Developmental Capitalism

By Hunter Wallace

This excerpt from Michael Lind’s Land of Promise: An Economic History of the United States will illuminate some recent debates here. I just got this book in the mail, but it describes the essential differences between the Hamiltonian and Jeffersonian camps of economics:

“Developmental economics holds that the basic unit of the world economy is not the individual or the firm, but the polity – typically an empire or city-state in premodern times and a nation-state today. Competition or collaboration among countries, rather than among households or companies, is considered to be the central fact of economics. Developmental states, whether democratic or authoritarian, have usually encouraged private property and private enterprise. But they have viewed the private and public sectors as collaborators in a single national project of maximizing the military security and well-being of the community by means of technological modernization, while minimizing dependence on other political communities. The market is good to the extent that it helps necessary national industries and bad to the extent that it hurts them. The government is not the enemy of the private economy, but its sponsor and partner. Developmental capitalism looks at the economy from the point of view of the manufacturer and the engineer, rather than that of the merchant or banker.”

As Lind points out, there are Hamiltonians of the right, left, and center, as well as liberal, conservative and centrist Jeffersonians. My own views are Hamiltonian, centrist, and authoritarian.

“The alternative in America to the Hamiltonian version of the developmental state is the antistatist tradition associated with Thomas Jefferson and his philosophical descendants. The term “liberal” is misleading, because developmental economics comes in liberal forms as well, so I will use a term that many historians use for the political economy of Jefferson and Smith: “producerism.”

In this tradition, the implications of economic power for military power, which are central to developmental economics, are ignored. In the utopia of producerism, competition in free markets among great numbers of producers who lack the power to manipulate prices to their own benefit is assumed to minimize the cost of goods and services. The central role of government-sponsored technological innovation in reducing prices over time, even in monopolistic and oligiopolistic markets, is ignored in producerist thought and its offspring, the academic school of neoclassical economics. Market-driven price reduction is equated with the interests of individuals as consumers. Other than a government with minimal defense and police functions, there is no public good or national interest distinct from the short-term interest of consumers in the lowest possible prices.

This vision of the economy translates into an adversarial vision of relations among governments and businesses. The purpose of the state is to remove barriers to free exchange among individuals and firms, and then, once those barriers have been removed, to limit its activities to enforcing the rules of competiton, as a “nightwatchman” or “umpire.” Cooperation by firms or their merger into large entities is viewed with suspicion and seen as a proper object of antitrust prosecutions. Producerist economics is hostile as well to collaboration between business and government.”

More here on the developmental state.

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  1. Good discussion of the economic factors behind America’s rise as an industrial giant. We also need to consider this for the future was nationalists gain political power.

  2. Not directly on topic with the present post itself, but has to do with the threads the present post continues:

    “In the spring of 1960 I was invited to serve as commencement speaker at an eighth-grade graduation in a coal camp school. The seven graduates received their diplomas in the dilapidated two-room building which had sheltered two generations of their forebears. A shower sent a little torrent of water through the ancient roof onto one of the scarred desks. The worn windows rattled in their frames and the paper decorations which had been prepared by the seventh-graders fluttered in drafts admitted by the long-unpainted walls. Outside, the grassless playground lay in the shadow of an immense slate dump and was fringed by a cluster of ramshackle houses. One of the graduates had been orphaned by a mining accident, and the father of another wheezed and gasped with silicosis. The fathers of three others were jobless.

    “The little ceremony was opened with the singing of ‘America the Beautiful,’ our most stirring patriotic hymn. The irony of the words, sung so lustily in such a setting, inspired the writing of this book. Perhaps it may help a little to bring the sad reality and the splendid dream a little closer together, for my friends, my kinsmen, my fellow mountaineers.”

    Those are the closing paragraphs of the introduction of “Night Comes to the Cumberlands,” Harry Caudill’s 1963 “biography” of Appalachian Kentucky.

    For the record, I’ll mention that my desk, where I’m typing this, sits at the point of origin of the Appalachian South. If you will check the map at the following link, you will see “Oxford Township,” which is now my neighborhood in northeast Philadelphia:,_1854#/media/File:Philadelphia_pre_1854_consolidation.jpg

    Harpers Ferry, via which whites migrated from the North down into the Southern reaches of the Great Appalachian Valley, was created by Robert Harper, who was born in Oxford Township. Since I don’t know exactly where, in this area, he lived, I have to say it’s possible he lived right where I’m typing this. If Charlestown, South Carolina, is the starting point of the plantation South, well, then, I’m going to say I’m presently sitting at the starting point of the Appalachian South.

    At the following, you may read that Harper was brought to what became Harpers Ferry to build a Quaker meeting house:

    As you know, the ancestors of the first Appalachians passed through Philadelphia; they entered the Great Appalachian Valley out near Harrisburg. Mechanicsburg, which is a town near Harrisburg, was a place where mechanics worked on the migrants’ wagons. I suppose it’s “burg” because some of the early settlers, who became the Pennsylvania Dutch, were German.

    Anyway: Greetings from the birthplace of interior Dixie.

  3. John, that’s a very nice story. My ancestors are credited with being among the original pioneers of the Shenandoah Valley, down through Bath (Berkley Springs) to the old Valley Pike, and west along Braddock’s Road and the Mason-Dixon Line.

    Thank you.

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