The Capitalist Foundations of America
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George L. Priest of Yale Law School and AEI’s Council of Academic Advisers delivered the last of the 2006-2007 Bradley Lecture series on May 14. Edited excerpts follow. A video of the lecture is available at www.aei.org/event1380/, and the full text is available at www.aei.org/publication26183/.

The foundations of this country were established by people seeking new and better opportunities for their lives--economic opportunities--and who sought the opportunity to employ their talents in the marketplace. The pursuit of religious freedom, of course, was an ambition of some. The desire for greater political control, similarly, was significant, but I will argue significant instrumentally in order to make possible economic advances. The defining ambition of the founding of America was to achieve economic improvement.

The dominant interpretation today of our nation’s founding is what has been called the "republican synthesis." It derives from the study of the American Revolution and of the rhetoric of the criticism of British colonial rule as that criticism escalated into outright revolt. What became the synthesis was initiated in a political interpretation put forth by historian Bernard Bailyn in his study of political pamphlets prior to the Revolution; advanced by historian Gordon Wood in his book The Creation of the American Republic, which extended the interpretation to the aftermath of the Revolution through the adoption of the Constitution; and solidified when both wrote further important works emphasizing the centrality of republican values to justify colonial revolt. The synthesis was importantly extended by Edmund Morgan, [who] defined what he called "the Puritan ethic," a set of values of New England Puritans [who] prized frugality and were distrustful of luxury and committed to a renewal of virtue.

As a political and ideological interpretation, the "republican synthesis" at best neglects economic motivations and economic forces, though it is not unfair to say that it devalues them. It defines political commitment as the primary relationship of a citizen to the society. And by emphasizing the distrust of luxury, extravagance, and avarice, and the importance of public over private interests, the synthesis might be thought to be antagonistic to capitalism. I believe this is a mistake. . . . I shall attempt to show [through vignettes of American capitalism] that economic advancement, not the achievement of political equality, is far more central to the history of this country than has been appreciated.

The narrative that defines the pursuit of freedom of expression and political equality as central to the history of the country begins with the Puritans: religious dissidents who immigrated to Massachusetts to avoid religious persecution. The history of the country, however, begins earlier.

  • From a European standpoint, the continent was discovered by Columbus in 1492. Motivations are difficult to evaluate, but Columbus and his crew did not come to America for the public interest, to create a republic, or even as employees of his patrons, Ferdinand and Isabella, who might have had such goals. They came for profit.
  • The earliest colony in America was Virginia. The first Virginia colonists were not religious dissidents, but Englishmen looking to improve their lives. . . . The Virginia Colony was a joint-stock corporation through which a small group of English investors obtained a grant from the Crown to establish a colony in Virginia, chiefly with the thought of profit from minerals. . . . The Virginia Company sought to lure colonists to man the venture by promises of profits. . . . According to the terms of the contract, the division of lands and profits was to be made after seven years, and each colonist would own a share equal to a share of an English investor. As a profit-aspiring enterprise, the colony proved to be a failure. It was an abject failure when operated--as it was initially--on a communal basis: few worked; the majority died. . . . [W]hen the colony shifted the basis of its organization by allocating private property rights, it became more prosperous. No important minerals were discovered, and the venture never recorded a profit. But the deaths stopped and the population expanded.
  • The founding of the Massachusetts colonies is significant within the dominant historical interpretation of the country as illustrative of the country’s commitment to religious and expressive freedom. The Pilgrims immigrated to New England to avoid religious persecution. Colonies derivative from Massachusetts, such as Rhode Island and Connecticut, were founded by further religious dissidents: those dissenting from the Puritan dissenters. The actual history is somewhat different. . . . The Plymouth settlers had lived in the Netherlands for eleven or twelve years before their decision to immigrate to America. . . . According to William Bradford in Of Plymouth Plantation, the determining reason for leaving the Netherlands was economic, not religious. They possessed religious freedom in the Netherlands, but they could not obtain good jobs.

[These examples and others show] that economic improvement, not political participation, is the central and defining value of our country.

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About the Author

 

George L.
Priest
  • George L. Priest is the Edward J. Phelps Professor of Law and Economics and Kauffman Distinguished Research Scholar in Law, Economics, and Entrepreneurship at Yale Law School. Over the past two decades, he has focused his research on antitrust, the operation of private and public insurance, and the role of the legal system in promoting economic growth. Priest joined Yale Law School in 1981 and is co-director of the John M. Olin Center for Law, Economics and Public Policy. Earlier, he taught law at the University of Chicago; the University at Buffalo–State University of New York; and the University of California, Los Angeles. Priest is also chairman of AEI’s Council of Academic Advisers.

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