Monday, July 16, 2007

19th century US Farmers Vote for Smithian Policies

Bruce Miller writes a Blog called: ‘The Blue Voice’ and has contributed a fairly long, thoughtful retrospective review article on William Appleman Williams' book (1969), The Roots of the Modern American Empire: A Study of the Growth and Shaping of Social Consciousness in a Marketplace Society, Vintage Books, or ‘Roots’ (here)

I have extracted below references to Adam Smith:

Farmers, the railroads and Adam Smith’

Williams makes another important point in connection with the "Smithian" outlook of the farm businessmen. Their famous battles for better regulation and the railroads, and even for publicly-owned railroads, was based on a particular understanding of how a capitalist economy should work:

[Adam] Smith likewise provided a solid critique of monopolies, and of the misuse of the government by special coteries of metropolitan interests. The farm businessmen were also aware that Smith offered careful and even sophisticated justification for government actions, such as those concerned with improving transportation or checking monopolies, that were designed to strengthen the structure and guarantee the freedom of the marketplace itself. And their own experience, particularly after the 1840s, steadily reinforced their understanding and acceptance of Smith's great stress on the necessity of the sustained expansion of the market as the dynamic engine of continued progress and freedom. (Miller’s emphasis)”

This concern for regulating railroads' rates and practices was also heavily related to farmers' concern for access to the export market. "The farmer's concern with transportation costs, which arose directly out of his routine involvement with the foreign market, was the primary cause of his increasingly vigorous attack on the railroads" (my emphasis). So, the railroad fight themselves played an important role in shaping the agricultural majority's concern for public policies on the export markets.”

“…But Williams also explains that the "agricultural businessmen" were operating with an understanding of the world based on Adam Smith's classical economic theories. Smith stressed the importance of foreign trade. And he emphasized the need for free trade without the kind of restrictions that the British mercantilist system of his time imposed. Smith's American admirers also held the conviction that the spread of free trade would convince those who benefitted from it of the virtues of a capitalist free market economy. And that along with spread of capitalism would come democratic and liberal institutions. Their notion was "a fair field with no favor" in the global marketplace, as Williams puts it. And they believed democracy would follow.”

Unusually, this retrospective review published on the Blog on 15 July 2007 of a book published in 1969, was so interesting and well written, I did not jump to the references to Adam Smith first.

The subject was interesting and covered ground I knew nothing of. I have been busy on my Adam Smith books all day, having lost writing ground this week-end with the birth of a grandchild (a most wonderful diversion from the usual daily grind and one I much enjoyed).

I expect the issues in the book by Williams were controversial and I can see the connection the farmer’s lobby made with Adam Smith. He envisaged that the British American colonies, because of their empty territory to their west and the abundance of land per head of the population of immigrants, would continue to enrich them as productivity based on agriculture would continue to rise. The colonies are a high-wage economy because labour was scarce and new labourers arriving from Europe would work for high wages at first and then take the plunge and become farmers in their own right, thus denuding the labour force again and adding to the bidding up of wages.

Smith believed that in a hundred years (circa 1880) the former colonies would be the richest country on earth. As he knew nothing of the impending industrialisation that was a few decades ahead, Smith based his prediction entirely on the growth of agriculture with a smaller manufacturing base serving the community. By the 1880s the USA was already a thriving industrialised economy, with a rich agricultural sector. It was the policy tension between these two powerful sectors that drove US politics from the dispersed constituencies in the cities and the rural hinterlands.

That the agricultural lobby took up Smith’s references in Book V of Wealth Of Nations on the government’s role in promoting ‘public works and institutions facilitating the commerce of society’ is not surprising. Given Smith’s prestige it must have been a powerful narrative for aspiring politicians from the sector. That public ownership for rail roads was considered must have driven some electors to the ‘left’ (is this where the ‘Farmers and Labour’ ticket came from?) and others who hostile to city business would have been re-assured if Smith was supposed to be in favour too.

I like the notion that America was ‘full up’ and must expand elsewhere, though I am unimpressed that this involved capturing some small island groups (Philippines, Samoa, Cuba), hardly places that could relieve either US population pressure(?) or prove a vent for US agricultural exports.

There is so much more in the article that it must be of interest to US readers and I heartily recommend it to all.


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