferential terms. 

As revealed in the landmark 1934 report by the Federal Trade Commission that led to the enactment of the RPA, it was precisely this kind of conduct that allowed the chain stores of the 1930s to crush their independent rivals and monopolize local markets. Other consequences of allowing firms to exercise their buyer power at will has also led to lower wages for workers. This behavior also has bad effects for the consumer: By killing off smaller, less privileged competitors, consumers have reduced access and choice for products.

By proscribing buyer coercion and discriminatory pricing, instead of stifling competition entirely, the RPA shifts market competition. As opposed to allowing firms like Amazon or Walmart to wield their colossal size against their suppliers to obtain preferential terms, the corporations can lower their profit margins or operate more efficiently to obtain lower prices. Both corporations can buy products from suppliers in bigger volumes to obtain a lower per unit price—a practice the RPA encourages so long as the discounts are constructed equitably. Walmart can invest more to expand its transportation and delivery network to allow suppliers to charge the company lower prices due to real differences in cost. Amazon can engage in additional internal expansion of its operations by hiring more workers and building its own manufacturing infrastructure to produce its own products in-house. Both companies can focus more of their resources on improving the quality of their products or becoming more attractive workplaces to obtain the best industry talent. 

By encouraging a firm to allocate more of its resources into expanding its productive capacity or providing more product choice for consumers or more jobs for workers, the restrictions imposed by the RPA, while inhibiting one method of competition, promote using others that benefit the public. It also facilitates investment by firms and leverages genuine economic efficiencies while curtailing a dominant firm’s predatory tactics. 

The RPA, while not a perfect law, is a sensible statute addressing a clear problem. In the words of the former FTC Commissioner Philip Elman, “Congress sought to assure that the prohibition of price discrimination would not prevent the development of efficient distribution methods or deprive buyers of the rewards of lower prices which are the incentives for seeking more efficient methods.” 

Indeed, when it was once a keystone in America’s competition law regime between the 1940s and 1970s, the RPA assisted with channeling corporate conduct into precisely this kind of socially beneficial competition. During the height of its enforcement in the 1960s, when the FTC initiated over 500 actions, the RPA worked alongside other strict prohibitions from antitrust laws to structure the economy to ensure socially beneficial competition. For example, scholarly literature recounts how companies like DuPont, American Can, and IBM—some of the largest corporations of their era—all plowed significant financial resources into research and development after incurring repeated antitrust lawsuits.

Further, there is scant evidence that the RPA leads to higher consumer prices. However, in spite of the exceptionally limited number of empirical studies on the RPA, one study has actually shown that the RPA increases price competition. This result intuitively makes sense. If firms are receiving nearly identical prices for the goods they are purchasing, other channels of competition, such as lowering margins, increasing product quality, or offering additional marketing services become more viable and meaningful.

Moreover, regardless of the ephemeral potential of price increases, the drafters of the RPA explicitly stated that higher prices were worth it if they facilitated fairness in the economy and restrained undue corporate power. Representative Wright Patman stated that Congress designed his namesake bill to facilitate “low prices…consistent with good prices to the wage earner who converts that raw material into the finished product for retail distribution.” In other words, when Congress enacted the RPA, it consciously chose to ensure fair treatment, prices, and wages took primacy over low prices for their own sake. 

Despite the existence of such violative conduct from firms like Walmart and Amazon, along with the potency of the RPA and its enforcement benefits, why has the federal government not initiated blockbuster lawsuits? The answer is that since the 1970s, the defense bar and libertarian Chicago School economists engaged in a highly successful campaign to systematically dismantle the antitrust laws by marketing a demonstrably false narrative and asserting they were designed to almost solely focus on low prices to consumers under the moniker of “consumer welfare.” One of their prime targets was the RPA. Liberals like Ralph Nader also took particular umbrage against RPA enforcement on the grounds that the law was complicated, provided “questionable value” to consumers, and, because it was being enforced too vigorously, symbolized organizational incompetence at the FTC. These simultaneous efforts set the stage for significant retrenchment of RPA enforcement.

After obtaining prominent enforcement positions in the federal government in the 1970s and publishing a widely circulated report, Chicago School sympathizers directed the DOJ to completely abandon enforcement of the RPA. As with the DOJ, enforcement from the FTC precipitously dropped in the 1970s, with the last lawsuit from the agency during the Clinton administration. A scathing 1972 report published by Ralph Nader and his “raiders” also asserted that the RPA should be repealed unless enforcement was substantially curtailed.

Since the 1970s as well, the Chicago School has successfully convinced the Supreme Court to weaken the RPA and the antitrust laws more generally by restricting its application and imposing substantial legal burdens on private plaintiffs, making litigation significantly harder and more expensive. Moreover, organizations like the Chamber of Commerce, which effectively serve as mouthpieces for the defense bar, also continue to peddle highly distorted narratives about the RPA in all likelihood to maintain the status quo and thwart any potential action by the administration as they know that without the firepower of the federal government, RPA claims against companies like Amazon and Walmart are unlikely to prevail.

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The wholesale abandonment of RPA enforcement from the federal government by such a miscarriage of prosecutorial discretion is fundamentally at odds with Congress’s intent and the rule of law. Nevertheless, Congress has not repealed the RPA, and historical attempts at such action have been repeatedly rejected. In other words, the RPA is merely in a dormant state, and thus ready and capable of being revived and vigorously enforced. 

The Biden administration has already taken several steps to restore the RPA, including initiating two FTC investigations, issuing a short guidance document, and giving speeches detailing the RPA’s goals. Based on these recent actions from Biden administration officials, there is clearly an overwhelming eagerness to initiate an enforcement action. Marketplace bullies like Amazon and Walmart should be on notice that their unfair practices could soon face heavy condemnation. Such a lawsuit cannot come soon enough and should be openly welcomed.

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Daniel A. Hanley is a senior legal analyst at the Open Markets Institute.

This article first appeared on The American Conservative, December 7, 2023

Why is the public image of developers somewhere between that of a used car salesman and that of a Bond villain? A child without social and cultural baggage might view developers extremely positively. They build tall buildings. They oversee construction sites with lots of cool heavy equipment. They give families places to live—more friends to play with!

Of course, many adults view developers as slimy, powerful, and insidious. They are schmoozing and cajoling in the background, driving a hard bargain with public officials, squeezing every cent out of every deal. The Atlantic contributor Jerusalem Demsas notes residents’ understandable resentment of our system’s zero-sum negotiations, pitting public desire for public benefits, in the form of developer “concessions” such as parks and infrastructure improvements, against massive unmet private demand for more homes in places with economic opportunity.

My purpose is not to make you sympathize with developers; rather, I wish to demonstrate that the corruption and sleaze that we associate with development, as well as our debilitating shortage of homes, is primarily a product of weak property rights. Consider the following scenario.

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You are 37 and still looking for love, walking downtown on a Tuesday night. You are in a bad mood. You splurged on a nice restaurant, it was your third time seeing this person, and they just cut things short, telling you that you’re great, but it’s not going to work. They insisted on picking up the check and it just made you feel worse. That’s the kind of mood you’re in.

Wandering past city hall, you see a notice for a public meeting of the municipal planning commission. Seeking a distraction, you step inside. A city staffer greets you, explaining the meeting is for a SUP to the GLUP, allowing more density for a new apartment building. A what? A special use permit to go beyond the general land use plan. The building would be just around the corner from where you live. One thing leads to another and you sign up to speak.

Not many citizens are at the meeting but it is going poorly for the developer. A few local neighbors say they are very concerned. Traffic. Shadows. Someone even mentions crime. You are in such a bad mood that when it is your turn to speak, even though you are only repeating what you have heard, and your opinions are pretty vague, you testify with conviction, blasting the city for giving so much away to developers, letting fat cats step on the little guy. You are the sour note proceedings end on. The unelected commissioners look awkwardly at each other then vote to defer the project for further study. In the end, 350 new apartments will become 250. You, a random person off the street, have played a decisive role in evaporating 100 new homes. Poof.

Unfortunately, this story is fairly representative of the entire English-speaking world. A few people testifying at a public meeting can and do sway decisions about development projects worth tens of millions of dollars. We have inherited broad discretion to control where other people live through political means rather than as a natural consequence of economic transactions. Decisions are highly discretionary, based on planning staff interpretations of esoteric documents and the whims of local elected officials. Developers must navigate a Byzantine and intrinsically political process. That is the simple explanation for gamesmanship in property development. Weak property rights define our land use regime.

During the transition from the Gilded Age to the Progressive Era, as streetcar and rail suburbs were fully built out and the automobile became a middle class phenomenon, land use restrictions shifted from keeping factories away from schools to a vaguely defined concept we would today call “livability.” Congestion in those days referred to people packing city streets on foot and residing in crowded, often squalid conditions. So maybe there was a valid rationale to strike some balance.

Yet at least here in the United States, that shift was heavily inflected by prejudice, a desire to exclude “any person not of the Caucasian Race.” This included overtly racist anti-black zoning in cities such as Baltimore, evolving into the 1916 invention of homogenous single-family zoning in booming Berkeley, California. A white developer there sought to ensure that a black dance hall and Chinese laundromats did not encroach on his new neighborhood.

The U.S. Supreme Court upheld single-family zoning in the 1926 Euclid v. Ambler Realty decision, infamously validating the assertion that,

[V]ery often the apartment house is a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district. Moreover, the coming of one apartment house is followed by others, interfering by their height and bulk with the free circulation of air and monopolizing the rays of the sun which otherwise would fall upon the smaller homes, and bringing, as their necessary accompaniments, the disturbing noises incident to increased traffic and business, and the occupation, by means of moving and parked automobiles, of larger portions of the streets, thus detracting from their safety and depriving children of the privilege of quiet and open spaces for play, enjoyed by those in more favored localities-until, finally, the residential character of the neighborhood and its desirability as a place of detached residences are utterly destroyed.

The court’s opinion concludes:

If these reasons, thus summarized, do not demonstrate the wisdom or sound policy in all respects of those restrictions which we have indicated as pertinent to the inquiry, at least, the reasons are sufficiently cogent to preclude us from saying, as it must be said before the ordinance can be declared unconstitutional, that such provisions are clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.

In 1948, the U.S. Supreme Court ruled racist housing restrictions and covenants unconstitutional, but for at least two decades thereafter, such language remained in deeds in the city I call home, Alexandria, Virginia, near Washington. The message was unmistakable: If you are black, you should not live here. If you try, you will have to contend with more than the law.

Our land use system evolved further across the decades, from suburban white flight to the understandable, though flawed, association of urban density with crime to the New Left’s demand for transparency and open government post-Watergate. Alexandria’s widespread downzoning in 1992 is typical of that era.

Even for a classical liberal, class warfare is the only term that does justice to this set of facts and pattern of history. Conservatives know the Progressive Era’s elitism, which rationalized a range of corrosive ideas from eugenics to the subtle class antipathy that has permeated left-wing politics ever since.

The rub: American partisans of all stripes had a hand in crafting our land use regime to exclude certain groups of people at a societal scale. Through a confluence of economic and demographic factors—from baby boomers staying out of retirement and in their multi-bedroom homes longer than prior generations to professional opportunities concentrating in a few superstar metros—the water has now risen so high that even two incomes of six figures each are hardly enough to buy a house in a nice neighborhood.

Forget “just live somewhere else”; many of us find we were born in the wrong decade, with decent homes now out of reach. Generation X (and millennials) are sandwiched between aging parents and children struggling to find firm economic ground on which to build a life and particularly a family.

Our land use apparatus is not at all designed to produce homes or meet demand or let people live near jobs. Rather, it is designed for the serious purpose of upholding a constitutionally enshrined protection of the free circulation of air and sunshine falling on single-family homes. Quiet and open spaces for play are a privilege, the court affirmed, to be enjoyed by children in more favored localities.

The practical effect of weak property rights is that naked power dynamics easily win out. You need not read the Melian Dialogue to understand that a public input process which privileges in-person testimony at community meetings—often held on weekdays, in the evening and even during the workday—favors retired persons and people paid to attend, and disadvantages essentially everyone else. The imaginary you in the prior scenario was walking off the sting of a disappointing date, i.e., childless and not home putting kids to bed.

Entitlement is a core theme of land use debates. Developers must navigate a so-called entitlement process to secure the right to build, jumping through various bureaucratic hoops even if their project is technically permitted “by-right.” Some of our esteemed elders brush off younger generations’ complaints about housing insecurity and cost of living as a sense of entitlement. “Just work harder” is the frequent reply, regrettably.

However, the greatest entitlement in the housing market is, manifestly, an entitlement to interfere with other people’s property, via legal and quasi-legal mechanisms. Just a hint of ambiguity in the color your neighbor paints their fence might empower you, if you so choose, to ensnare them in a process of discovery and debate with the homeowners association or local government that will be excruciatingly tedious, regardless of outcome.

At my first public meeting, in Alexandria, I watched a respectable, starchy couple politely beg for permission to make small improvements to their property, to prevent their historic home’s basement from periodically flooding with sewage. They were dressed almost as well as the land use attorney they hired, who happens to be one of the best in Northern Virginia. The mayor and city council and city staff were on board, the requisite variance was granted, smiles all around, everyone on the same page. Yet they all had to be there on a Saturday morning.

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Under a fundamentally constrained view of human nature, it is generally imprudent to challenge people’s preferences. I moved to the D.C. area more than a decade ago and never wanted to live in a large building, preferring the smaller scale of what is called “gentle density” or “missing middle” housing: multiplexes, garden apartments, and townhomes (the American term for fancified rowhouses). These middle options are missing, or relatively uncommon, because American cities have banned or heavily restricted them for decades. I grew up in a large detached single-family home. Some people want that life, no objections here. But we make all other housing typologies difficult to build. That is the root of America’s housing shortage and affordability crisis.

Any preference for detached single-family homes, even enshrined in law, is not universalizable as a practical matter and economic reality. California’s housing meltdown is a warning that cities cannot house enough people by sprawling out indefinitely. Booming sunbelt cities, even in Texas, with more land than France (ask any Texan), face the same constraint. They too will eventually have super-commuters spending three or four or five hours driving each way, if they treat residential density like pollution.

The fundamental defect of housing policy in the English-speaking world is that property rights, over the most important type of property, are absurdly weak. We have given people awesome power over each other’s lives. Where you live and what kind of home you live in are dictated to you based on your socioeconomic station, just as the original creators of these institutional structures intended. And the decisions within this framework are largely arbitrary. Is it any wonder that fallible human beings misuse this power? The answer is all around us.

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Luca Gattoni-Celli is the founder of YIMBYs of Northern Virginia, an all-volunteer grassroots housing advocacy organization. He lives in Alexandria, Virginia, with his wonderful wife and children. Read more at lucagattonicelli.substack.com or email lucagattonicelli@substack.com.

This article first appeared on The American Conservative, November 16, 2023

You are familiar with the litany of ills blighting our society: declining rates of work and marriage; rising rates of obesity and loneliness; soaring deaths of despair. All of these trends reflect the falling fortunes of the American male, a malaise magnified when we look at boys and men in poor and working-class communities.

When the male malaise is raised among conservatives, too often the blame is assigned to “culture,” that most nebulous of forces. The assumption here is that vague changes in the culture—shifts in norms, preferences, and aspirations—are robbing men of their sense of industry and ambition, not to mention their ability to forge meaningful ties to others—including a wife.

What goes unacknowledged here is that real institutions—Big Business and Big Education—also have had a hand in the worsening lot of American males.

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Fewer men are working in America than ever before, according to the chart above. The share of young men (aged 25–35) who are working full-time fell from about 80 percent in the 1990s to less than 70 percent today. For men without college degrees, the fall in full-time employment was even greater, from around 80 percent to less than 65 percent today. This means that about one-third of young men in their prime are not working full-time.

Part of the story here is related to Big Business’s offshoring of American manufacturing jobs. President Clinton’s China trade bill in 2000 obviated inestimable quantities of American labor. According to MIT economist David Autor and his colleagues, America lost well over 2 million jobs as a direct result of this trade agreement. This is but one example of how the search for cheap labor fed the falling fortunes of the American working man. 

In more recent years, another business development has affected the work ethic of the American male. Big Business has moved heavily into what David Cartwright called “limbic capitalism” in his 2019 book, The Age of Addiction: How Bad Habits Became Big Business. He defines limbic capitalism as “a technologically advanced but socially regressive business system in which global industries, often with the help of complicit governments...encourage excessive consumption and addiction...They do so by targeting the limbic system, the part of the brain responsible for feeling and for quick reaction, as distinct from dispassionate thinking.” 

Many of the nation’s biggest businesses—from Alphabet (YouTube) to TikTok to Microsoft (X-Box) to Philip Morris (vapes)—are selling products that serve teenage boys and young men one dopamine hit after another. The problem with these products is they make school and work relatively less appealing, inhibiting the ability of many young men to develop the skills, ambition, and work ethic that would enable them to thrive in the twenty-first century economy. 

The dangers of these limbic products are well known in Silicon Valley. That’s why Big Tech titans like Steve Jobs, Bill Gates, and Sundar Pichai limited their kids’ exposure to their own products. The problem is that many young males, especially working-class and poor kids with less parental oversight, are not similarly protected from the allure of these products. 

Consequently, one reason a growing number of men don’t view work as normal or desirable—or don’t have the capacity to focus and flourish in a job—seems to be that they are too addicted to the electronic opiates of our day. The research of the Princeton economist Mark Aguiar and his team suggests that screentime can account for nearly half of the drop in working hours for men in their twenties from 2004 to 2017. Over that time, recreational computer time rose by 60 percent among men. Many parents of teenage boys, of course, know that this problem begins well before males reach their twenties.

The bigger point is that many of America’s biggest businesses now profit off vices that rob males of their capacity to aim for and hold down a good job.

But it’s not just Big Business. It’s also Big Education. 

In an interview with the George Lucas Educational Foundation covering his 2022 book Of Boys and Men: Why the Modern Male Is Struggling, Why It Matters, and What to Do About It, social scientist Richard V. Reeves explained that boys are falling well behind their female peers. “There are very big gaps in terms of things like school [expulsions] and suspension,” he said, also noting a staggering difference in academic performance today by gender. Two thirds of the students with the top 10 percent in GPA scores today are girls; in the bottom 10 percent, two thirds are boys. 

Why are boys doing so much worse than girls in our schools? The pedagogy and ethos are not boy-friendly. There’s not enough recess and too few male teachers, too many group projects and make-work assignments that hold little appeal for boys. All this and more helps to explain why too many of our schools do boys a disservice. 

Boys pay greatly for this educational failure as they age. Today, for instance, males are significantly less likely to attend and graduate from college than females. The current male-female ratio in college classrooms mirrors the ratio of the 1970s, and we seem to be headed for a world where about 60 percent of college attendees are female and only 40 percent are male. This matters not only because many men will have more trouble getting launched in the working world relative to their female peers, but also because women prefer to marry men who have roughly the same educational credentials as they do.

How, then, can we push back against Big Business and Big Education to reduce the enervating and dispiriting effects they are having on boys and young men?

When it comes to Big Business, we need to keep studying the effects of the dopamine economy on male ambition and agency, much as we have studied the effects of social media on young women’s mental welfare. If rigorous studies confirm the red flags thrown up by research to date, public and civic efforts should be launched to educate teens and their parents about the harms of excessive time spent on screen for young men. And we should target gaming much as we do alcohol and cigarettes, with taxes and public messaging to reduce the amount of time and attention that our teens, especially teen boys, devote to the dopamine economy.

Regarding Big Education, we need to give parents more options for their sons’ (and daughters’) best educational fit—and that means passing school choice legislation in as many states across the country as possible. We need schools that hire more male teachers, that make their curricula and pedagogy more boy friendly, and that give boys more time out of doors. More single-sex schools, of course, would be especially valuable in this regard. Well-funded vocational programs in high schools, accorded greater status by local schools and closely tied to local business opportunities, would also help motivate and prepare young men who are not on the college track. 

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These are the kind of concrete steps we must take if we wish to tackle male malaise head on. It’s not enough to chalk it up to “the culture.” We must move clearly and confidently to limit the hold that Big Business has on our boys’ hearts, minds, and time—and make sure that Big Education stops crushing their curiosity, creativity, and potential. 

Absent clear measures like these, we can expect to see all too many of our boys and young men continue to drift, underperforming in school, work, love, and life. For their sake and ours, let us not leave them to the enervating embrace of Big Business and Big Education. 

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Brad Wilcox is a senior fellow at the Institute for Family Studies, Director of the National Marriage Project at the University of Virginia, and a Visiting Scholar at the American Enterprise Institute.

Elizabeth Self is Outreach Coordinator at the Institute for Family Studies.

This article first appeared on The American Conservative, November 9, 2023

Americans don’t know very much about the world. The most recent National Assessments of Educational Progress (NAEP, or “The Nation’s Report Card”) found that only 27 percent of eighth graders are proficient in reading, 20 percent in math, 22 percent in geography, and a mere 13 percent in U.S. History. The adult population is not doing much better. Surveys from the last 15 years show that a full 25 percent of adults were not able to name any of the branches of the U.S. government, and only 6 percent got a “B” or better on a test of international politics. 

Why is our collective knowledge so low? It is low because, more than a hundred years ago, our K-12 education systems rejected the liberal arts in favor of a pedagogy of mere process—for “learning how to learn,” instead of learning something in particular. The results have been the loss not only of common knowledge and civic reference points, but also of lifetime opportunity and social mobility.  

A subject-specific, knowledge-rich curriculum isn’t just about learning facts. It is about engaging with meaningful information about the world and the questions that human life inevitably raises, about connecting the dots between geography and history and economics and art. This is what historian Diane Ravitch called “the academic curriculum,” which doesn’t mean rote memorization but, rather, “the systematic study of language and literature, science and mathematics, history, the arts, and foreign languages; these studies, commonly described today as a ‘liberal education.’”

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Most American schools provide nothing of the kind. Instead, disaggregated skills such as “find the main idea” and “compare and contrast” trump content mastery. Educators are taught that school should be about the process of learning, not about learning something specific. Or that, to get practical, students shouldn’t have to memorize state capitals or learn key dates by heart, because any fact is searchable on a smartphone.

As a result, most classrooms routinely underchallenge students, and at every income level, our students underperform their matched peers.  

Besides leading to vacant and boring instruction, a pedagogy of process widens the gaps between low- and upper-income students and thereby shuts down opportunity for the next generation. 

How so? Parents of means introduce their children to copious knowledge through museums, travel, conversations about current events, and especially through reading. This persistent accumulation of knowledge makes learning new things easier. University of Virginia’s Dan Willingham calls background knowledge “sticky,” because “the more you know, the easier it will be for you to learn new things.”  This inherent advantage translates into better grades and better opportunities. Numerous educational studies in the United States, in Europe, and around the world, find that mastery of important content knowledge benefits all students and helps close achievement gaps.

In the United States, Catholic high schools in the late twentieth-century closed achievement gaps by, among other things, ensuring an intellectually robust curriculum. When Chicago Public Schools put the academically rigorous International Baccalaureate Diploma Program in thirteen of its extremely low-performing high schools in 1997, students who went through all four years were 40 percent more likely to attend college than their peers. The focus and rigor of some urban charter networks accelerate learning and erase racial gaps. When Duval County Public Schools (Jacksonville, FL) implemented knowledge-rich curricula in its K-8 schools, students’ academic growth was so pronounced that six districts in the state followed suit.

On the other hand, children whose parents simply don’t have the time, experience, or resources must rely on schools to make up the difference. If schools don’t ensure classrooms brimming with knowledge about the world, the achievement gaps between wealthy and low-income students persist. (For a terrific book that summarizes the research and practice, see Natalie Wexler’s The Knowledge Gap: The Hidden Cause of America’s Broken Education System—and How to Fix It.)

But how did our country lose the appetite for rich content, and can we get it back?

Throughout the 19th century in the United States, the academic curriculum served as a unifying factor across the disparate K-12 schools (Catholic, Lutheran, Congregationalist, etc.) that were funded by local taxes. The nation’s high schools, even those in rural communities, insisted that students learn Latin, advanced math, literature, history, geology, physics, rhetoric, and government. 

Teacher preparation followed suit, with a focus on collegiate subject matter and cultural capital-building (field trips, concerts, literary societies, public debates), all designed to foster robust liberal arts K-12 classrooms.

By the late 19th century, however, the equalizing value of the liberal arts came into dispute. Many voices joined the fray, but its contours can be seen in shorthand, through one actual high-profile debate between two educational leaders and the forces they represented: Charles Eliot (1834–1926) and G. Stanley Hall (1844–1924). 

Eliot wanted to modernize and expand access to the liberal arts. He became President of Harvard University in 1869 at the age of 35; chaired the National Education Agency’s most renowned working group (see The Committee of Ten Report, below); co-founded the College Board; and edited a “five-foot shelf” of great texts for popular consumption. He was also a public persona whom both political parties considered nominating for President.

Hall promoted the new science of developmental psychology, rather than academic content, as the key to educational success. Hall invented the modern term “adolescence;” served as president of Clark University; founded the American Journal of Psychology and the American Psychological Association; formalized and elevated the wildly popular field of Child Study; and introduced Freud and Jung to an American audience. Hall was the equivalent of an international rock star, the “most widely known…educational psycholog[ist] in late Victorian and Edwardian England,” and “one of the leading figures in American scientific and intellectual life” at the turn of the century.

Eliot and Hall represented clear voices respectively for and against the academic curriculum, with Hall’s “against” resting on developmental psychology and a strand of evolutionary theory. In subsequent years, the “against” side took different angles—from social efficiency and expressivism, to social adjustment and “child nature”—as Diane Ravitch’s Left Back chronicles in detail. 

After the Eliot–Hall debates, that is, by the 1920s, teacher preparation programs no longer fostered academic preparation and cultural exposure. Field trips to theaters and participation in rhetorical societies became a thing of the past. Child development had become the single most important tool for the classroom.

In short, Hall’s side won. The world he designed is still recognizable to those of us in the field of education. Every reference to “personalized education,” “learning how to learn,” or that teachers should be merely “a guide on the side” is not new, but rather calls upon 100 years of educational orthodoxy. 

And even though K-12 classrooms changed more slowly than teacher preparation programs, by the 1950s and 60s the anything-but-the-curriculum yielded its expected fruit. American high schools required very few academic courses for graduation. A serious attempt to align K-12 with higher education failed. Psychological development in the guise of “social adjustment” had become the currency of the realm in teacher training institutions—even making its way into landmark court cases such as Brown v Board of Education.

By the 1980s, the low level of student achievement finally rose to the level of a public emergency—and governors responded by creating uniform standards for math and ELA, called the Common Core State Standards (“CCSS”), which their legislators voted to adopt en masse. The genius of the CCSS was that, “by displacing the fifty sets of state standards with one largely uniform set of content standards, they represent[ed] a seismic, heretofore unseen turn in curricular policy.” The political necessity of the CCSS meant that they were formulated to ensure (mostly) content-agnostic standards rather than specific bodies of knowledge. The early 21st century was thus dominated by calls for “standards-alignment” and “twenty-first-century skills” rather than a return to the academic curriculum.

The influence that the CCSS has had on student achievement has proved ambiguous. In their favor, the Common Core State Standards set a more rigorous bar than the state standards they replaced (with the possible exception of Massachusetts). Another positive outcome has been greater attention to high-quality materials. The non-profit EdReports’ standards-alignment reviews of math and ELA textbooks have been crucial; state and district leaders increasingly use EdReports’ “all green lights” indicator as a criterion for new textbook adoptions. 

Standards and skills are a necessary component of excellent instruction. By themselves, however, they are simply insufficient. A preference for anything-but-the-academic-curriculum has contributed to America’s tragic NAEP scores and the reality they reflect: Far too many Americans graduate intellectually and civically under-prepared. 

Dismantling the liberal arts in K-12 education took decades, and restoring—and updating—it will, too. 

The good news is that the turn towards knowledge-building is picking up steam in state departments of education, district schools, charter school networks, and many non-public schools. The truth is that any school, anywhere, can pull the academic curriculum lever to good effect. 

For example, Baltimore City replaced a skills-based English language arts curriculum with a robust, knowledge-building one. Success Academy, a high-impact network of charters in New York City, built its academic reputation on a culture based on high expectations, “joyful rigor,” and a strong, knowledge-building curriculum. The New York Partnership Schools, a network of Catholic schools in the South Bronx, attributes much of its academic success to its adoption of knowledge-building curricula—a move CEO Kathleen Porter-Magee considers both cost-effective and high-impact. 

Membership organizations such as Chiefs for Change support the value of high-quality, culturally affirming curriculum and instruction, resulting in powerful reports such as their 2019 Honoring Origins and Helping Students Succeed. The nonprofit Knowledge Matters Campaign provides resources, podcasts, and proof points of the impact of content-rich curricula on student learning. The center I co-direct—the Johns Hopkins Institute for Education Policy—reviews English and social studies curricula for their knowledge-building capacity, quality, and coherence. 

All of us can play a role in supporting the instructional core. Parents can ask schools whether they use a knowledge-rich curriculum. Principals can calibrate classroom observations to academic rigor. System leaders can support teachers with curriculum-aligned professional development and collaborate on curriculum-aligned assessments, creating a virtuous circle that only Louisiana has attempted in recent years. Civil rights groups can commission studies of curricular quality and inclusion. We can raise the bar and keep on raising it, one step at a time.

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A few qualifications. First, a “yes” to the liberal arts does not mean an exclusionary focus on “Great Books” and Euro-centric, white, male authorship. Modernizing and expanding the academic curriculum means reaching a new generation with a myriad of voices that reflect their own worlds and call them to others. Second, the above is not a plea for a rigid national curriculum, nor for the imposition of a “common narrative.” It is, however, an argument for knowledge-building to take its place at the center of classroom instruction, for the sake of the next generation and our common life.

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

This article was also adapted from Berner’s upcoming book, Educational Pluralism and Democracy: How to Handle Indoctrination, Promote Exposure, and Rebuild America’s Schools, to be released in April 2024 by Harvard Education Press.

Ashley Berner serves as director of the Johns Hopkins Institute for Education Policy and associate professor at the School of Education. She earned her D.Phil in Modern History at Oxford University and studies the structure, content, and outcomes of international school systems.

This article first appeared on The American Conservative, November 2, 2023

In the fall of 2021, a group of former Hill staffers and current think tank scholars gathered in a small room in Old Town Alexandria just outside Washington, D.C. The group represented a wide range of perspectives from across the center-right, with former staff from the Trump and George W. Bush White House teams; staff from the Rick Santorum and Carly Fiorina campaigns; and former denizens of the Hill, from Mike Lee’s office to Paul Ryan’s. Together, social conservatives, economic conservatives, and libertarians were in the room to take a broad look at the decline in “social capital”—that rich network of relationships that support us in our private and professional lives from the cradle to the grave. 

The deterioration of social capital and its regional inequality has been measured by declines in neighborliness, numbers of nonprofits, charitable giving, church attendance, marriage rates among lower-income cohorts, and rises in loneliness and crime rates. The academic analysis suggests that the decline in social capital across America explains the overall decline in society-wide trust in national institutions such as the government, the media, and each other. 

As we discussed a variety of work papers, an Andy Warhol-style print of George Washington looked down upon us, serving as a reminder that the first president had once stayed in this townhouse. A recent arrival from the United Kingdom, I was reliably informed that it was common for many houses, hotels, or function rooms across the East Coast to make historic claims based on even a fleeting visit from a Founding Father or his spouse.

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During a session on civil society and technology, one former Senate staffer quoted de Tocqueville’s observation of the unique emphasis on free associations to get things done in America. I thought the reference was odd. Could a 190-year-old insight still be expected to apply to the country we live in today after enormous changes in territory, wealth, population, technology, and norms? If de Tocqueville set off on a tour of America today, he would be comparing a country of 12.8 million people and a federal revenue of $27.4 million (almost $1 billion in today’s money) with a country of 330 million inhabitants and $4.9 trillion in federal revenue.

Yet one line did seem hauntingly relevant: “Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you perceive an association in the United States.” As the day progressed, a clear theme emerged: that America seemed to have come under the eighteenth century French malaise of looking to the government for its undertakings while at the same time lamenting federal government overreach. There is perhaps also a danger of looking to the contemporary equivalent of England’s “great lords”: the American philanthropic billionaire.

Philanthropic giving is at a record high. Yet this flow of cash is not necessarily the sign of great civil health; in fact the share of people giving is down—to both charity and politics. The uptick in funds is from the super-wealthy, concealing a worrying trend. As Putnam states in Upswing, “philanthropy among most Americans has fallen steadily since the mid-1960s, only partially and temporarily offset by megagifts from the newly mega-rich.” 

The number of local nonprofits is down, and has been for some decades, having been replaced with D.C.–based national advocacy groups without local chapters or members. 

Political participation, considered another form of social capital creation by the Joint Economic Committee’s Social Capital Project, has also seen conflicting trends. The most recent presidential election was the most expensive on record to date, but giving from regular voters is down. The increase has come from the mega-wealthy expressing their free speech, permitted to do so with abandon since Citizens United in 2010.

Together, philanthropic and political funding have become increasingly focused on the federal or national level. Ostensibly, this should improve the quality of policy analysis and advocacy for the best ideas to influence the most people, but the increase of funds to a focus on the federal and national could well be gutting the capacity for local civil and civic participation. Even those philanthropists funding state outreach do so to achieve federal goals. This activity means that less effort, focus, and value is placed on local political and civil apparatus. 

The declining value of local political apparatus means the best local talent is not attracted to local politics, further diminishing the quality of local civic society. Moreover, the decline in nonprofit and free local association further depletes the networks of relationships that mediate between individuals, local communities, and their representative machinery. Increasingly alienated voters are more vulnerable to looking to the government or overlords to rescue them.

Obviously wealthy patrons have sponsored philanthropic activity throughout America’s history, and were behind many of the associations de Tocqueville remarks upon—hospitals, prisons, and schools. Nevertheless, as Brian Rourke wrote in 2014, describing the shift to “strategic” philanthropy and a decline in taking unsolicited grant requests, “funders are now engaging in public problem-solving efforts in ways that Andrew Carnegie and John D. Rockefeller probably never imagined. What are still officially considered ‘grants’ are now sometimes detailed portfolios of work that have been developed by the funder itself, with the nonprofit partner serving more as contractor than grantee.”

​​As we reported in A Civil Society, trust in national institutions—federal government, mainstream media, big business, big denominations, even big philanthropy—is at record lows. But trust at the local level—state government, local media, small businesses, independent congregations, local nonprofits—remains relatively high. While neighborliness is down compared to the 1970s, trust with local residents is higher than with that of an “imagined” community of Americans living elsewhere.

This suggests that some of the solution is to take a look at what is happening locally and to build on it. Let us first examine the results of this society-wide decline in trust. 

We have seen a growth of polarization. We must be careful about what we are describing, as polarization is not the same as difference of opinion. It is, however, when different groups with different opinions who had previously been able to coexist peaceably—glued together by an overarching idea of “society”—are no longer able to do so. Instead, groups look for other “glue” to bind them together, which can be hatred of the groups they previously coexisted with, or new more extreme ideologies on left and right. 

This effect of polarization is heightened when we change our understanding of democracy. A traditional view is one in which democracy preserves the rights of the individual against an over-mighty government. But across the West, democracy is increasingly seen as an individual being given protections against their neighboring citizens by an omniscient government. 

Rather than neighbors working together in free association, creating cohesion and trust that facilitates a governable society, we see neighbors growing less enamored with each other, and instead looking to the government to facilitate society. This development is clear in the rise of “identity politics,” but can also be seen in class warfare, or versions of patriotic populism: All seek to use the machine of government to control those sections of the population that are at odds with them. 

Many philanthropists, concerned at this animus, want to use their generosity to help. Some of these attempts look like trying to get people of different backgrounds to meet each other, as though an absence of empathy is the problem. Bridge-building exercises like coffee with a stranger may be helpful, but philanthropic grants can’t set up coffee dates for 330 million people. Nor can these efforts recognize that society-wide trust isn’t built by eliminating tribes, but rather affirming them. 

In the same way, too often, the more strident efforts to tackle polarization are an attempt to get everyone onto the same page, to sign up to the same political or cultural agenda. Here the view is that polarization wouldn’t exist if only the other person, group, or voter didn’t have bad opinions, if only they would be educated and agree with us. This approach might allow for the celebration of diversity of ethnic or sexuality background, but is threatened by diversity of opinion. This bias is seen operationally; as Chris Stackaruk notes in The Chronicle of Philanthropy, “Most pluralism nonprofits have progressive leanings and are normally hesitant to hire staff who do not share all their values.”

Coercing people to one point of view and branding anything else toxic hate, racism, or unpatriotic is a manifestation of the problem, not the solution. Rather we must be able to agree to disagree. 

To this end, Governor Cox is making a remarkably helpful intervention during his chairmanship of the National Governors Association, an initiative called “Disagree Better.” Sharing the notion that the American idea allows for plural religions and points of view, the initiative aims to help elected representatives and citizens learn to be more comfortable with different opinions and to enjoy a more civil society that can disagree better.

This requires confidence. A society with strong stocks of social capital can have the confidence to be secure in their own position but not threatened by competing points of view.  

Such confidence is built locally. Seth Kaplan argues in his authoritative, comprehensive and timely book Fragile Neighborhoods, out last month, that it is neighborhoods and zip codes that must be the focus of any initiative to restore America’s potential if there is to be any strong sense of trust and confidence in the wider idea of America. This cannot be achieved through policy and even the siloed approach of government apparatus may fail to serve the “horizontal,” local approaches that are needed.

It is unlikely that the United States can go cold turkey from its addiction to federal intervention. So there are two broad policies the Social Capital Campaign propose at the federal level. One is to ensure the inclusion of faith groups in human services delivery—a group’s faith element should not disqualify a school, childcare service, foster care program, from federal grants. 

Second, we should boost the role of civil society locally. As mentioned, local non-profits are trusted more than national ones. Their boards are known, the work they do is understood, and funds are drawn from local residents. They are drawn from stronger local networks—churches, groups of parents whose children share a school, businesses that want to improve the downtown they operate in. These are local solutions to local problems led by local people. How they look and operate will differ greatly from locality to locality, but any association of local people working together strengthens local ties and helps neighborhoods develop social capital. Such groups build formal and informal networks of involved citizens who find it easier to participate in their local city halls, or to connect with local representatives.

We therefore recommend a couple of ideas that are intended to address Tocqueville’s French “government” problem and English “lord” problem that are challenging civil society grown in today’s America. First, we promote the proliferation of local non-profits that draw together local individuals to tackle local problems. Second, to reduce the “lord” problem, we recommend that foundations and billionaire philanthropists provide funding in a manner that is less controlling of outcomes and far less prescriptive in how those outcomes are achieved.

To encourage more of this, we will need three things. 

First, the Internal Revenue Service must create a new category of tax-exempt organization, the 501c3p—where “p” stands for poverty. In 2022, human services and public and society benefit/community improvement nonprofits accounted for 34 percent of  all nonprofits but only received 19 percent of charitable donations. Higher education nonprofits, by contrast, accounted for 5 percent of all nonprofits and yet received close to 11 percent of all charitable donations. Creating a separate category will allow for clarity around donations given to philanthropy that addresses poverty and local need. To promote this type of work, we recommend it is given a marginally higher tax relief incentive to other tax-exempt categories.

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Second, to take directive control out of this work, we recommend a State Poverty and Relief Community Chest, SPARCC. This would be a program of a State tax office which maintains a list of the 501c3ps registered only in their state. Any donor can give to the SPARCC. For the billionaire philanthropic donor-incentivized by a marginally improved tax break, they could experience what most of us experience when giving money away to charity—trusting the funds to the local experts delivering the programs through their own relationships. The SPARCC would, like a tax refund, distribute a dividend to all the local 501c3p nonprofits in the state, regardless of philosophy or alignment to a donor’s approach. 

America has a social capital problem. Its demise is to describe the decline of the social fabric that allows a vast variety of people, values, faiths, ethnicities, and opinions to live side by side. The freedom of associations of individuals and neighbors to provide solutions is as necessary today as it was 190 years ago—arguably even more so. If we are to replenish America’s social capital, we must start local, and use the state and federal apparatus to support a proliferation of local solutions to local problems.

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Chris Bullivant is Director of the Social Capital Campaign based in Charlottesville, VA.

This article first appeared on The American Conservative, October 12, 2023

It is the regrettable curse of great men to be wrongly remembered both by their allies and enemies. This has long been the case with President Franklin Delano Roosevelt. To many on the right, he is the man responsible for the near-total destruction of local democracy. For many on the left, he is a great champion of utopian progressivism who offered a still incomplete vision of a socially democratic America. The truth, as is often the case, lies somewhere in between. 

Roosevelt was a complex man: optimistic but pragmatic, liberal but cautious, a patrician who formed common cause with the working masses. Through all of this, at the heart of Roosevelt’s politics remained a deep appreciation for the ideals of the American founding in a sense that is almost Burkean. He wished to update the American understanding of economics and government to better protect these principles in a new age. American conservatives need to cut their frequent historic (and historically groundless) cries of socialism and understand that the New Deal was intended as a conserving rather revolutionary project. Even more importantly, conservatives need to abandon their reactionary tendencies against any ounce of government intervention in the economy and see that, if properly preserved, the New Deal represents the third great constitutional development in the history of our nation. 

The New Deal is typically associated almost exclusively with the Great Depression—the country was suffering severe economic hardship and the Roosevelt administration’s policies were meant to end that suffering. However, this was not the primary goal of the New Deal in the eyes of its chief architect. Roosevelt saw the Great Depression as part of a larger problem that originated not in the Wall Street crash but in the Industrial Revolution. Roosevelt made this clear in a series of speeches delivered throughout his time in office; these articulate a robust understanding of the principles that underlie the American political tradition and what it takes to conserve them. 

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The first major speech in which Roosevelt discussed the underlying ideas of the New Deal at any length was an address to the Commonwealth Club of San Francisco delivered in the midst of his first campaign for the presidency. Roosevelt argued that the greatest political question has always been “whether individual men and women will have to serve some system of government or economics, or whether a system of government and economics exists to serve individual men and women.” 

In short, are humans meant to be free or continuously subject to some greater power? It was this exact question that the American Revolution attempted to settle. Roosevelt argues that Thomas Jefferson and many of his fellow founders hoped to create a world where “each man is free to live according to his own lights.” This required that no one person, group, or entity have the power to tyrannize over the individual. As Roosevelt made clear later in his career: “That very word freedom, in itself and of necessity, suggests freedom from some restraining power.” 

Roosevelt argued that such an endeavor proved easy enough when the country’s Western portion was a great untamed wilderness. Anyone being oppressed by a private individual could simply grab a wagon and strike on their own. But by the time Roosevelt was speaking in the 1930s, things had changed—the West had been won, and the Industrial Revolution had given rise to an entirely new form of individual: the economic royalist. He put the problem in stark terms at the 1936 Democratic National Convention: “For out of this modern civilization [the industrial revolution] economic royalists carved new dynasties. New kingdoms were built upon the concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital—all undreamed of by the fathers—the whole structure of modern life was impressed into this royal service… For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.” 

In short, Roosevelt argued that the concentration of economic influence in the hands of the few eroded the basic liberty that formed the heart of the American regime. To be free from government tyranny is essentially meaningless in the face of private companies that can dominate the lives of all those citizens inevitably drawn into their orbit. The Great Depression merely threw this problem into stark relief and made apparent the need for rethinking the nature of American politics. 

The New Deal was designed to resolve the crisis by balancing the influence of government and private industry. This would create space for individual freedom to flourish. In practice, this meant that the government must come to understand the important role of guaranteeing “equal opportunity in the polling place” and the “marketplace.” The New Deal sought to bring into being a government capable of addressing the peculiar problems of the Industrial Age, while still maintaining the American commitment to natural rights. 

Just a cursory overview of Roosevelt’s political philosophy makes evident that there is nothing terribly communist or revolutionary about the New Deal. One could reasonably disagree that the government needs to evolve in order to continue defending its own principles, but this argument takes on not just progressives but conservatives like Edmund Burke. After all, it was Burke who famously argued the evolutionary nature of the British Constitution and declared to the world, “A state without the means of some change is without the means of its conservation.” 

In addition, the New Deal provides the solution to a very real and important problem: private tyranny. This is a problem those on the political right too often ignore, but Roosevelt was right in saying that equality of opportunity can be destroyed by more than government overreach; greedy corporations both historically and today pose just as serious a threat to human liberty. Though many conservatives disagree with this simple fact—instead arguing that the only problem with America’s free market is that it is not free enough—they should be reminded that Roosevelt is not taking an exclusively left wing stance here: Benjamin Disraeli and Winston Churchill, two conservative giants, largely agreed with the sorts of policies deployed by the New Deal. 

For all its virtues, American conservatives are right to identify serious problems in the New Deal. The political scientists Marc Landy and Sidney Milkis have perhaps summarized it best: “Roosevelt persuaded the American people to accept the same centralized, bureaucratic power that they had long been taught to shun and fear. In so doing, he led citizens in the United States to accept new national responsibilities—to face up to the challenges of terrifying economic insecurity at home and brutal despotisms abroad. At the same time, he made possible the emergence of a more centralized and bureaucratic form of democracy that corroded political institutions and practices that nurtured an active and competent citizenry.” Roosevelt’s New Deal did much to make the American Regime workable in the twenty-first century, it also partially withered the rooted institutions that serve as the foundation of a functioning society. 

This gives us some idea of how conservatives should relate to the New Deal. They must understand that it represents an important step in America’s constitutional development. The New Deal provides for the maintenance of natural rights in a way that purely eighteenth-century institutions never can again. Yet this does not mean the New Deal should be regarded as perfect in every respect. A healthy friendship relies on a mutual awareness of one another’s failings, and a desire to make the other person better. So it should be with the New Deal. Instead of incessantly criticizing the ideas of Franklin Roosevelt, we should work diligently to localize the institutions and concepts introduced by his administration.  

In practice, this means reforging important aspects of what one might call the two New Deals. The regulatory state created by the New Deal needs to be pared back so that local institutions have room to grow. This must be done delicately, making sure enough regulations remain to protect local institutions from the dangerous encroachment of private business. On the other hand, ameliorative welfare programs of the New Deal must be left largely intact. Large government funding for the poor can do a great deal to help alleviate the economic suffering that makes participating in rooted communities genuinely difficult.

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Nevertheless, it is not enough to simply maintain the second New Deal. It must be bolstered. Since the Great Society, we have slowly drifted away from jobs programs and cash handouts to instead sending an army of bureaucrats forth to try and “reform” the American poor. This meddlesome method of providing welfare is about as helpful as using tweezers to do a sledgehammer’s job. 

This is the political path chartered by Eisenhower, Stevens, and Viereck, but it is also the path conservatives have quite tragically left behind. The time has come for the right to discover the greatness of the New Deal and to improve it. Rather than ceaselessly caterwauling about Roosevelt’s imagined despotism, perhaps they should familiarize themselves with his true mission. They may just learn something. 

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Jeffery Tyler Syck is an assistant professor of Political Science at the University of Pikeville.

This article first appeared on The American Conservative, October 5, 2023

Tech exceptionalism is a sin. Tech leaders aren’t especially smart; they’re not even especially evil. They’re just ordinary mediocrities, no smarter or more cunning than you or I. Yet today’s generation of tech bosses have shrunk the internet down to “a group of five websites, each consisting of screenshots of text from the other four.”

What happened? How did a clutch of utterly undistinguished businesspeople convert the dynamic, fast-changing world of tech into a sector so inbred that it’s practically got a Habsburg jaw?

Like tech itself, tech concentration is unexceptional. Tech companies once dealt with competitors by attempting to develop superior products. As antitrust enforcement was progressively neutered—tentatively by Carter, aggressively by Reagan, and with varying degrees of enthusiasm by each successor administration, Republican and Democrat—tech companies were able to simply buy their competitors. 

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Take Google, a company with a single blockbuster product: its quarter-century old search engine. Virtually every other in-house product Google has developed since—its video platform, its numerous social media networks, its RSS reader, and its “moonshot” smart cities division—has failed. Google’s successful products are—with few exceptions—other people’s products, which it bought and operationalized. From mobile to ad-tech, server management to maps, document editing and collaboration to satellite imagery, Google is a company that bills itself as an idea factory, but is best understood as a deep-pocketed, self-sabotaging investor that buys the products it is incapable of designing and fielding on its own.

Google isn’t exceptional here. Facebook identified WhatsApp and Instagram as threats when its users started jumping ship for the new rivals. The company wrote a couple of checks and acquired these two nascent rivals before they could grow to challenge the company’s dominance. As Mark Zuckerberg says, “It is better to buy than to compete.”

Apple, too, is a buying-things company: In 2019, CEO Tim Cook cheerfully boasted to Kara Swisher about the 90 companies Apple had acquired that year. Cook brings home a new company for his board more often than you bring home a bag of groceries for your family.

Not every startup wants to be agglomerated into a Big Tech borg. When a tech giant finds a firm that isn’t willing to sell out, they use their investors’ cash to force them out. Take Diapers.com: When they refused to sell to Amazon, Amazon responded by selling diapers below cost, lighting $100 million on fire before buying the suffocated husk of Diapers.com for pennies on the dollar. 

Again, this isn’t exceptional. Most industries have indulged themselves in a 40-year-long orgy of mergers and acquisitions, transforming virtually every sector into an oligopoly ruled over by a cartel of five or fewer companies: athletic shoes, beer, cheerleading, defense contracting, book publishing, eyeglasses, semiconductors, bottlecaps, professional wrestling...the list goes on and on. Whole supply chains have consolidated into fistulated masses: The drugs produced by the pharma cartel are overseen by the pharmacy benefits management cartel and retailed through the pharmacy cartel.

But actually, tech is a little exceptional.

Digital technology is exceptional in a deep, technical sense. The only kind of digital computer we know how to make is the “Turing-complete, universal von Neumann machine”—a device that can run every valid program. All computers are, at their deepest level, equivalent, able to run any app we can write. That universality has been a boon to tech competition. 

The flexibility of digital systems means that a new market entrant can always make a compatible (“interoperable”) add-on, mod, or accessory. When IBM gouged its customers on mainframe hard-drives, innovators like Memorex jumped into the market with “plug compatible” drives that sold at a fraction of the price.

Microsoft’s wildly unreliable Office for Mac product turned reading and writing Word, Excel, and Powerpoint files into a crapshoot for Mac users, whose files were frequently unreadable by their Windows-using colleagues. Apple responded by reverse-engineering the Office file-formats and releasing the iWork Suite, whose applications—Pages, Numbers and Keynote—could perfectly read and write those Microsoft files. Thereafter, Mac users could collaborate seamlessly with Windows users, and—crucially—Windows users could switch to the Mac without giving up their files or their compatibility with the Windows users who comprised the majority of the market.

For Facebook, the infinite malleability of the digital world was key to its triumph over the incumbent MySpace. Facebook promised dissatisfied MySpace users a superior, surveillance-free alternative, but Facebook understood that no matter how much users disliked MySpace, they loved the friends they had on MySpace more. “Come to Facebook and sit alone in an empty virtual room, admiring the clean user-interface” was a poor pitch.

So, Facebook used interoperable tools to let ex-MySpace users eat their cake and have it too. Facebook provided those MySpace users with a “bot,” an automated program that used the user’s login and password to impersonate that user to MySpace, scraping the user’s waiting messages and putting them in their Facebook inbox. Replies that users typed in on Facebook were then autopiloted back to MySpace. Thus, MySpace users could become Facebook users without having to convince their friends to make the leap with them—and without having to give up on friends who weren’t ready to leave.

This digital flexibility and the interoperability it enabled was a perennial check on incumbent dominance. Any time an incumbent tightened the screws on its customers—raising prices, lowering quality, converting included features into pricey add-ons—an interoperator could sell that customer a screwdriver to loosen the screw again.

What’s more, these interoperators enjoyed the “attacker’s advantage.” In security, the defender—say, an incumbent hoping to prevent its products from being reverse-engineered by an upstart—needs to make no mistakes. The attacker—say, a would-be interoperator painstakingly decompiling a popular product with an eye to offering an after-market improvement—has only to find and exploit a single defect in the defense.

Tech products have always enjoyed explosive growth thanks to the network effects that are endemic to the sector. Every Facebook user signs up to be with the users who are already there, and then becomes a lure for other users who want to hang out with them. Every iOS user is a reason to be an Apple app developer; every new app is a reason to become an iOS user.

But tech’s network-effects-driven growth have always been held in check by that inescapable universality. The second a company used its network-effects-drive scale to start shifting surpluses from customers to its shareholders, an interoperator popped up to offer those customers a better deal. 

That was true when IBM gouged on hard-drives; it was true when Microsoft used its scale to visit pain upon Mac users; it was true when MySpace tried to hold its users hostage. Wherever an incumbent used lock-in to extract super-normal rents, a new market entrant popped up to offer those customers an alternative. The more invasive your ads are, the more the ad-blocker company can raise in the capital markets.

The universality of digital platforms meant that every platform that became greedy thanks to its explosive growth was pruned back to size through the good graces of low switching costs delivered by interoperability, which either lowered the friction associated with going from one product to another, or simply modified the product the manufacturer delivered to remove extractive antifeatures.

Tech was forever a dynamic industry, where mainframes were bested by minicomputers, which were, in turn, devoured by PCs. Proprietary information services were subsumed into Gopher, Gopher was devoured by the web. If you didn’t like the management of the current technosphere, just wait a minute and there will be something new along presently. When it came to moving your relationships, data, and media over to the new service, the skids were so greased as to be nearly frictionless.

What happened? Did a new generation of tech founders figure out how to build an interoperability-proof computer that defied the laws of computer science? Hardly. No one has invented a digital Roach Motel, where users and their data check in but they can't check out. Digital tools remain stubbornly universal, and the attacker’s advantage is still in effect. Any walled garden is liable to having holes blasted in its perimeter by upstarts who want to help an incumbent’s corralled customers evacuate to greener pastures.

What changed was the posture of the state towards corporations. First, governments changed how they dealt with monopolies. Then, monopolies changed how governments treated reverse-engineering.

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The Apple II Plus hit the shelves the same year Ronald Reagan hit the campaign trail. While it was Jimmy Carter who pulled the first tentative Jenga blocks out of the antitrust enforcement system, Reagan went at it with gusto, tearing them out by the fistful. 

The theories of Robert Bork and his Chicago colleagues gained currency. Their new orthodoxy held that Congress had never intended to police the emergence of monopolies per se, but only to rein in those rare monopolists who abused their market power to raise prices or lower quality. This “consumer welfare” theory of antitrust enforcement gradually won out over historic notions of the inherent risks of large corporations and concentrated sectors.

With the drawdown of antitrust enforcement, industries across the board dwindled to oligopolies, but tech got there first and faster. The capital markets proved exceedingly bullish on subsidizing formerly illegal tactics, such as predatory pricing, acquiring and extinguishing nascent rivals, and mergers to monopoly between major competitors.

Shareholders lined up to subsidize below-cost offerings. Amazon spent a mere $100 million destroying Diapers.com. But Uber’s investors financed a bonfire of $31 billion, losing $0.41 on every dollar it took in for the first 13 years of operations. Investors snapped up shares of companies like Google, whose ineptitude at creating successful new products was counterbalanced by its ability to buy other peoples’ companies.

As tech diversity declined, the industry's ability to capture its regulators increased. 

The early, chaotic years of the consumer internet were full of policy setbacks for tech companies. Recall the Napster Wars, when the entertainment sector—dominated by fewer than a dozen companies then, a number that’s halved in the ensuing quarter-century—comprehensively trounced the tech sector. Bedrock case law crumbled, like the “Betamax” decision (Sony Corp. of America v. Universal City Studios, Inc.) that immunized the manufacturer of any technology that was “capable of sustaining a substantial noninfringing use” from copyright liability. 

Congress and state houses introduced strings of bills intended to limit the tech sector’s ability to make new tools without permission from the entertainment company. Michael Powell’s FCC passed the “Broadcast Flag” rule, which required every single digital device to be fitted with technology that would disable file-transfers if a file was marked with a copyright restriction flag (the Broadcast Flag rule was struck down by the D.C. Court of Appeals in 2005).

Then, as now, the entertainment sector was a pipsqueak when compared to tech. By every measure—number of users, number of sales, total profits, profit margins—tech was bigger and (theoretically) more powerful than entertainment. But the difference was that all the power in the entertainment industry had been boiled down to a cozy cartel of frenemies who were capable of forming a united front in policy fights. By contrast, tech was a squabbling rabble. In every policy fight, some tech companies would defect, taking the entertainment industry’s side, muddling the message that regulators, courts and lawmakers heard. 

That disunity provided an opening in tech’s defense that entertainment drove straight through, again and again.

But there’s more than one way to solve a collective action problem. The tech sector’s solution was brutally simple: As tech companies merged and re-merged and re-re-merged, its policy goals grew less fractured. Tech companies that had once rudely shouldered their way into the market by reverse-engineering their rivals’ products—Apple, Google, Facebook—suddenly got DMCA-happy and began suing and threatening rivals who tried to do unto them as they did unto their own forebears. When Apple reverse-engineered Microsoft Office to make iWork, that was progress: If you were to try to do the same—say, to make a platform that could run iOS apps and play back media from the iTunes Store—Apple’s lawyers would nuke you until the rubble glowed. 

Everywhere questions of tech policy arise—U.N. specialized agencies like WIPO, standards bodies like the World Wide Web Consortium, expert agencies like the FCC, intergovernmental bodies like the E.U. Commission—tech arrives in lockstep to sing from the same hymnal. Their self-serving rhetoric is no longer checked by other commercial actors who speak with the authority of firms that serve millions of customers. 

To the extent that a counternarrative appears in the record, it comes from minuscule firms, hobbyists, activists, and academics. For regulators—especially regulators drawn from the ranks of large tech firms—giving them what they want is a no-brainer.

This policy unity has produced a regime where everything that is not prohibited is mandatory. Tech companies get to violate privacy laws where they exist (Europe) or prevent their passage altogether (Washington). They bypass labor law with the fiction that when an app is your boss, you are transformed into a “small business.” They circumvent consumer protection law, arguing that a pay-to-play system that fills our search results with deceptive lookalike products that are inferior to the goods we’re seeking is a form of “advertising.”

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Meanwhile, we are prohibited from taking countermeasures. A worker can’t reverse-engineer the Uber app to compare wages with other workers and algorithmically determine when a job offer is a lowball. A consumer can’t install an ad-blocker in an app without risking felony prosecution for violating the DMCA. An entrepreneur can’t mod the Amazon app to remove all the paid results and display comparison prices from rivals. An investigative journalist can’t scrape grocers’ websites to build the case that large firms are colluding to raise prices while blaming inflation.

Interoperability wasn’t killed by the reverse-engineer-proof computer nor by the lack of market demand for aftermarket modifications. It was killed by regulatory capture, arising from market concentration, arising from the bad idea that monopolies are efficient sources of consumer welfare, rather than deep-pocketed rent-seekers who leverage their scale to extinguish rivals, corrupt our politics, harm workers, and gouge customers.

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Cory Doctorow (craphound.com) is a special advisor to the Electronic Frontier Foundation (eff.org) and the New York Times bestselling author of dozens of books. Follow his newsletter at pluralistic.net.

This article first appeared on The American Conservative, September 14, 2023

“The palace is not safe when the cottage is not happy.”

Benjamin Disraeli, 1848

The year is 1900, and a fierce debate is raging in Liverpool’s City Council. On one side, Sir Archibald Salvidge is pressing for a “fair wage clause” to be inserted into council contracts. This is opposed by the leader of the Liverpool Conservatives, Sir Thomas Hughes. In the course of the heated debate, Salvidge claimed Hughes had never been known to advocate anything in the interests of the working man.

What makes this spat interesting is that Salvidge was a Conservative councilor. As the chairman of Liverpool’s Working Men's Conservative Association (WMCA), he was closely attuned to the demands of the working class (he was also the owner of a pub). Salvidge recognized that the only way to face the threat from a rising Labour Party was to take a more active role in local civic culture and to focus on economic regeneration. Under his leadership of Liverpool City Council, the city not only adopted his fair wage clause, but also, as Charlotte Wildman writes in her contribution to The History Boys: Lessons from Local Government’s Past, invested “in ambitious programmes of urban regeneration. In doing so, their vision and innovation revitalised local culture and ensured Liverpool not only survived but thrived during the most severe economic depression Britain has ever seen.”

Salvidge was one of a cast of Conservative politicians who came to embody the idea of “Tory Democracy.” As today’s U.K. Conservative Party flounders in the polls, a rediscovery of Tory Democracy provides a fresh approach to today’s economic, social, and civic decline to reheated technocratic managerialism.

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Tory Democracy is a political ideology that emerged within the Conservative Party in the United Kingdom during the 19th and early 20th centuries. Rooted in conservative principles, Tory Democracy sought to strike a balance between traditional values and the pressing need for social reforms to address the challenges posed by industrialization and social inequality.

For Benjamin Disraeli, Tory Democracy’s greatest proponent, “the great question is, not whether you should resist change which is inevitable, but whether that change should be carried out in deference to the manners, the customs, the laws, and the traditions of a people, or whether it should be carried out in deference to abstract principles, and arbitrary and general doctrines.”

One of the main drivers of Tory Democracy was the passing of the Reform Act in 1832, which expanded the franchise and forced local Conservative parties to engage with newly-enfranchised voters. The Reform Act in 1867, passed by Disraeli’s government, enfranchised part of the urban male working class by allowing all male heads of household to vote. As such, the Tory Democrat wing of the Conservative Party became more attuned to the demands and hardships of the working classes, and increasingly saw the state as a vital agent in addressing social problems in contrast to the laissez-faire free marketeers, who saw poverty as a sign of personal and moral failing. At its core, Tory Democracy is best summed up by Disraeli in his 1872 speech in the Crystal Palace, where he stated that the “great object of the Tory party, and one not inferior to the maintenance of the Empire, or the upholding of our institutions, is the elevation of the condition of the people.”

Tory Democracy was, of course, still Tory, and aimed to alleviate social suffering without undermining traditional institutions like the monarchy, the established church, and the House of Lords (as the Liberals wanted) or eroding class boundaries and stifling enterprise (as the Socialists sought). This is not to say Tory democrats were opposed to reform of these institutions, but rather that the value of these institutions was that they could alleviate the plight of the poor.

To this end, Disraeli utilized a rhetoric that claimed traditional institutions as being more concerned for the welfare of the people than the “oligarchs of Parliament,” who were cast as the enemy of the laborer and who sought power for power’s sake. This approach was so successful that historian William J. Wilkinson notes in his Tory Democracy that Disraeli was responsible for “stamping a tradition so indelibly upon the imagination of the workers, that when a Labour Government assumed office forty-two years after his death, the capitalist and not the monarch regarded the event with apprehension.”

If the class system is a British institution which should be kept, contra the goals of the Socialist, Tory Democrats see paternalism as the main method of alleviating the plight of the poor and thus ensuring the maintenance of social stability. Harking back to an idealized feudal system for inspiration, whereby the “hall” and the “cottage” had a common sympathy with one another, so wealthy employers should make it their duty to provide their workers with good conditions and good pay, from a sense of noblesse oblige, rather than striving solely for profit maximization.

Outside of the employer-employee relationship, the ruling elite should be responsible for the well-being of society as a whole, through philanthropic work and effective, responsible, and moral government that strove for social reform to smooth out tensions within society. As a result, the label Tory Democracy is a misnomer. Tory democrats did not especially value government by the people, in which the majoritarian will of the people is sovereign, but rather the idea of government for the people.

The paternalist obligation at the core of Tory Democracy is in clear contrast to 19th-century Liberals and laissez-faire Tories who believed the free market and free trade would deliver prosperity, and that social obligations outside the market did not have value.

As noted by Robert Eccleshall, the rhetoric of class reconciliation served several purposes. Many Tory Democrats did care for the plight of the poor and did want to advocate for a program of social reform. To them, society could be conceptualized as an organism, and like any organism, a sickness in one area harmed the whole. For others, social reform was good insofar as it held any socialist revolution at bay.

For others it served as a stick with which to beat the party leadership for lack of flair, or for aristocratic Tories to lament the decline of feudal responsibility in a party where the “moneyed interests” were in the ascendency. Later, in the early years of the twentieth century, it was used to urge a pragmatic yet progressive conservatism capable of steering a middle course between laissez-faire and doctrinaire radicalism.

Disraeli’s government in 1874 to 1880 was transformative. His government effectively decriminalized trade unions by allowing a breach of contract by an employer to be tried in a criminal court rather than a civil court, held that a trade union could not be prosecuted for an act which would be legal if conducted by an individual, and legalized peaceful picketing.

The Artisans’s and Labourers’s Dwellings Improvement Act 1875 allowed for councils to engage in slum clearance and to build new dwellings. The Public Health Act 1875 improved living conditions. For instance, local authorities had to provide sewage systems, all new dwellings had to include running water and drainage, and introduced compulsory authority medical officers and sanitary inspectors while the Factory Act 1874 reduced the working day for women and children to ten hours on a weekday and six hours on a Saturday. The Factory and Workshop Act 1878 consolidated all previous Factory Acts and made their enforcement much easier. So consequential was the Disraeli government that one of the first Labour M.P.s, Alexander Macdonald, said to constituents in 1879 that “The Conservative party have done more for the working classes in five years than the Liberals have in fifty.”

The phrase “Tory Democracy” entered public discourse when it was used, like many terms in British politics which soon became commonplace, as a pejorative, to describe Arthur Forwood when he contested (and narrowly lost) the 1882 Liverpool by-election. Forwood embraced the label, as “an indication of his commitment to ‘active and enlightened Conservatism’.” He presented a classic Disraelian policy platform: safeguard national institutions, uphold the empire, and deliver a “safely progressive policy” to prevent a working-class embrace of “Revolutionary or Socialistic ideas.” Not only did Forwood speak in principles, he also listed the types of progressive measures the Conservative Party should adopt: extension of the Employers’s Liability Act, household suffrage in the counties, redistribution of the endowments of the established church for the benefit of poor parishes, reform of Irish land laws, and in doing so, Eccleshall writes, “Forwood went into rather more detail than Disraeli was apt to do.” Forwood later became the MP for Ormskirk.

One man who was not happy with Forwood’s use of the term Tory Democracy was Lord Randolph Churchill, father of Prime Minister Winston Churchill, who claimed Forwood used the phrase “without knowing what he was talking about,” although, as noted by Eccleshall, Churchill “himself failed to provide even a rudimentary prospectus of progressive legislation. On some issues, indeed, Churchill was palpably unenlightened, and he used Tory Democracy, not to advocate extensive legislation in the interests of the working class, but principally as an oratorical device for persuading the electorate to cherish old-style conservatism.” A few years later, however, in 1886, Churchill, now in the cabinet, did flesh out Tory Democracy with a program including free elementary education, provision of smallholdings for agricultural laborers, changes in local government, and land reforms for Ireland.

It is important not to overstate the extent to which Tory Democracy gripped the Conservative Party at the time. Many contemporaries saw it as an inconsistent ideology. Lord Rosebery, a biographer of Lord Randolph Churchill, described it as “the wolf of Radicalism in the sheep-skin of Toryism.” For others, including within the Conservative Party at the time, such as Arthur Baumann, a hardline Conservative M.P. for Peckham, Tory Democrats were akin to radicals on the Left, whilst for Lord Eustace Cecil, later a Conservative M.P. in Essex, the Tory Democrats’ proposals simply appropriated Chamberlain's radical program. For critics, Tory Democracy was nothing more than opportunism for pseudo-liberals who were simply in the wrong party.

However, Tory Democrats admitted opportunism was one part of the drive for Tory Democracy. Disraeli that the policies in the Employers and Workmen Act 1875 would “gain and retain for the Conservatives the lasting affection of the working classes.” Support for the Reform Act 1867 was an opportunity to “dish the Whigs,” as was Lord Randolph Churchill’s opposition to the Liberal Government’s Employers’s Liability Act 1880 and Reform Act 1884. The irreverence of the Tory Democrats, however, hid a deeper acknowledgement that reform was inevitable given the changes in the electorate, and thus it was better the Tories, with their respect for tradition and the constitution, oversaw change rather than leaving it up to radicals, who would undoubtedly, and recklessly, go further. Furthermore, in the new electoral arena, the Conservatives had to win votes, and the ability to offer social reform offered another reason for the working man to vote for them over the Liberals or any nascent labour movement.

Tory Democracy was eclipsed by post-war Keynesianism, which itself fell as the global political and economic context changed, to be replaced by Ronald Reagan and Margaret Thatcher. The context has changed yet again, as the rising tide of global liberalism ebbs. Globalization, liberal economics, and increasingly individualistic societies have hollowed out our communities. Economies do not serve the people, but instead multinational capital flows. People do not feel like politics works for them.

Elements of the British Conservative Party recognized this, jolted to reality by the vote to leave the European Union. In the U.K., this has been given intellectual heft by the postliberal movement. Trumpism has dragged the U.S. Republican Party to an America-First political economy that has been somewhat aped by President Biden’s Inflation Reduction Act and CHIPS and Science Act.

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However, Tory Democracy teaches us a muscular political economy is necessary but not sufficient for a transformative right-program that appeals to the working classes. Economic reform must go alongside social reform. In the U.K. this means dealing with high housing costs and decentralizing political power.

The greatness of Disraeli was in identifying the fractures present in society and recognizing that the state was vital in combatting them. The challenge today is no lesser, but neither is the prize: a reforging of the alliance between popular conservatism and the working class. Tory Democracy offers a lesson for all those interested in taking up the challenge.

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

David Jeffery is a lecturer in British Politics at the University of Liverpool.

This article first appeared on The American Conservative, August 24, 2023

Conservatism is an engaging mix of freedoms. It combines the pursuit of prosperity with respect for the past. It is laced with personal responsibility and belief in family and nation. No successful Conservative government has held Britain up on the road to change and progress. They have embraced new technology and movements for change, while helping the institutions to evolve to embrace those innovations.

Conservatives saw the potential of free trade, came to see the importance of votes for everyone, accepted and developed the welfare state as social attitudes created movements for change. Conservatives saw the power of the railway, the steam age, the petrol engine, aviation, computing, and the worldwide web and did much to promote them.

Conservatives champion the freedom to think and speak as we will, to form our own associations, and enjoy the goods and services of a relatively free and competitive market. These are set in a framework of strong law and order, bound by the social ties of family and country.

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When I went to Downing Street to advise Margaret Thatcher in 1983, we were conscious of how much damage socialism had done to individuals and the country. Income tax rates up to 83 percent for work income and 98 percent for savings sapped enterprise and led to a brain drain as talent left the country. A huge, bloated state provided poor services at large cost, burdening the treasury and future taxpayers with enormous debts. Large nationalized monopolies charged customers too much for too little choice, threatened employees with redundancy and burdened taxpayers with large losses. The state owned too much, and people owned too little. The more the state subsidized, taxed, and regulated, the worse our economic performance became. The state overreached and people were belittled and bossed. The poverty of this approach during the 1970s was captured by the Labour government’s need to borrow from abroad and implement emergency spending cuts as the economy buckled under the weight of an overreaching public sector.

The core of the problem was economic. The failure to grow, innovate, and retain home-reared talent and ideas left a large state unable to afford a strong defense. The Labour government of the 1970s argued over where power should lie between the parts of the Union, losing referenda on devolution of government to both Scotland and Wales. It lost control of inflation, presided over a recession, and humiliated the nation by seeking a bailout from the IMF, an organization primed to help poorer countries.

The Conservative answer had to be change. We needed to release the talent of the nation, offer more freedoms, rebuild the U.K.’s reputation at home and abroad. I took to Margaret Thatcher the overarching idea of encouraging everyone to become an owner. She was well advanced with promoting home ownership through tax breaks and public housing sales. I helped her add the offer of shares in nationalized businesses to the many, employee ownership, employee buyout of state assets, personal ownership of pension savings, more self-employment, and more opportunity to create and build small businesses. Wider ownership opened up many more opportunities for many more people. The aim was to enfranchise the many in the economic life of the nation by becoming owners.

Central to the whole vision was the sale of around 10 percent of the wealth of the country from nationalized to private ownership. Breaking open state monopolies would lead to improved service, more choice, and more investment. The proceeds of the sales would finance the stronger defense and better funded welfare we needed.

We adopted a range of approaches to privatizations. National Freight was sold as an employee and management buyout. Lorry drivers and managers got together to own the firm. Attitudes changed with the change of ownership. There developed a can-do approach, a wish to fix the trucks, maximize their workloads and serve customers better. The business became very successful. Shares in British Petroleum were sold on the Stock Exchange as it was already a private sector group with a large private shareholders list. Large utilities including British Telecom, British Gas, and the nation's electric-power grid were recreated as private sector companies, with competition and regulation to get them to serve people better at competitive prices. Their shares were offered for sale to the public, the institutions, and the employees. Employees could buy on favored terms. Mass ownership of shares was advanced substantially by these offers.

The businesses were most transformed by competition. Telecoms leapt ahead. The monopoly nationalized supplier had previously rationed the availability of lines. It allowed a narrow range of rented equipment, mainly phones, to be connected. It ordered an old fashioned electro-mechanical switching system that other telephone companies in the world did not want buy, while the U.S. was pressing on with electronic equipment. The U.K. was about ten years behind the U.S. but caught up very quickly on privatization.

The electricity industry had been investing in large coal generating plants that only converted about 32 percent of the coal energy into electrical power. Following privatization, the industry switched to combined cycle gas power stations with around 55 percent thermal efficiency. The dash for gas was cleaner and cheaper, lowering power costs and air pollution at the same time.

Privatization of telecoms made the U.K.’s “Big Bang” revolution possible. The flood of new capital and large trading firms into London needed access to much more and better telecom capacity, which the newly privatized industry was able to provide freed of Treasury capital investment controls.

Increasing self-employment and small business was also an important part of the revolution.  Taxes were reduced to more competitive levels. Individuals were offered tax incentives to venture their capital and to build their businesses. Some regulatory burdens were streamlined. The VAT sales tax threshold was put up to the maximum the European Union allowed, so the self-employed could avoid early ensnarement in the costs and complexities of VAT. There were attempts to break up large public sector contracts to allow more small business access to such opportunities.

Reform of pensions and savings followed so people could identify with the wealth they were building for retirement. Self-invested individual pension accounts became available instead of having to save through a large employer scheme.

Policies were put in place to promote growth and better paid jobs in a range of run down areas from the East London Docklands to inner city areas across the country. Run down and closed down commercial and industrial uses were replaced by new buildings. The state intervened to kick start the process. Urban Development Corporations with powers and money to assemble and clean sites attracted large sums of private capital to build new commercial and residential districts. Canary Wharf, a whole new exciting business district, emerged from the empty docks and wastelands of east London.

Today Conservatism can benefit from the lessons learned during the Thatcher revolution. Conservatism works best when it trusts people more and offers choice. Monopoly industries run by the state offer poor value and often end with rationing, insufficient investment, and customer dissatisfaction. Free-to-user public services are popular, but they too need choice and competing suppliers to help them deliver the capacity and the quality people expect.

Conservatives believe in a strong state to do those things that only the state can do. People look to government for wise laws and fair and firm enforcement. They want a strong and effective defense for the country. The best way to live in peace is to be well-prepared for hostile actions by others, who will be deterred by effective defense and government resolve.

There should be clear and good laws, but not an excess of law. Conservatives should not believe in laws to bind government, or treaties that transfer government decisions on domestic matters to international fora and courts. The government has no need to legislate to hit certain targets. It should state a target and show by words and deeds how it plans to get there. It will be judged by results. It should not use legislation to give emphasis to what should be just a press release or statement of policy. Government policy statements are taken seriously if the government is firm of purpose and has a reasonable record of delivery. Making targets or policies a legal obligation can involve the courts in what should be the business of government alone.

Government should avoid unnecessary regulation and interference in the lives of people and the work of companies. It is no business of the government how I heat my home or get about. Of course, the safety of others and the avoidance of harms are important matters requiring national laws and standards, but this should not lead on to telling people what they can buy or instructing business on what they should make and offer for sale. It is free enterprise, competition, and choice that have powered most of the great improvements made in products and services over the last century. There is no need for government to legislate in detail on how to make a car or a heating system, or to ban ones it does not like. All should be subject to the same safety and environmental laws.

There are dangers in imposing too many taxes and too many complex rules for each tax levied. They get in the way of enterprise and freedom. High corporate taxes drive investment to other countries. The Republic of Ireland, with a corporation tax rate of just 12.5 percent, collects four times as much business tax per head as the U.K. manages with a tax rate double the Irish level. High capital gains taxes deter people from selling properties and financial assets they no longer need or like, standing in the way of better allocation of capital and real estate. High income taxes deter extra work and effort, encourage able people to leave the country, and impede the growth of family wealth and financial resilience. High taxes make welfare dependents of the many and tax exiles of the rich.

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Conservatives believe in freedom and enterprise, choice and opportunity. We believe in helping people to live fulfilling lives, recognizing and releasing the talents and energy within. We reject the gloom of the left who think people and the world have to be controlled by governments to avoid disaster. We do not want to live in a pocket-money society where most things belong to and much income is taken by the state, leaving people with what remains after the large demands of governments have been satisfied. We know from experience that well-intentioned government policies so often backfire. Rent controls to help tenants lead directly to a shortage of property. Subsidies to help investment lead to high taxes on business to deter it. State bans on products and services lead to an exodus of talent and activity to more permissive jurisdictions. Government going into business areas for itself usually leads to losses and more public debt. 

Conservatives back and trust people. Socialists back government to control people. Conservatives like roundabouts where traffic flows because individual drivers make good decisions. Socialists like traffic lights so government controls you and often makes you wait.

This article is part of the “American System” series edited by David A. Cowan and supported by the Common Good Economics Grant Program. The contents of this publication are solely the responsibility of the authors.

Rt. Hon. Sir John Redwood is the Conservative Member of Parliament for Wokingham, a former Secretary of State for Wales, and a fellow of All Souls College Oxford.