Alexander Hamilton and Capitalism: Making America
Alexander Hamilton, the first treasurer of the United States, knew there was a better way for countries to become prosperous than by conquering others. What was his plan, and did it work? Dinesh D’Souza offers an assessment.
This video is part of a 5-part series. Click here to watch the entire Making America series.
For most of human history, wealth was presumed to be finite.
Consider a boy on a playground with 10 marbles. How can he get more? There is only one possibility. He has to take someone else’s marbles.
Until relatively recently, wealth was mostly in land and the only way to get more land was to take it. Conquest was the natural mode of human acquisition.
And that’s how most countries evolved and grew—through force and conquest.
The American Revolution was motivated in large part by resistance to this old way of doing things. To put it mildly, the colonists didn’t like the idea that the English crown could take their money or property without their consent.
“No taxation without representation,” they protested.
Still, the control of money and property was only part of the picture. The bigger challenge would be this: could the New World find a better alternative to the Old World’s conquest-and-seizure model?
Alexander Hamilton, the first treasurer of the United States, had the answer.
Under his brilliant stewardship, the new nation developed a new concept of wealth creation: capitalism—based on innovation, invention, and enterprise. And it would be available to every citizen from any background with the willingness to work for it.
America could get more marbles without seizing anyone’s marbles. We would just make new ones.
True, later in America’s history, the government seized Indian land, but that wasn’t Hamilton’s idea.
And, obviously, there were inventors and merchants around before America. But America is the first society to be based on invention and trade. America, as Karl Marx later understood, is the capitalist society par excellence.
Hamilton was the man who made it so.
Indeed, Hamilton’s own life reflected the upward mobility he wanted to be a defining characteristic of the new nation.
Born on the small Caribbean island of Nevis, he was orphaned at 12. By 14 he was running a shipping company for a local merchant. At age 20, he made his way to New York. Soon thereafter he fully embraced the revolutionary cause. By 23, he was George Washington’s most trusted aide. At 34, he was running the US Treasury, the largest department by far of the new government.
In contrast to Hamilton, the other leading founders—Washington, Jefferson, Madison—were Virginia farmers. If it were up to them, America would have been set up as a network of farming communities, with towns conceived as places where agricultural produce was bought and sold.
It was Hamilton who laid the groundwork for America to become a prosperous urban, industrial, commercial society.
Hamilton envisioned America as a nation whose nuclei would be cities, centers of vigorous invention, innovation, and trade, with new types of people—entrepreneurs, mechanics, financiers, salesmen, and so on—all working to enjoy the “pleasing reward of their toils.”
But how to create such a society? That was the question. How to make New York, which was then a modest town, into the New York City we know today: a flourishing center of finance, commerce, publishing, and the arts?
Coming from the islands of the West Indies, where the buying and selling of human beings was the defining feature of the economic system, Hamilton well understood how easily the passion for conquest—control over other human beings—could overwhelm man’s better nature.
Yes, slavery was a lamentable feature of the new country. The question for the pragmatic Hamilton was how to get rid of it—not immediately—that was impossible—but eventually, inevitably.
In his mind, there was only one way: make it as easy as possible for as many people as possible to become as prosperous as possible. This would happen through the myriad ways of commerce.
A commerce of this sort, Hamilton knew, would require a strong central government; not to curb freedom but to protect it.
The elaborate system of rights and contracts on which capitalism is based requires a government to be the neutral arbiter of the disputes that inevitably arise. A weak central government of the sort envisioned by Jefferson would not be up to that challenge. To say that these two intellectual giants butted heads over this question would be an understatement.
Fortunately, Hamilton’s vision prevailed.
That vision included one more crucial component, one that is easily overlooked: patent protection for inventors and innovators.
Article 1, Section 8 of the US Constitution gives Congress the power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
No less a figure than Abraham Lincoln would note that this right—the only right listed in the original Constitution, prior to the addition of the Bill of Rights—accelerated the economic development of the United States by adding “the fuel of interest to the fire of genius in the discovery and production of new and useful things.”
It was no accident that within a matter of decades the United States became the most prosperous nation in world history.
It’s no accident because Alexander Hamilton was there at the founding—the man who understood that, thanks to capitalism, you don’t have to take anyone else’s marbles to get more marbles of your own.
I’m Dinesh D’Souza for Prager University.