Once both Central Powers and Triple Entente nations were well along the path to economic recovery, thanks largely to the Dawes Plan, US investors came to be awash in debt. J.P. Morgan—the same investment house that had handled England’s huge wartime debt—also masterminded the huge debt relief package that brought Germany’s debt under control and enabled Germany to begin paying off its debt to France and England; which, in turn, enabled France and England to repay its war debts to US investors, with interest.

This made US the largest creditor nation and explains how the US came to succeed Great Britain as the world’s fourth hegemon (after Italy, Holland, and Great Britain); i.e., the primus inter pares without whose agreement international trade and commerce could not take place and whose laws and holdings therefore shape the global economy.

But, of course, US investors needed to find places to invest their riches and this, more than anything else helps to account for the seemingly contradictory turn inward by US politicians and turn outward by investors. Political Economy students will need to reflect more carefully on this potentially toxic combination. For it suggests that defense policy will increasingly follow instead of lead. American investors buy up huge chunks of territory and resources whose export, trade, exchange, or processing into finished goods fuels the health of the markets and and well-being of American citizens. But the protection and securing of these foreign investments in turn therefore come to be of interest to the Department of War (subsequently the Defense Department) which then has a vested interest in protecting these private investments.

How might free markets foster this unintended consequence?

In his book The Post-American World, Newsweek International Editor Farheed Zakaria justifies Paul Volker’s draconian anti-inflationary measures beginning in 1981 by suggesting that high inflation is much more dangerous than high unemployment because high inflation deprives individuals of what they have already earned, invested, or saved, while high unemployment deprives individuals only of their present and future earning capacity. Mr. Zakaria refers in this context to the repercussions that followed from hyperinflation in Europe, particularly among the former Central Powers and allies, following World War I.

Although in purely economic terms Mr. Zakaria is surely correct, may there be some value in reflecting, on the one hand, on the effects high unemployment has traditionally had on working families, and, on the other hand, on the alternatives leaders of the former Central Powers could reasonably choose in light of their destroyed industrial capacity and towering debt connected to the Versailles Treaty’s “war guilt” clause. Since Germans had neither the industrial capacity to raise sufficient capital to pay this debt nor sufficient reserves, and since it was only much later that Americans would lend to Germans at a reasonable interest rate, what were the alternatives open to such leaders?

Do economists or–in the case of Mr. Zakaria–public intellectuals have a responsibility to call attention to impact economic policies are likely to have on social and political events?

No one disputes that US investors were huge beneficiaries of World War I. Nor does anyone dispute that historically private weapons manufacturers and financers have benefited from wars going far back into the Middle Ages. As we will see when we read G Arrighi later in the semester, since they are often guaranteed by governments or (in monarchies) governing families and since they appear at times of extreme need, wars are among the most profitable investments investors can make. But their benefits are not universal. Just as Italy and Spain were losers in the conflict between Spain and Holland (16th century), or just as Spain, Germany, and France were losers in the conflict between Spanish and England (17th century), so Germany and England were losers in the two conflicts that gutted Europe mid-twentieth century.

The truth is, so long as nations go to war, someone needs to put up the capital to finance those wars and someone needs to produce the weapons that belligerents purchase in order (they hope) to win those wars.

It is less often remarked how those who finance and supply warfare are politically and economically empowered by their readiness to lend capital and produce weapons, stealing much more of a share of the market and garnering much more political influence, relative to their competitors and relative to other sectors, than they would have in the absence of war.

As a very young JM Keynes commented in 1917:

The sums which this country [Great Britain] will require to borrow in the United States of America in the next six to nine months are so enormous, amounting to several times the national debt of that country, that it will be necessary to appeal to every class and section of the investing public. . . . It is hardly an exaggeration to say that in a few months’ time the American executive and the American public will be in a position to dictate to this country on matters that affect us more dearly than them.

Yet bankers and weapons manufacturers often feign indifference in the causes of war and peace, almost as though they are merely responding to popular political “demand” (and not the rational drive to maximize return on investment).

Considering the delegation that Woodrow Wilson brought with him to Europe following the war, composed largely, as J Frieden observes, of “representatives of Wall Street [such] as [J.P.] Morgan’s Thomas Lamont, Norman Davis, Bernard Baruch, and a young John Foster Dulles”—a pattern repeated in nearly every major previous conflict and every conflict since—it is easy to see why some might see war financiers and suppliers as “merchants of death.”

Do economists have a responsibility to consider the benefits bankers and weapons manufacturers gain from conflicts between nations?

Economists often take on the Great Depression to show that their theories pass muster. JM Keynes wrote his General Theory in part to show that Classical Economic Theory only covered the special (and rare) case when an economy enjoyed full employment. M Friedman countered with a series of articles and books in the 1950s that showed how government intervention deepened and lengthened the Great Depression. Yet, how can economics—which attempts to recognize and formalize the aggregate decisions of delimited communities—adequately take into account Käthe Kollwitz’s despair? Why did J Frieden begin a chapter about the onset of the Great Depression with this story?

Economists are famous for dismissing—at the peril some argue of both their theories and their societies—the social and political consequences of economic events. Despair, such as that experienced by Ms. Kollwitz, often propels people to action and their actions often give rise to economic events that are entirely unanticipated by economists. Do economists have a responsibility to consider the effects of economic events on social and political forces?

The cascade of unanticipated events unleashed by World War I and its aftershocks is bewildering. But so too is economists’ naïveté over the possible repercussions of economic events leading up to that War. Imperialism, colonialism, and militarism are only the most obvious of the economic processes that gave rise to World War I. Even if economists are not responsible for controlling these processes, how might they account for them in their theories? And, if economists are not responsible for their failure to take these processes into account, then of what value can their economic theories be in helping us to understand the world or predict how economic policies and decisions will shape the world of tomorrow?

(To get us thinking about this, you might want to reflect on the costs and benefits of WWI, WWII, the Holocaust, the Rise of the Soviet Union, the Cold War, anti-imperial and anti-colonial conflicts, etc.)

As analysts and economists bewail the Republican Party’s utter incomprehension of the most fundamental macroeconomic principles, they seem completely oblivious to the historical precedent the Republican Party appears to be following. No doubt, the dock workers and laborers who donned costumes and tossed tea into the Boston Harbor all these many years ago were tired of paying for the British military occupation of their own country. And they were tired of the British taxing their second most favorite beverage. But, how many of those hoodlums were invited to the Constitutional Convention in Philadelphia fourteen years later?

None. That’s because one of the leading aims of the meeting in Philadelphia was to empower the federal government to tax citizens in all of the thirteen states, an aim none of the participants in the original tea party would have countenanced. In their view, a nation that restored the authority of the central government to tax the citizens of individual states would amount to nothing short of restoration of monarchy. And they said so explicitly.

It was the intransigence of these original tea partiers that provoked the Constitutional Convention. For, as Virginia’s Edmund Randolph put it when introducing his outline of the new Constitution:

The Confederation produced no security against foreign invasion; Congress not being permitted to prevent a war, nor to support it by their own authority. Of this [Randolph] cited many examples; most of which tended to show theft they could not cause infractions of treaties, or of the law of nations, to be punished; that particular states might, by their conduct, provoke war without control; and that, neither militia nor drafts being fit for defence on such occasions, enlistments only could be successful, and these could not be executed without money (Elliot’s Debates, May 29, 1787).

Then as now the tea partiers would rather have seen the ship of state scuttled than secure its financial integrity.

But they were, in effect, locked out of the meeting, leaving the fiscally responsible delegates from each of the states free “to form a more perfect union” as the Preamble puts it.

So, where does that place today’s successors to the original Tea Party? At the very least, they display a remarkable (or not so remarkable) lack of understanding of the most basic Constitutional principles. They want us to scrap the Constitution and start over. In effect, they are asking for a Constitutional re-do. Which is fine. Our Constitution and Bill of Rights make allowances for this possibility.

Unlike 1787, however, the fiscally responsible members of each party have no authority to lock these hoodlums out of our meetings. Their popular support is too strong, their Congressional delegation too large. Which is why “we the people” must do what Congress cannot. First, we need to use whatever means we have—which means our Constitutionally protected freedoms (press, speech, association, religion)—to disempower these enemies of the Constitution. Corporate campaign donors need to deprive them of their source of revenue. Individual donors need to send their money elsewhere. Second, we need to use these same means to get the Tea Party out of Congress and out of the Republican Party.

Finally, the Republican Party itself needs to recommit itself to “public things,” to res publica, and to the wealth we hold in common (hence the Commonwealth). Or they should have the guts to publically disavow their claim to republican values and institutions and change their name, perhaps to the Tea Party. In either case, the Republican Party should make clear either that their delegation continues to support the U.S. Constitution and the Federal Government’s right and responsibility to manage—yes, manage—the finances of their nation or Republican office holders should clearly and unmistakably disavow the Constitution and (no longer able to swear to uphold the Constitution) they should step down from office.

 

As Texas Gov. Rick Perry Enters GOP Race, New Exposé Reveals His Close Ties to Radical Evangelicals

If you have not heard Amy Goodman’s report or read Forrest Wilder’s article in the Texas Observer, I want you to do so now. And if you are one of the many Christians who follow my blog or link to me on Facebook or Twitter, I want you to think carefully before you support Rick Perry or his Dominionist campaign for the White House.

One widely used definition of fascism is “solving political, social and economic problems culturally.” What I find disturbing about Governor Perry is not that he is a (small “f”) fascist, but that he has been able to attract such a large following within the conservative Evangelical world to his brand of fascism.

According to this brand of fascism, the political, social and economic woes of our nation are but a surface effect of a deeper spiritual and hence cultural malady the only solution to which is national repentance.

Now, to those political conservatives who follow this blog or link to me on Facebook or Twitter, but who reject Dominionism, I want you to know that Dominionism is more powerful than the momentary political advantage you feel you can get from it. Whenever you divert attention away from what are real economic, social and political traumas and when you buy into the rhetoric of cultural warfare, you are feeding the Dominionist movement. When the Dominionists win, I guarantee that they will not care the least about your economic, social, or political agenda. You will lose.

So it is time that you rethink the rhetoric of cultural warfare. Governor Perry wants to recruit you for his Christian army. Don’t join.

IX. The New Pericles

Approval of the document patched together in Philadelphia, the U.S. Constitution, was by no means assured. In a nation whose population numbered nearly 3 million, the Constitution reflected the political, economic, educational experience and judgment of fifty-five highly educated, wealthy, white men.  And, to no one’s surprise, it created institutions that were, in almost every respect, identical to those found in England. As in England, so in the United States, government policy would be carried out by an executive that was not popularly elected—in England a Prime Minister, in the United States a President. As in England, so in the United States, the larger chamber would consist of popularly elected representatives—in England a House of Commons, in the United States a House of Representatives. And, just as in England, so in the United States, one chamber, the so-called “aristocratic” branch of the legislature, would be reserved for men not subject to direct popular election. Their charge would be to protect property, wealth, and privilege.

Even more disturbing, at least to anti-federalists, was how the Constitution restored to this federal government the right to raise revenues from the states and to impose federal laws upon those states without ever having to receive approval from state legislatures. Thus, in the eyes of many, the U.S. Constitution restored the very conditions—taxation without representation—over which the War for Independence had been fought in the first place. This was no Tea Party platform.

All of this may seem odd, until we remember that nowhere among its four and a half thousand words is there the least hint of “democracy.” That is because the United States were constituted as a Republic, a federation of states legally bound together by a constitution under the governance of three branches and, as Article IV, Section 4, explicitly states: guaranteeing “to every State in this Union a Republican Form of Government,” not a democracy.

This stress on republican values and institutions made citizenship of paramount importance. If the United States was indeed a republic, then what kind of people would be empowered to dispose of its common wealth? If the poor and landless were politically franchised, what would prevent them from legally seizing those things that they otherwise lacked? If, on the other hand, they were completely excluded, then what would prevent them from following the example of Daniel Shays’ men and taking back the very country for which many of them had fought and died?

In either case, the result would be the same: tyranny. In Aristotle’s words:

Since where some own a very great deal of property and others none there comes about either an extreme democracy or an unmixed oligarchy, or a tyranny may result from both of the two extremes, for tyranny springs from both democracy and oligarchy of the most unbridled kind, but much less often from the middle forms of constitution and those near to them (4.1296a).

Yet, how near to the middle dared the United States to lean? The answer, most state lawmakers agreed, lay in Aristotle’s Politics. The key to their dilemma would ultimately be found not in the shape of the institutions they created, but in the citizens they admitted to govern those institutions. And, in this respect, Aristotle’s advice was eminently pragmatic. Citizens should be of such a stature as to be themselves equipped to occupy the offices for which they would be electing representatives. In other words, the only difference between the citizens elected to office and those voting them into office would be that each, in succession, would take his place in public office before vacating that office for the next citizen. “The citizen whom we are seeking to define is a citizen in the strictest sense,” thought Aristotle, “against whom no such exception can be taken, and his special characteristic is that he shares in the administration of justice, and in offices.” No line separates the citizen and the citizen’s competence from the competence of the office holder. Thus, “in the best state,” according to Aristotle, “the citizen is one who is able and willing to be governed and to govern with a view to the life of virtue.” Or, again, “the good citizen must have the knowledge and the ability both to be ruled and to rule, and the merit of the good citizen consists in having a knowledge of the government of free men on both sides.”

We may be inclined to feel that this is simply common sense, which it certainly is. Yet, a great deal is contained in this “ability both to be ruled and to rule.” At the very least, what it contains is a rejection of monarchy and despotism. For, as Aristotle noted, “republican government governs men who are by nature free, the master’s authority governs men who are by nature slaves; and the government of a household is monarchy (since every house is governed by a single ruler), whereas statesmanship is the government of men free and equal.”

We have already noted that republican government qualitatively differs from running a private enterprise. And, now we know why. Individuals who report to and are subject to the master of the household (and today to shareholders and a Board of Directors), whatever else we wish to call them, are in fact doulos: slaves. Citizens and representatives within a republic, by contrast, are by nature free. Those therefore who govern them must have a knowledge of what it means to govern people who are, in fact, free and who are, in fact, equal to them. But there is more.

The citizen also enjoys the same independence as those by whom he is governed and this tells us something not only about the citizen, but also about the kind of political form that is appropriate for this kind of citizen. As Aristotle put it, “one who has the right to participate in deliberative or judicial office is a citizen of the state in which he has that right, and a state is a collection of such persons sufficiently numerous, speaking broadly, to secure independence of life.” Independence, in other words, did not entail independence from the state, but, to the contrary, a state composed of individuals who are independent.

This distinction, it turns out, was absolutely critical to the framers of the Constitution. For, were citizens not independent prior to holding public office, then, as Aristotle knew well, they would seek public office in order to become independent. In the ideal state, by contrast, independent citizens are willing to support office holders because they know that they too will require such support when they assume office. As Aristotle observed:

In earlier times, under the natural system, claiming to do public services in turn, and for somebody in return to look after their own welfare just as previously they looked after his interest when in office themselves; but nowadays owing to the benefits to be got from public sources and from holding office people wish to be in office continuously, just as if it were the case that those in office although sickly people always enjoyed good health—in which case office would no doubt be much run after by invalids.

In other words, in order to ensure that citizens not seek office in order to obtain benefits, the state must make sure that citizens already enjoy these “benefits” prior to becoming office holders. For this reason, Aristotle felt that citizens “should be the owners of property, for they are citizens, and the citizens of a state should be in good circumstances.”

This also followed from Aristotle’s teaching about the relationship of happiness and virtue. Since it followed that an individual could not be virtuous without being happy and could not be happy without wealth, it made no sense to Aristotle that a state could be virtuous while some of its citizens languished. With this in mind, Aristotle counseled that “we should pronounce a state happy having regard not to a particular section of it but to all its citizens.” In other words, in order to ensure the security of republican values and institutions, it was essential that all—and not merely some particular section—of its citizens be prosperous.

But just as virtue is not the same thing as self-interest and happiness not the same thing as pleasure, so prosperity is not the same thing as the unending and unlimited pursuit of wealth. This was Aristotle’s point when he distinguished between natural and perverse ways of accumulating wealth. “These people”—i.e., those who seek unending wealth—“turn all skills into skills of acquiring goods, as though that were the end and everything had to serve that end.” What was required was an appropriate balance. Wealth was needed in order to contribute to the common wealth. But it was also needed in order to weather the storms of fate.

Citizens should not only possess enough to meet their requirements in civic life, but also to encounter the perils that face them from outside; hence they should possess neither so large an amount of wealth that it will be coveted by their neighbors and by stronger states while its possessors will be unable to repel their assailants, nor yet so small an amount as not to be capable of sustaining a war even against equal and similar states.

Aristotle was not naïve. He recognized that states needed enough wealth to defeat potential adversaries. But he also knew that too much wealth would create divisions within and could potentially undermine the very public institutions and values that made citizenship valuable in the first place.

So, if our aim is to preserve republican institutions and values, then who should be a citizen? Aristotle could not have expressed himself more clearly.

It clearly follows that in the state which is best governed and possesses men who are just absolutely, and not merely relatively to the principle of the constitution, the citizens must not lead the life of mechanics or tradesmen, for such a life is ignoble, and inimical to virtue. Neither must they be husbandmen, since leisure is necessary both for the development of virtue and the performance of political duties.

These sentiments, which strike us today as so contrary to democracy, stood at the heart of Alexander Hamilton’s three great contributions to the Federalist Papers, nos. 12, 13 and 35. In no. 12, Hamilton acknowledged both the benefits and the risks of a commercial republic. The benefits, of course, were the production of great wealth and prosperity for all—including the husbandman (farmer) and the mechanic (tradesman). But, like Aristotle, neither was Hamilton under any illusions that such wealth and prosperity would not provoke jealousy and perhaps war from economic rivals. And, for Hamilton, this external threat required that the federal government be granted the powers to tax wealth in an amount necessary for defense and protection of the republic. Nor was Hamilton under any illusions about from whom such revenues must be raised. They must come from the wealthy and principally from those who own land.

As the necessities of the State, nevertheless, must be satisfied in some mode or other, the defect of other resources must throw the principal weight of public burdens on the possessors of land. And as, on the other
hand, the wants of the government can never obtain an adequate supply, unless all the sources of revenue are open to its demands, the finances of the community, under such embarrassments, cannot be put into a situation consistent with its respectability or its security. Thus we shall not even have the consolations of a full treasury, to atone for the oppression of that valuable class of the citizens who are employed in the cultivation of the soil. But public and private distress will keep pace with each other in gloomy concert; and unite in
deploring the infatuation of those counsels which led to disunion.

Of course, the “counsels” of which Hamilton speaks are those who would oppose the federal government’s right to tax wealth: the anti-federalists.

In Federalist no. 13, therefore, Hamilton identified a separate, but related, danger: perpetual economic growth would lead to ever greater inequality among citizens and, ultimately, to civil war. Such would inevitably follow from the dangerous combination of expanding population, territory, and commerce. In response, Hamilton called attention to a distinction easily recognized and quickly acknowledged by his colleagues in Philadelphia, but often lost on the public at large. It was true, wrote Hamilton, that a democracy must remain small and limited in order to function. But, noted Hamilton, the United States would be constituted not as a democracy, but as a republic, and therefore it would not suffer the same limitations and risk the same dangers as a democracy.

The error which limits republican government to a narrow district has been unfolded and refuted in preceding papers. I remark here only that it seems to owe its rise and prevalence chiefly to the confounding of a republic with a democracy, applying to the former reasonings drawn from the nature of the latter. The true distinction between these forms was also adverted to on a former occasion. It is, that in a democracy, the people meet and exercise the government in person; in a republic, they assemble and administer it by their representatives and agents. A democracy, consequently, will be confined to a small spot. A republic may be extended over a large region.

But, on some level, this argument merely kicked the can down the road. For, if the United States were to be a republic and not a democracy, then how would each state determine who could take part in the republic? Aristotle, we know, felt that a republic could only survive if its citizens were men of wealth, leisure, education, and good health. He therefore excluded all individuals tied in any way to private enterprise: not simply farmers, tradesmen, and laborers, but merchants and businessmen as well.

As we see in Federalist no. 35, Hamilton was familiar with these limits. And, yet, he also recognized their impracticality in a republic that was, after all, composed largely of merchants, businessmen, and farmers. His hope was that lower classes would see their own interests served by promoting the interests of their superiors, and that these, in turn, would see their own interests served by promoting the interests of the republic. He therefore believed that “mechanics and manufacturers will always be inclined, with few exceptions, to give
their votes to merchants, in preference to persons of their own professions or trades.” This is because “they know that the merchant is their natural patron and friend; and they are aware, that however great the confidence they may justly feel in their own good sense, their interests can be more effectually promoted by the merchant than by themselves.” In other words, those occupying lesser professions would simply demure to their social and occupational superiors.

They are sensible that their habits in life have not been such as to give them those acquired endowments,
without which, in a deliberative assembly, the greatest natural abilities are for the most part useless; and that the influence and weight, and superior acquirements of the merchants render them more equal to a contest with any spirit which might happen to infuse itself into the public councils, unfriendly to the manufacturing and trading interests.

This, in turn, led Hamilton to conclude that “artisans and manufacturers will commonly be disposed to bestow their votes upon merchants and those whom they recommend.”

Federalists held firm through 1800 when, of the now nineteen states and territories, only Kentucky and Vermont enjoyed universal white male suffrage and fully fourteen maintained property qualifications. (The remaining three required, reasonably, that voters also be taxpayers.)

But, history was not on Hamilton’s side. By 1830, those favoring universal white male suffrage had added five states to the original two. And of the now twenty-five United States, only two maintained property restrictions.

Thomas Jefferson, who oversaw this transition and in many ways was responsible for it, viewed the nation’s march to the west as a means to provide property to America’s exploding population. Property, for Jefferson, translated into independence; and independence translated into freedom not simply from necessity, but freedom as well from having to work in another individual’s private enterprise or household.

Yet, even as Jefferson promoted the march west, epitomized by the Louisiana Purchase, which more than doubled America’s territory, he was anxious to remind his countrymen that property and wealth, without education, was a sure formula to promote demagogues. For, without education, newly propertied and newly enriched farmers would be powerless to resist the rhetoric of politicians.

Jefferson’s seemingly oxymoronic Democratic-Republican Party aimed to create the conditions necessary to sustain republican values and institutions: land, wealth, leisure, and education for all politically enfranchised. But, it was not to be. Precisely as Jefferson had feared, political power fell increasingly to individuals best able to capture the attention of America’s least well-educated and least well-informed voters, an aptitude perfectly suited to Gorgias’ fine art, not Jefferson’s.

Workers objected, but to no avail. Thus, as one Philadelphia tradesman complained in the early 1830s, “the inestimable blessing of ‘universal suffrage’ . . . can be of no further use” unless workers also “possess sufficient knowledge to make proper use of it.” Yet, universal public education for working families was being contemplated by no one.

The consequences that followed from depriving politically enfranchised Americans of social, economic and intellectual enfranchisement to match their new political status were predictable. America’s new economic power placed it in conflict with the powers of western Europe. Its need for ever more resources and territory to satisfy its insatiable appetite for economic growth placed it in conflict with the native American nations of the south and southwest. And, just as Jefferson had predicted (and, of course, as Aristotle had predicted well before him), political enfranchisement by itself did lead in fact to the rise of demagogues.

But, it also had another consequence that Aristotle had foreseen, but that Jefferson had apparently overlooked. Once the production of never ending wealth had supplanted the more natural and reasonable goal of wealth in the service of the republic, traditional American values themselves began to change. As ever more American citizens fell under and into the service of other Americans, the very notion of uniquely republican values and institutions soon ceased to make much sense.

Today we view this gradual erosion of republican values and institutions uniquely from the vantage point of slavery. But this may actually obscure the change that was taking place. Just as Americans in southern states had grown accustomed to a large segment of their population—slaves—working in the private households of their wealthy, educated and independent citizens; so American in the northern states were growing increasingly accustomed to a large segment of their population—wage laborers—working in the private households of their wealthy, educated and independent citizens. So, just as Aristotle predicted would happen to any nation the majority of whose citizens labored in the households of others, America was quickly forgetting its republican values and abandoning its republican institutions.

What happened next could have been predicted.  Much as Pericles had over two millennia earlier, an successful army general with an appreciation for the appetites of the common man and an insatiable ambition for personal honor and glory stepped from the shadows. And, like Pericles, this general knew how to use the common man’s visceral hatred for those who were different from himself—in this case bankers, lawyers, native Americans, and African slaves—to fuel his political ambitions.

Enter Andrew Jackson—the new Pericles.

Allan Bloom we would like his readers to think that he is an erudite thinker. He is in fact a second rate thinker who passes off (or who attempts to pass off rude asides and innuendo for intelligence). This may work for converts. But for anyone who has carefully read the authors he caricatures, Bloom’s

VIII. The Measure of a Man

Although America did not invent slavery, slavery did invent America. Slavery invented America by providing the delegates to the Constitutional Convention the frame within they considered each of the critical questions they sought to answer. This was already clear on May 29, 1787, barely two weeks into the convention, when Edmund Randolph introduced the resolutions, known as the Virginia Plan, out of which our constitution would emerge. For even those resolutions that did not mention slavery explicitly had slavery written all over them. Nor is it difficult for us to figure out why this was so. The answer is already right there in Aristotle’s definition of a slave: “Any human being that by nature belongs not to himself but to another is by nature a slave; and a human being belongs to another whenever, in spite of being a man, he is a piece of property, i.e., a tool having a separate existence and meant for action.”

“In spite of being a man. . . .” So, were slaves to be counted as property, in which case they should be taxed, but not represented; or should they be counted men, in which case they should be represented, but not taxed. Here, in a man—a human being who belonged not to himself but to another—was contained the very cause for the American Revolution itself: taxation without representation. And, yet, the problem does not end there.

On May 29, 1787, Edmund Randolph set out five defects to the Articles of Confederation, defects that in the judgment of all those present warranted the creation of “a more perfect Union.” To begin with, “the Confederation produced no security against foreign invasion.” Congress could not “prevent a war, nor . . . support it by their own authority.” Congress also had no authority, should any state violate a treaty, or “the law of nations,” to punish that state. More importantly, noted Randolph, “particular states might, by their conduct, provoke war without control.” And, should they do so, “neither militia nor drafts being fit for defence on such occasions, enlistments only could be successful, and these could not be executed without money.” In short, the federal government was entirely incapable of either defending itself or of raising revenues with which to do so. This suggested a strengthening of the federal government at the expense of the states.

The federal government needed revenue in order to raise an army. Southern delegates objected. They objected, first, because, unlike their colleagues to the north, their property consisted not in real estate, ships, merchandise, and fixed capital, but in men, women, and children—in slaves. However, they also objected because they had reason to believe that, were the federal government to use their taxes to raise an army, that army might well be used against the southern states themselves.

The second defect to which Randolph called the attention of his fellow delegates was the fact that the federal government lacked authority to “check the quarrel between states, nor a rebellion in any, not having constitutional power, nor means, to interpose according to the exigency.” Again, the federal government was too weak to prevent civil war. And, again, southern delegates feared that the next rebellion might not be launched by Daniel Shays and his men, but by southern slaves eager to join their free brothers and sisters in the north. On whose side would federal troops side, on the side of southern planters, or on the side of southern slaves?

The third defect was that the Confederation was unable to secure the “fruits of liberty,” which, in this case, meant chiefly the economic fruits. But, once again, the problem was the weakness of the center. Without the ability to regulate interstate commerce or to impose restrictions on the generation of currency, the federal government was powerless to take advantage of the abundance of wealth and labor enjoyed by the new republic. But, once again, as well, property and, hence, slavery was the underlying issue. This is because the southern states wanted slaves to be treated as men for purposes of representation, but treated as property when it came to law. This placed run-away slaves in the odd position of being charged with theft, in effect stealing themselves. Interstate commerce was jeopardized by the countless caveats and exceptions that states were forced to make on account of slavery.

Randolph’s fourth objection to the Articles of Confederation was that they left no means for the federal government to defend itself “against encroachments from the states.” But, fifthly, Randolph pointed out, there was no clause making the federal constitution “paramount to the state constitutions.”

In both of these cases, slavery was the underlying issue. Against whom would the federal government need to defend itself if not from troops charged with protecting the South’s most peculiar institution? Or, which states sought preemption of their state constitutions over the U.S. Constitution? Again, the answer was clear.

And, yet, the northern states knew that economically they needed the South just as much or even more than the South needed them. We often overlook the immense windfall slavery provided all of the states and not simply those in the south. Economically, slavery drove wages down not only for unskilled workers, who often competed for employment with slaves, but for all workers, both skilled and unskilled. But, for this reason, we also often overlook the tremendous boost to overall productivity slavery provided, not simply for the South, but for all of the United States. This helps to explain why, for all their moral posturing, delegates to the convention from northern states did not simply walk away from the table when their southern colleagues refused to budge. And this, in itself, points to what was truly unique about the debates over slavery at the Constitutional Convention.

Aristotle, we will recall, discussed slavery in the context of the household economy or private enterprise, the principle aim of which was to maintain the household. Indeed, Aristotle explicitly warned against those who would seek to expand their wealth indefinitely. The owners of such households were at risk, believed Aristotle, of mistaking life (bios) for creation (zoe) and so of substituting mere biological existence for living well. Such owners, Aristotle warned, would quickly lose their bearings and would begin to view all of human action as mere means for accumulating endless wealth. Soon they would see courage only another means for making money, instead of an indispensible component in winning battles. Or they would begin to see war as only another way of accumulating wealth. Or they would view health care as a means for making money rather than, as it should be, a means to care for the sick and make them healthy.

Clearly, the impact that endless accumulation of wealth would have upon the enslaved would be disastrous. For let us suppose that the owner of this form of property could increase his yield not by preserving or maintaining his human property, but by using, discarding, and purchasing another slave. Let us suppose that, like any commodity, this commodity too could carry a value that made its use and replacement more economical than its care and preservation. Here, in fact, was the ultimate perversion: that human beings would come to view other human beings not as a means to sustain a closed economy, i.e., a self-sustaining oikos or oikonomia, which is the case in every despotism; but, rather, that they would come to view other human beings as a means of unending accumulation of wealth. At this point, human beings, whose bodies and minds are not limitless, are made subject to a process that is. And the destruction of their finite bodies and minds for the sake of something limitless comes to be viewed as a price worth paying.

This, clearly, is what had happened in America, not only in the South, but also in the North. And it is what linked the fates of mere landless laborers in the North to the fates of enslaved Africans in the South. In both instances, their lives and labor had come to be viewed solely within the context of the private household economy. The natural condition of both was viewed as “the tool” of another human being within an overall despotic relationship.

But, since delegates from northern states shared this general outlook with their southern counterparts, northern delegates found it difficult to out-maneuver their southern colleagues in discussions about taxation, property, security,representation, and slavery. They wished—all of them, North and South—to be true republicans, true advocates and protectors of public life, the life we hold in common and where alone we are free and equal. And, yet, such was the nature of the despotism attached to the private household economy (oikonomia)—to which, in turn, the delegates were themselves attached—that this despotism could not help but seep through the cracks left open by the framers.

Initially, of course, it created but a trickle. Since it intersected every one of the resolutions named in the Virginia Plan, the topic of slavery came up almost every day the convention met. But, on most days, since it was always possible to reach consensus on whatever matter was explicitly on the table—length of term of service, direct or indirect election of representatives, interstate commerce, taxation—the treatment of slavery could be kicked down the road indefinitely, or so it seemed. But, then, beginning in July the matter of slavery could not be put off any longer. And by August it threatened to undo all that had thus far been accomplished. Would slavery wreck the convention? Would it deprive the new nation of what it most needed: a new constitution?

Republicanism presumes common wealth shared among political, economic, and intellectual equals. The men meeting in Philadelphia in 1787 to “form a more perfect Union” were under no illusions. They knew full well that this republican vision would not sit well with most of those who had actually picked up muskets, fought, and suffered hardship for their country. Most of their fellow countrymen lacked the wealth, education, and property they would have needed to actively participate in public life. And, although some of them might hope some day to own their own household (oikos) and thereby become the masters (despotes) of their own household economy (oikonomia), most of them were and would forever remain the doulos or “slaves” within some other man’s private household economy.

For those of European descent, there was a way out of such bondage. Hard work, saving, wise investment, and eventually land and education might earn them the right to actively participate in public life. For those of African descent, the same did not hold true. Hard work might earn them a transfer from work in the fields to work in the foundry or lumber mill or to the household itself. But no amount of labor would be enough to earn them their political freedom. They too remained doulos or slaves within some other man’s private household economy; but without any hope for redemption. They were bound to work for a master (despotes) for life.

Just as it was elsewhere in the Americas, despotism was thus an indispensible component of economic life in the United States as well. And this fact, in and of itself, made advocacy for republican values and institutions highly problematic. For, as the inhabitants on the Island of Hispanola (Haiti) would soon demonstrate, there was nothing to prevent slaves from embracing these same values and institutions. And, owing to the inherent conflict between republican institutions and values and despotic ones, this made the formation of a more perfect Union that explicitly included despotism a leading problem for those meeting in Philadelphia.

The topic of slavery came up nearly every day during the convention. It came up on July 11, because southern states wished to have their slaves counted (at least numerically) in the formula that would determine representation in the House. It came up on August 8, because Massachusetts’ Rufus King, an outspoken federalist, wished to revisit the matter of importing slaves, which he considered “a most grating circumstance.” King, who had just read a disturbing committee report on the matter, struck a despairing note:

In two great points, the hands of the legislature were absolutely tied. The importation of slaves could not be prohibited. Exports could not be taxed. Is this reasonable? What are the great objects of the general system? First, defence against foreign invasion; secondly, against internal sedition. Shall all the states, then, be bound to defend each, and shall each be at liberty to introduce a weakness which will render defence more difficult? Shall one part of the United States be bound to defend another part, and that other part be at liberty, not only to increase its own danger, but to withhold the compensation for the burden? If slaves are to be imported, shall not the exports produced by their labor supply a revenue the better to enable the general government to defend their masters? . . . Either slaves should not be represented, or exports should be taxable.

Here, again, questions of taxation, representation, and national defense are clearly bound together with the entire matter of slavery. Rufus had earned his wealth from manufacturing, shipping, and investing in public securities. He therefore well appreciated the intimate relationship between slave labor, manufacturing, and the export business. But, he also appreciated the expense the federal courts and magistrates had incurred and would continue to incur policing the slave trade and its issue.

At which point, Gouverneur Morris of Pennsylvania was recognized. The only thing striking about Morris’ human geography is the praise it earned from his colleagues.

Compare the free regions of the Middle States, where a rich and noble cultivation marks the prosperity and happiness of the people, with the misery and poverty which overspread the barren wastes of Virginia, Maryland, and the other states having slaves. Travel through the whole continent, and you behold the prospect continually varying with the appearance and disappearance of slavery. The moment you leave the Eastern States, and enter New York, the effects of the institution become visible. Passing through the Jersey’s and entering Pennsylvania, every criterion of superior improvement witnesses the change. Proceed southwardly, and every step you take, through the great regions of slaves, presents a desert increasing with the increasing proportion of these wretched beings. Upon what principle is it that the slaves shall be computed in the representation? Are they men? Then make them citizens, and had them vote. Are they property? Why, then, is no other property included?

What precisely Morris meant by referring to the human landscape as a “desert” is difficult to discern. Was he referring to the poverty, the hovels in which slaves were forced to live? Was he referring to the profound lack of commerce, when compared to the north? However, it is Morris’ aim that is truly astounding. Morris was not demanding representation for slaves. Far from it. Rather, he was pointing out that slaves could not and should not be represented (thus depriving the south of dozens of potential representatives in the House).

But, then Morris turns to the matter of property and therefore of taxation. Southern states wanted it both ways. When taxation was on the table, they wanted their slaves to be counted human beings and therefore not taxed. When representation was on the table, they also wanted their slaves to be counted human beings, at least for purposes of representation. But, then, when the matter of voting was on the table, all bets were off. Suddenly once again slaves became property. Which other form of property was thus exempted from taxation?

Morris then called attention to what all of the others had ignored. Slavery, he pointed out, is the foundation of aristocracy. “Domestic slavery is the most prominent feature in the aristocratic countenance of the proposed Constitution.” Of course he was right. But, he was not finished. “The vassalage of the poor,” he declared, “has ever been the favorite offspring of aristocracy.” Right again. But he was speaking to a room filled with men for whom “aristocracy” was not necessarily a term of derision. And, so, in conclusion Morris returned to the issues of security, revenue, and representation.

And what is the proposed compensation to the Northern States, for a sacrifice of every principle of right, of every impulse of humanity? They are to bind themselves to march their militia for the defence of the Southern States, for their defence against those very slaves of whom they complain. They must supply vessels and seamen, in case of foreign attack. The legislature will have indefinite power to tax them by excises, and duties on imports, both of which will fall heavier on them than on the southern inhabitants; for the bohea tea used by a northern freeman will pay more tax than the whole consumption of the miserable slave, which consists of nothing more than his physical subsistence and the rag that covers his nakedness. On the other side, the Southern States are not to be restrained from importing fresh supplies of wretched Africans, at once to increase the danger of attack and the difficulty of defence; nay, they are to be encouraged to it, by an assurance of having their votes in the national government increased in proportion; and are, at the same time, to have their exports and their slaves exempt from all contributions for the public service.

Here, finally, Morris tied all the themes together: despotism, security, revenue, and representation.

Aristotle, too, had recognized the interrelationship among these matters. Despotism—or, as we prefer to call it, private enterprise—was the very foundation for the freedom of the republic. Absent the household economy’s generation of wealth, there could be no revenue to share in common. And absent common wealth, there could be no freedom and independence for the citizens of the republic.

There was, however, a huge difference between fourth century Athens and eighteenth century North America. Where Aristotle had viewed the unending accumulation of wealth as a perversion of private enterprise, the framers of the constitution were inclined to praise this potentially endless source of wealth. Here, we cannot overlook the fact that, while the first Library of Congress gave Plato and Aristotle pride of place—first and second under the general heading of “Politics”—it grouped them together with Adam Smith’s Wealth of Nations, which, given its novelty, is quite impressive. Published a mere eleven years earlier, in 1776, Smith’s book had already made it onto the all-time best seller list alongside Plato’s Republic and Aristotle’s Politics.

Evidently the framers still believed that it would be possible to steer clear of the perversions Aristotle had mentioned. They would be able to prevent military courage from being leveraged for private financial gain. They would be able to prevent wars from being waged to accumulate wealth. And they would be able to prevent medicine from becoming a cash cow. But, mostly, they would be able to prevent the despotism of the private household economy from infecting the republic.

Yet, given their discussion of slavery, it already seems clear that republicanism itself was on the block. For, all of the delegates, not excluding Morris, were now entirely comfortable equating the value of human beings with the private labor they performed in one another’s households, as though a republic could possibly be based and built upon such a thoroughly despotic principle. Each of them had taken the measure of a man—a slave—and had made that measure the cornerstone of their so-called republic.

That cornerstone has a name and that name is Civil War.

Repeatedly over the past month I have read something like the following in the American (and in the foreign) press:

The expected showdown over the legislation is the culmination of months of efforts by Tea Party-allied freshmen and fellow conservatives to demand a fundamentally smaller government in exchange for raising the federal borrowing limit.

This from today’s New York Times (July 27, 2011). The problem I have with this casting of the debt crisis is that it isolates this particular campaign to disable and eliminate the federal government from past and continuing campaigns. This is not about smaller government. This is about the restoration of “private law” on behalf of private self-interest at the expense of public law on behalf of res publica. Nor is it about reducing deficits. The best outcome for the so-called Republican Party would be default, financial crisis, followed by a complete political overhaul of the nation.

This agenda places private investors  in a dilemma. On the one hand, they are not all too fond of the rule of public law. As the framers of the U.S. Constitution pointed out two and a quarter centuries ago, the single greatest defect in the Articles of Confederation was that it prevented the federal government from raising revenues to maintain the consistent rule of law across the states. In 1787, the federalists won out over the anti-federalists. But the argument didn’t end there.

Throughout the nineteenth century, southern Congressmen and northern industrial leaders labored tirelessly to overturn, pare back, and undermine federal institutions and federal authority. And, as we well know, in 1861, exactly one and a half centuries ago, eleven states determined that the only way to undo the decisions of 1787 was to once again declare their independence from the federal government. These states, in effect, re-instituted the Articles of Confederation. For private investors, the decision was was an unmitigated disaster.

Which is why financial markets are a bit jittery to say the least. For, the alternative is the consistent rule of law res publica, on behalf of the public. And they know what this means. As it did in 1787, it means the taxation of private wealth on behalf of public interests.

The game is over. Private financial institutions need to step up to the plate. They need to make clear to Tea Party Republicans that they are now on their own; that, given the alternatives before them, they will support (small “r”) republican values and institutions over private law and private self-interest. Because, in the end, this is what also serves the interests of financial markets.

My fear is that it is too late and that, having coddled and cheered these anti-federalists since the end of World War II, these anti-republicans now rule the roost. Which means that this may be not 1787 or 1861, but 1932. No, this is not about smaller government. It is about an entirely different kind of government. And, that is what concerns me.