================= HES POSTING ================= This is a short extract from my forthcoming book: The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation (Duke University Press, Spring 2000). Alexander Hamilton and Adam Smith Of all the founding fathers, Hamilton was most inclined toward the mind set of political economy. Scholars have noted certain parallelisms between the work of Hamilton and the Wealth of Nations (Gourne 1894; Mitchell 1962; 2: pp. 144, 146, and 149; and the editorial notes in Hamilton 1961; 10: pp. 1-240). William Grampp even suggests that a reading of Wealth of Nations was sufficient to wean Hamilton of his earlier mercantilist leanings (Grampp 1965, pp. 134-36). In fact, Hamilton's ideas were remarkably close to those of Steuart. Both thought that institutions other than the market were required to integrate the economy. Hamilton approved of Steuart's popular monetary theories because they would "cement more closely the union of states" (Hamilton 1961-; 7: p. 70). Indeed, the same metaphor can be found in Steuart where statesmen are called upon to "cement" their society (Steuart 1767; 2: p. 191). Elsewhere, Hamilton praised debt and the army as cement for the union (Hamilton 1961-; 2: pp. 635, 402; see also 3: 4, p. 29). Steuart's influence was readily apparent in Hamilton's Report on the Establishment of a Mint, which drew heavily on the work of his master (Hamilton 1961-; 10: p. 462). Although Hamilton did not explicitly acknowledge Steuart, an early draft did allude to him as "an English writer of reputation who appears to have investigated the point with great accuracy and care and who accompanies his calculations with their data which are confirmed by other authority" (ibid., p. 482). In his most systematic study of the limits of the market, Hamilton lashed out at those "who maintain that trade will regulate itself" (Hamilton 1961-; 3: p. 76; see also ibid., 15: p. 467). He continued: "Such persons assume that there is no need of a common directing power. This is one of those wildly speculative paradoxes, which have grown into credit among us, contrary to the practice and sense of the most enlightened nations" (ibid.). Hamilton's most noteworthy contribution to economic theory proper was his Report on the Subject of Manufacturers (Hamilton 1961-; 10: pp. 1-340). In spite of the frequent appropriations of observations from Smith, the intent of the document was decidedly unsmithian (ibid., p. 7; see also Cooke 1967, p. 81). Hamilton wrote of the division of labor, but his division of labor was Steuart's, not Smith's. He began with the assertion: It has just been observed, that there is scarcely anything of greater moment in the economy of a nation, than the proper division of labour. The separation of occupations causes each to be carried to a much greater perfection, than it could possibly acquire, if they were blended. [Hamilton 1791, p. 249] To create an appropriate social division of labor, Hamilton called for the "separation of the occupation of the cultivator, from that of the Artificer" (Hamilton 1961; 10: p. 251) by "diverting a part of its population from Tillage to Manufactures ... leaving the farmer free to pursue exclusively the cultivation of his land and enabling him to procure with its products the manufactured supplies requisite either to his wants or to his enjoyments" (Hamilton 1961; 10: pp. 216 and 261-62). Hamilton recommended that the state enact a continual tax which would act as "a Motive to greater exertion in any occupation" (ibid., p. 280). Like Steuart, he saw industry as engaging those "willing to devote the leisure resulting from the intermissions of their ordinary pursuits to collateral labours" (ibid., p. 253). In short, Hamilton rejected "the proposition, that Industry, if left to itself will naturally find its way to the most useful and profitable employment: whence it is inferred that manufacturers without the aid of government will grow up as soon and as fast, as the natural state of things and the interest of the community may require" (ibid., p. 266). Steuart could not have said it better. Smith's unimportant role in the development of Hamilton's thought is suggested by one source, who noted that Hamilton had actually prepared a critique of Wealth of Nations during his term in the Continental Congress (ibid., p. i; and Hamilton 1879, 2: p. 514). Michael Perelman [log in to unmask] ============ FOOTER TO HES POSTING ============ For information, send the message "info HES" to [log in to unmask]