Federalist Papers – Hamilton argues for a free market

Posted by Jason | Posted in Economics, Government, History | Posted on 03-11-2009

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In the Federalist Paper No. 12, Hamilton is arguing for the Constitution and the Union by discussing the benefits of the Union to raising revenue for the government. Quickly, Hamilton highlights something modern day socialists somehow forget, that through self interest, what they call greed, all members of society benefit.

Hamilton writes, “The prosperity of commerce is now perceived and acknowledged by all enlightened statesmen,” except for modern day socialists, “to be the most useful as well as the most productive source of national wealth, and has accordingly become a primary object of their political cares.” What Hamilton is saying is all enlightened (educated) men of this time period recognize that commerce (free trade) is the best way to build national wealth. Because this is known to be true, enabling free trade has become the object of their policy.

He continues, “By multiplying the means of gratification, by promoting the introduction and circulation of the precious metals, those darling objects of human avarice and enterprise, it serves to vivify and invigorate all channels of industry and to make them flow with greater activity and copiousness.” Here Hamilton is stating the government should encourage trade by “multiplying the means of gratification”. He talks about precious metals as “those darlings objects of human avarice and enterprise”. Basically, he is saying money and the want of more money (avarice or as socialist like to say, greed) drives people to work more and to produce more for society (enterprise).

“The assiduous merchant, the laborious husbandman, the active mechanic, and the industrious manufacturer – all orders of men look forward with eager expectation and growing alacrity to this pleasing reward of their toils.” What? You mean all these men look forward to earning profits? Those bastards! Hamilton recognizes that it is the reward of profits that causes the merchant, the farmer (husbandman), the mechanic, and the manufacturer to be productive, and the more reward the more productive they will be. He uses words such as assiduous (unrelenting) merchant, laborious (extreme effort) husbandman, active (involving physical effort)  mechanic, and industrious (working energetically) manufacturer.  He uses these words to emphasize it’s the profit motive that creates these behaviors. With no profit motive, you do not have the productiveness of these men.

Next Hamilton discusses how everyone benefits from the free market, even those who think they don’t. “The often-agitated question between agriculture and commerce (basically labor and businessmen) has from indubitable experience received a decision which has silenced the rivalship that once subsisted between them, and has proved, to the entire satisfaction of their friends, that their interests are intimately blended and interwoven.” Notice that Hamilton basically says that the interest of both labor and businessmen are interwoven. Government cannot benefit the laborers by punishing the businessman. In doing so, he also punishes labor.  He continues, “It has been found in various countries that in proportion as commerce has flourished land has risen in value. And how could it have happened otherwise? Could that which procures a freer vent of products of the earth, which furnishes new incitements to the cultivators of land, which is most powerful instruments in increasing the quantity of money in a state – could that, in fine, which is faithful handmaid of labor and industry in every shape fail to augment the value of that article, which is the prolific parent of far the greatest part of the objects upon which they are exerted? It is astonishing that so simple a truth should ever have had an adversary;” Apparently, it still has it’s adversary in modern day politicians, socialists, and labor unions, who believe that free markets don’t help everyone. But Hamilton explains, how could you increase the value of one without increasing the value of the other? You can’t increase the value of what labor produces without increasing the value of labor. Both parties benefit.

Lastly, “and it is one among a multitude of proofs how apt a spirit of ill-informed jealousy, or of too great abstractions and refinement, is to lead men astray from the plainest paths of reason and conviction.” Wow, Hamilton points out that jealousy leads men astray from reason and conviction. How true is this in modern society? While everyone truly knows that government produces nothing, many today still want the government to intervene in the free market because of jealousy. They are jealous of the rich. Because of their jealousy, they are blinded to reason which would highlight the errors of their ways. Does this remind you of the tax the rich argument? They need to pay their fair share! Who cares if they have benefited society more by creating jobs, services, products, etc. They don’t deserve that much more than the poor. Low and behold though, when government takes more of their money, they don’t create as many jobs, services, products, etc, and we are all worse off because of it. These are simple truths, but jealousy, as Hamilton points out, leads us astray from reason.

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Comments (2)

What a sad intepretation of such great communications…this was so disappointing of a read. I feel as if three and half minutes of my life were completely wasted on writing that clearly has a partisan agenda. Which is even sadder since one of the intents of “The Federalist Papers” was to insure bi-Partisanship.

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Kinda funny since I don’t belong to any party.

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