American Political

and

Economic Theory

© 2005 James L. Smith

Suggestion: Use Historical Ideas to Frame Historical Events1. Ideas from the past can help make history a practical subject.

2. Ideas from the past, whether good or bad, can endure for generations.

3. Ideas from the past can help us understand ourselves as individuals.

4. Ideas from the past can help us understand the modern world.

5. Ideas from the past can inspire us and give us a reason for being.

6. Ideas from the past can help us understand our nation. (The United States is defined, in part, by big ideas.)

7. Ideas from the past can help students prepare for the AP U.S. history exam.a. Presidential elections between 1928 and 1948 revealed major shifts in

political party loyalties. Analyze both the reasons for these changes and their consequences during this period. (2008 Standard Essay Question)

b. To what extent did the role of the federal government change under President Theodore Roosevelt. (2007 Standard Essay Question)

c. “While the United States appeared to be dominated by consensus and conformity in the 1950's, some Americans reacted against the status quo.” Analyze the critiques of United States society made by TWO of the following: Youth, Civil Rights Activists, Intellectuals (2006 Standard Essay Question)

d. In what ways did the French and Indian War (1754-1763) alter the political, economic and ideological relations between Britain and its American colonies? (2004 DBQ)

e. Compare and contrast the programs and policies designed by reformers of the Progressive era to those designed by reformers of the New Deal period. Confine your answer to programs and policies that addressed the needs of those living in poverty. (2004 Standard Essay Question)

f. “Reform movements in the United States sought to expand democratic ideals.” Assess the validity of this statement with specific reference to the years 1825-1850. (2002 DBQ)

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Ideas do not exist in a vacuum.

Ideas must be studied in historical context.

Significant Ideas in United States History

Use the following list as a guide to identifying people with significant ideas shaping U.S. history. The list is incomplete and intended only as a starting point for identifying significant historical ideas.

Pre-Constitutional HistoryAristotle, Cicero, Thomas Hobbes, John Locke, Baron de Montesquieu, Jean Jacques Rousseau, Bartolomé de Las Casas, New England Puritans, Roger Williams, Jonathan Edwards, Ben Franklin, Thomas Paine, Mercy Otis Warren

Building the NationThe Federalist Papers, The Anti-Federalists, George Washington, James Madison, Thomas Jefferson, Alexander Hamilton, Fisher Ames, John Marshall

Early Nineteenth CenturyCharles Finney, Horace Mann, Alexis de Tocqueville, Henry David Thoreau, Ralph Waldo Emerson, Elizabeth Cady Stanton, Lucretia Mott, Margaret Fuller, Dorthea Dix, Orestes Brownson, Sojourner Truth, John C. Calhoun, Frederick Douglass

The Civil WarAbraham Lincoln

Late Nineteenth CenturyAdam Smith, Karl Marx, William Graham Sumner, Henry George, Thorstein Veblen, Andrew Carnegie, Edward Bellamy, Horatio Alger, Mary Lease, Alfred Thayer Mahan, Josiah Strong, Frederick Jackson Turner, Helen Hunt Jackson, Susan B. Anthony, William James, Booker T. Washington

Early Twentieth CenturyW.E.B. DuBois, John Dewey, Charles Sheldon, Upton Sinclair, Eugene Debs, Helen Keller, Theodore Roosevelt, Woodrow Wilson, Marcus Garvey, Norman Thomas, Franklin Roosevelt, John Maynard Keynes

Late Twentieth CenturyGeorge Kennan, William O. Douglas, C. Wright Mills, Herbert Marcuse, Dwight Eisenhower, John Kenneth Galbraith, Rachel Carson, Martin Luther King, Jr., Malcolm X, Betty Friedan, Tom Hayden, The American Indian, César Chávez, William F. Buckley, Ronald Reagan, Milton Friedman, Newt Gingrich, John Naisbitt, Alvin Toffler

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Ask students to focus on six recurring issues when studying American political and economic theory.

1. Should federal power override state and local power?2. Should the needs of the community outweigh the rights of the individual?3. To what extent should minority rights be protected in a system based on

majority rule?4. To what extent are all people created equal?5. What limits, if any, should be placed on private property?6. What ideas best define the United States?

Liberalism and Conservatism

Classical Definitions (Established in the Eighteenth Century)

Liberalism, in the classical sense, referred primarily to an idea of limited government and laissez faire. Associated with such thinkers as John Locke and Thomas Jefferson, classical liberals believed in limiting the powers of government and protecting the rights of the individual. (Note: The idea of a free market was associated with liberal ideas.)

Fundamental Beliefs Associated with Classical Liberalism1. The individual is supreme.2. The individual has natural rights and freedoms that should be protected by

the government as well as from the government. 3. Government must be limited in power in order that freedom is granted to

every citizen.4. Rights are universal and eternal.5. The world is formed by humanistic rather than theological principles.6. Toleration in matters of morality and religion is essential to creating a just and

peaceful society.

Conservatism, in the classical sense, came from a desire to conserve existing things which were either good in themselves or better than the alternatives. The father of classical conservatism was Edmund Burke, a man whose Reflections on the Revolution in France outlined what he thought were the dangerous forces let loose in the French Revolution and how to deal with those forces.

Fundamental Beliefs Associated with Classical Conservatism1. Individuals are a product of historical customs, values, and principles.2. The well-being of society is more important than the rights of the individual.3. Government should spring from the course of events rather than from

abstract principles. 4. Constitutions should be written to protect existing interests.5. Governments should find pragmatic solutions to problems rather than look for

radical solutions. 6. Some problems cannot be solved by political action.7. Human beings desire stability in their day-to-day lives.

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Liberalism and Conservatism

Modern Definitions (Established in the Twentieth Century)

Liberalism, as used in the twentieth century, referred to an idea that laissez faire economic policies led to the accumulation of great wealth and an uneven destribution of wealth. Contrary to the defense of private property and free market economics found in classical liberalism, modern liberals believed the laissez faire policies created freedom and power for those who possess wealth and the loss of freedom and power for those who do not possess it.

Fundamental Beliefs Associated with Modern American Liberalism1. Social and economic reform are possible through constitutional political

action.2. Government should be used to protect the rights of minorities.3. Government authority should be centralized in the federal government.4. Government should have the power to intervene in economic affairs.5. Government should finance more social programs.

Conservatism, as used in the twentieth century, referred to an idea that generally opposed governmental regulation of the economy. Conservatives believed that government should act only within the framework of preserving traditional values and principles. Government should protect established institutions.

Fundamental Beliefs Associated with Modern American Conservatism1. In general, government action cannot solve the problems of social and

economic inequality. 2. Government should not intervene in economic affairs.3. State and local governments should be granted more authority over the

intrusive power of the federal government.4. Government should lower taxes and decrease regulation of business.5. The government should finance fewer social programs.

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Thomas Jefferson and Alexander HamiltonThe Beginning of American Political Parties

Thomas Jefferson Alexander Hamilton

The Power of the People vs.The Power of Government

Governmentʼs powers should originate from the consent of the governed. The people are the best instrument to judge the actions of government. Even when the people are wrong government should not regulate their ideas.

The best form of government is a republican government that does not allow the people to influence elected officials directly. Government officials should form public policy for the common good without having to satisfy the passions of the people.

Revolution vs. Stability

A periodic rebellion is a good thing; political leaders should always be aware that the people possess the spirit of resistance. The nation should not go twenty years without a rebellion.

Stability in government is vital to the success of any nation. Since wealthy people most likely desire stability, they should be given the strongest voice in shaping public policy.

Farming vs. Manufacturing

The United States should preserve its agricultural society and resist the development of manufacturing. Manufacturing creates large cities, and the mobs of large cities are a threat to good government. Cities also unleash forces that corrupt the morals of the people.

A diverse economy best serves the national interest. Agriculture is essential to human existence, and manufacturing would strengthen the American economy. The United States should promote both agricultural production and manufacturing.

State Powervs. Federal Power

Since the states created the federal government, the states should be the final judge of federal laws.

If too much power is granted to the states, each state will have tendency to promote its own interests over the interests of the nation. State laws contrary to the laws of the federal government should be invalid, and the federal government should be more powerful than state governments.

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William Graham SumnerThe Industrial Revolution, Part One

William Graham Sumner (1840–1910) was an American economist and sociologist. In a book titled What Social Classes Owe Each Other (1883), Sumner argued for a market system free of government interference. Sumner was an advocate of social Darwinism.

Sumnerʼs Main Ideas1. Nature requires human beings to struggle for survival in a brutal world. Nature

does not provide enough for all human beings. Inequality and competition are natural to human existence.

2. Each individual has one primary responsibility—to take care of himself. People who fail to take care of themselves become a burden for others. “Itʼs root, hog, or die!”

3. People who give money to beggars are not generous and kind. All money given to people who do not take care of themselves is money that could instead reward independent and productive workers.

4. Wealthy capitalists are unjustly portrayed as disgraceful human beings. The accumulation of a large fortune is not disgraceful. The accumulation of wealth is necessary for the improvement of society.

5. Society improves naturally if those who are most fit are allowed to work and invest without restrictions.

6. Society cannot be reformed. Reformers should leave society alone and mind their own business. Laissez faire is the best policy. The only proper role of government is to provide peace, order, and security.

7. When democratic reformers try using government to regulate economic conditions they are forcing capitalists to protect themselves with the power of government. Corruption in politics is inevitable when reformers try to regulate capitalists.

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Eugene V. DebsThe Industrial Revolution, Part Two

Eugene Debs (1855–1926) was an American labor leader and organizer of the Socialist Party. He ran for president of the United States five times as the candidate of the Socialist Party.

Debsʼ Main Ideas1. Capitalism divides society into two classes: capitalists and workers. Capitalists

use their ownership of the tools of production to accumulate wealth and support an extravagant lifestyle. Workers, who do all the work and produce all the wealth, are condemned to a state of poverty and dependence. Capitalism enriches a few while the mass of people struggle for survival.

2. Capitalists are guilty of vast crimes against humanity. They destroy natural resources. They kill and maim workers in factories. They breed oppression, exploitation, and war. They commit great crimes that should be punished. Rather than receiving punishment, however, they are glorified as the leaders of society.

3. Millions of people are unemployed in a capitalist system, and the ability to make a living is doubtful. In such an inhumane system many people become vicious criminals. A capitalist society needs prisons to protect itself from the criminals it creates.

4. Both Republicans and Democrats represent capitalist interests. Republicans are big business capitalists who organize trusts. Democrats are small business capitalists who oppose trusts. Whether Republicans or Democrats control political power makes no difference to the working class.

5. People should recognize the benefits of treating others with kindness, because harsh treatment makes all people more vicious. The idea of living according to the law of the jungle violates the moral truth that we are our brotherʼs keeper.

6. The Socialist Party promotes several fundamental changes for American society.a. The capitalists system should be abolished, and workers should own and

control the tools of production free from the slavery of the wage system.b. All men and women should have equal rights and opportunities.c. Child labor should be abolished.

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Woodrow WilsonTwentieth Century Liberalism, Part One

Woodrow Wilson (1856–1924) spent most of his adult life as a professor and did not enter politics until he was in his fifties. As president of the United States, he combined the Jeffersonian idea of a popular-based government with the Hamiltonian desire for a strong federal government. His program known as the New Freedom instituted a regulated capitalist system.

Wilsonʼs Main Ideas1. The Industrial Revolution and the development of giant corporations created an

economic situation that no longer grants every person an opportunity to profit from individual talent. Talented individuals can no longer enter the business world because monopolies have taken control of the economy.

2. Thomas Jefferson argued for minimal government in order that individuals could freely develop their talents. However, giant corporations now dominate the nation, and individuals no longer possess economic freedom. Workers employed by big business no longer have a personal relationship with their employers.

3. Capitalism thrives on freedom, but monopolies destroy freedom. Monopolies take away economic freedom by destroying competitors and keeping newcomers from entering the business world. Monopolies take away political freedom by becoming so powerful they are able to take control of the government.

4. Thomas Jeffersonʼs support for minimal government should be replaced by federal action that regulates business, restores competition, and gives people a “new freedom” from the power of monopolies.

5. Businesses serve the public and should therefore be open to public inspection and regulation. The public interest must be protected by the government.

6. Regulating monopolies will not harm capitalism. Regulation will instead revive economic competition and bring about a new prosperity that better serves the public interest.

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Franklin RooseveltTwentieth Century Liberalism, Part Two

Franklin Roosevelt (1882–1945) grew up in the midst of great wealth and privilege. As president of the United States, however, he promoted domestic policies designed to serve common Americans.

Rooseveltʼs Main Ideas1. The Industrial Revolution created a new class of privileged Americans who not

only control the economy, but also control the government. Workers, farmers, and small businessmen are no longer free and independent. The federal government has a responsibility to use its power to regulate business and protect economic liberty. Government should use its constitutional power to promote the general welfare and secure the blessings of liberty.

2. Government should use its power to fight underconsumption. Antitrust laws should not only be used to break up monopolies, they also should be used to control pricing. Purchasing power should be stimulated throughout the nation.

3. Government should provide relief to the unemployed. People who depend on the dole, however, face spiritual and moral disintegration. Life on the dole destroys the human spirit. Work is better than the dole, and government should create jobs for the unemployed.

4. Government control of the economy does not limit freedom; it protects freedom. Freedom is not only an opportunity to speak and worship freely, it is also the opportunity to make a decent living. Economic royalists who complain about a loss of freedom are really complaining that their privileges have been taken away.

5. Government has a responsibility to protect individual rights. In addition to political rights, government should also guarantee economic rights.

6. Governmentʼs responsibility to the welfare of society does not stem simply from humanitarian concerns. Civilization cannot survive unless individuals are responsible to each other. In the modern industrial society self-supporting individuals are extinct; every individuals is now dependent on others for survival.

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Ronald ReaganTwentieth Century Conservatism

Ronald Reagan (1911–2004) was the leading spokesperson for a new conservative movement that began in the 1950s. As president of the United States in the 1980s, Reagan followed his conservative principles and transformed American public policy.

Reaganʼs Main Ideas1. Government should be business oriented. A healthy business climate creates a

healthy economy, and a healthy economy benefits all people by providing jobs and higher tax revenues for increased government services.

2. The size of government should be reduced, and government should operate according to the principles of business. Government should not spend more than it takes in. Federal spending should be cut.

3. Excessive taxation prevents people from investing in factories, equipment, and research. Excessive taxation causes unemployment and a slump in economic activity.

4. Excessive regulation of business stifles creativity. Government should not create a barrier to creativity and prosperity.

5. Government cannot solve the problems of human misery. Although several decades of welfare have tried to end poverty, the number of people needing government help keeps increasing. The private sector can solve problems more successfully than government.

6. Government has grown to large. When government tries to satisfy every desire of its citizens, the result is tyranny. Big government suppresses individual excellence and personal freedom. Government cannot provide solutions to economic problems — government is the problem.

7. Government should not try to redistribute wealth. No one has the right to take the earnings of one person to give to another. Government should cut taxes for those who are likely to invest in productive enterprises.

8. More power should be given to state and local governments. The best government is one that is close to the people and responsive to the needs of the people. State and local governments have a better chance to serve the people than the federal government.

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Bill ClintonA Third Way?

Bill Clinton (1946– ) ran for president in 1992 promoting what he called a “new covenant.” When he ran for reelection in 1996 his ideas were described as “triangulation.” By the late 1990s his policies were described as a “third way” that was neither liberal nor conservative. Clintonʼs philosophy received international support, most notably from Tony Blair in the United Kingdom and Helmut Kohl in Germany.

Clintonʼs Ideas1. Government should try to achieve liberal objectives (equal opportunity and

making work pay) through conservative means (minimal government regulation and government support of business).

2. Government should empower individuals with the skills and the means to survive in an information economy.

3. Government should serve as a partner with business, providing businesses the incentive to expand and the means to survive in a global economy.

4. United States foreign policy should be based primarily on economic agreements. The United States should help bring as many nations as possible into the global economy and help raise the standard of living in all nations.

Clintonʼs “Liberal” Policies and Proposals• National health care• Increased minimum wage• Tax increase for the wealthy• Tax cuts for the poor and middle

class• National service• Medicare drug benefits• Affirmative action

Clintonʼs “Conservative” Policies and Proposals• NAFTA• Enterprise zones• Welfare reform• Crime legislation• Decreased size of government• Devolution • Balanced budget / reduced debt• Repeal of Glass-Steagall Act

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