Strengthening Constitutional Self-Government

Programs for Citizens

Letters From an Ohio Farmer

A Commercial Republic

November 15, 2011

To My Fellow Citizens:

The United States was founded as a republic, but there was a spirited debate concerning the kind of republic the new country would be. Thomas Jefferson advocated an agrarian republic based on self reliant yeoman freeholders. He believed that domestic manufactures engendered dependence and corruption, both of which would undermine the virtues necessary to sustain republican government.

Alexander Hamilton, on the other hand, argued for a commercial republic. Only such a system, he thought, could provide the necessary conditions for the security, prosperity, and liberty of American citizens. Over the years, many have argued that the Founders saw commerce as a means of channeling the passions of the people, implying that the American republic is based on the narrow self interest of citizens. But Hamilton’s understanding was more elevated.

He saw a commercial republic as creating not only prosperous and free citizens but also virtuous ones. The obligations incurred through commerce and trade would, in Hamilton’s view, habituate the citizens of the United States to the virtuous and law-abiding behavior necessary for self-government and provide opportunities for developing the excellence of the human intellect.

In addition, Hamilton believed that commerce would provide the prosperity necessary for American greatness. A commercial republic would not only create the military and naval power necessary to enable a limited republican government to protect the natural rights of its citizens to their lives, liberty, and property, but also offer a hospitable environment for the most high-minded citizens to achieve the honors—even fame—they were capable of deserving for their exertions on behalf of their country. As Hamilton wrote in Federalist 72, “the best security for the fidelity of mankind is to make their interests coincide with their duty.”

Hamilton’s view prevailed and the United States has risen to become the most prosperous and powerful nation in the history of the world. But recent ongoing economic crises have undermined confidence in the commercial republic that for so long created wealth and power for American citizens. The reason for these economic crises can be traced to the abandonment of the very virtues that Hamilton sought to instill in his fellow citizens.

The virtue necessary to sustain republican government has been replaced with a sense of entitlement and debased dependency. Many Americans have come to accept the Progressive or European social-democratic idea that the purpose of government is not to protect the equal natural rights of individual citizens—the rights invoked by the Declaration of Independence: to life, liberty, and the pursuit of happiness—but instead to adjudicate the distribution of goods and services among competing claimants.

Those who take this position view the United States, not as a community of individuals, but as an array of groups whose demands must be met. But since government produces nothing on its own, certain favored groups prosper at the expense of others. Progressives invoke the language of rights, but what they mean by the term are privileges or claims to resources that are granted by government.

The result has been an explosion of government spending on behalf of client groups that threatens the financial stability not only of the United States but also of a global economy that depends on America’s financial stability.  Debt in and of itself is not the problem. As Hamilton proved, debt prudently managed on behalf of a government of limited power, can lubricate the wheels of commerce. But massive government spending to provide limitless entitlements for a dependent class of recipients produces not only economic problems but political and moral ones. The very concept of “entitlements” creates a dependency that is at odds with, indeed undermines, republican virtue.

At the same time, the U.S. government has pursued policies and imposed regulations tailor-made to destroy the spirit of entrepreneurship that fuels a commercial republic.  As a result, the American economy limps along, as businesses curtail hiring workers and avoid productive investment in the face of uncertainty about future economic policy. Like barnacles on a ship, government policies place a drag on the productive spirit of American citizens that is necessary to achieve the benefits of a commercial society.

In order to reap those benefits, it is necessary to reinvigorate that entrepreneurial spirit. This can only be done by reversing the culture of dependence that the demand for government-provided entitlements has engendered, which has separated interest from duty, contrary to Hamilton’s admonition. The primary goal of American statesmanship today must be to reunite the interest and duty of citizens, in Hamilton’s sense.

Ohio Farmer