By Douglas V. Gibbs
For
the Framers of the U.S. Constitution economics and property rights were
intimately intertwined. In today’s
society, however, property rights have been relegated away from its original
place as a fundamental right, and now are considered to be a minor right.
the Framers of the U.S. Constitution economics and property rights were
intimately intertwined. In today’s
society, however, property rights have been relegated away from its original
place as a fundamental right, and now are considered to be a minor right.
At
the center of the Framers’ foundational economic principles were two beliefs:
Laissez-faire (allow the economy to follow its own free market course without
governmental interference) and hard currency (using coined money composed of
precious metals so that the material itself held the value of the
denomination). The Founders also
preferred to avoid mercantilism (governmental protectionist policies),
discourage monopolies (the exclusive possession or control of the supply of or
trade in a commodity or service), disallow governmental interference regarding
one’s use of individual property, encourage the freedom of individuals to
contract, restrict regulation to the protection of health, safety, and morals,
and to encourage the free market to be as democratic and dynamic as possible.
the center of the Framers’ foundational economic principles were two beliefs:
Laissez-faire (allow the economy to follow its own free market course without
governmental interference) and hard currency (using coined money composed of
precious metals so that the material itself held the value of the
denomination). The Founders also
preferred to avoid mercantilism (governmental protectionist policies),
discourage monopolies (the exclusive possession or control of the supply of or
trade in a commodity or service), disallow governmental interference regarding
one’s use of individual property, encourage the freedom of individuals to
contract, restrict regulation to the protection of health, safety, and morals,
and to encourage the free market to be as democratic and dynamic as possible.
During
the era of America’s founding there were bitter disputes regarding the paying
of the national debt, whether or not the United States should create a national
bank, and whether government subsidization was beneficial to domestic
manufacturing and other industries.
Founders such as Alexander Hamilton argued that a perpetual national
debt was beneficial for credit purposes and holding together the union, he was
the primary proponent for the eventual creation of the Bank of the United
States (national bank) believing that our banking system required a connection
to Europe’s, and he encouraged the practice of government subsidizing various
sectors of the national economy. James
Madison, Thomas Jefferson, and other proponents of a more limited role of the
government opposed Hamilton on these issues.
Jefferson, in fact, argued against any national debt existing long enough
that its repayment becomes the responsibility of the next generation. While George Washington did sign the act that
established the Bank of the United States, he did so reluctantly, and against
the advice of Jefferson, and his republican allies.
the era of America’s founding there were bitter disputes regarding the paying
of the national debt, whether or not the United States should create a national
bank, and whether government subsidization was beneficial to domestic
manufacturing and other industries.
Founders such as Alexander Hamilton argued that a perpetual national
debt was beneficial for credit purposes and holding together the union, he was
the primary proponent for the eventual creation of the Bank of the United
States (national bank) believing that our banking system required a connection
to Europe’s, and he encouraged the practice of government subsidizing various
sectors of the national economy. James
Madison, Thomas Jefferson, and other proponents of a more limited role of the
government opposed Hamilton on these issues.
Jefferson, in fact, argued against any national debt existing long enough
that its repayment becomes the responsibility of the next generation. While George Washington did sign the act that
established the Bank of the United States, he did so reluctantly, and against
the advice of Jefferson, and his republican allies.
One thing
they all agreed upon goes back to the connection between economics and the free
ownership of property, which was that all Americans have the right to sell or
give property to others on terms of one’s own choosing (market freedom).
they all agreed upon goes back to the connection between economics and the free
ownership of property, which was that all Americans have the right to sell or
give property to others on terms of one’s own choosing (market freedom).
Socialists
reject the Founders’ approach to economics, arguing that a free market system
based on profit and free choice encourages selfishness and leads to an unjust
distribution of wealth. To ensure that
the socialist order properly combats a capitalist economy, socialists believe
there must be a constant establishment of new laws and new bureaucratic
initiatives in order to properly and equally redistribute among the masses the
wealth produced by the capitalist system.
reject the Founders’ approach to economics, arguing that a free market system
based on profit and free choice encourages selfishness and leads to an unjust
distribution of wealth. To ensure that
the socialist order properly combats a capitalist economy, socialists believe
there must be a constant establishment of new laws and new bureaucratic
initiatives in order to properly and equally redistribute among the masses the
wealth produced by the capitalist system.
Modern
opponents to the Founders’ view of economics also argue that while their plan
to protect property rights and utilize free markets occurred in a simpler time
with vast tracts of available land, in modern times these policies are
incapable of addressing the difficulties we encounter in today’s complex
industrial society. According to today’s
proponent of increased governmental intrusion into economics, economic
oppression during the early years of the United States could simply be dealt
with by moving hundreds of miles westward.
Today, there are no such places to run to. Therefore, today’s economy is doomed to fail
because it is unable to provide a fair and equitable allocation of goods and
services, nor an escape route so that the person may start all over again.
opponents to the Founders’ view of economics also argue that while their plan
to protect property rights and utilize free markets occurred in a simpler time
with vast tracts of available land, in modern times these policies are
incapable of addressing the difficulties we encounter in today’s complex
industrial society. According to today’s
proponent of increased governmental intrusion into economics, economic
oppression during the early years of the United States could simply be dealt
with by moving hundreds of miles westward.
Today, there are no such places to run to. Therefore, today’s economy is doomed to fail
because it is unable to provide a fair and equitable allocation of goods and
services, nor an escape route so that the person may start all over again.
These
criticisms are based on failed socialist principles that claim the Founders’
approach to economics was unfair, and too primitive to be applied today. The socialist view considers the free market
system as immoral because it allows selfish profiteers to dominate the system,
which undermines morality and encourages greed.
criticisms are based on failed socialist principles that claim the Founders’
approach to economics was unfair, and too primitive to be applied today. The socialist view considers the free market
system as immoral because it allows selfish profiteers to dominate the system,
which undermines morality and encourages greed.
In
reality, the free market system established by the Framers is the primary
reason behind the prosperity and economic dominance in the world that the
United States has enjoyed.
reality, the free market system established by the Framers is the primary
reason behind the prosperity and economic dominance in the world that the
United States has enjoyed.
The
Founders recognized property as being a fundamental right, and as with all
other natural rights, it was considered to be morally wrong to infringe upon
anyone’s property rights. Even if government,
or the proponents of government infringing on a citizen’s property rights,
claimed such an infringement was useful, or for the common good, such intrusion
into the natural right of property was considered despotic, and
unconstitutional.
Founders recognized property as being a fundamental right, and as with all
other natural rights, it was considered to be morally wrong to infringe upon
anyone’s property rights. Even if government,
or the proponents of government infringing on a citizen’s property rights,
claimed such an infringement was useful, or for the common good, such intrusion
into the natural right of property was considered despotic, and
unconstitutional.
The
Continental Congress declared in 1774 that “by the immutable laws of nature,”
the people “are entitled to…property.” In
the Virginia Declaration of Rights (1776), property was labeled as being an
“inherent” right. Massachusetts (1780)
called it a right “natural, essential, and unalienable.” Other States used similar language.
Continental Congress declared in 1774 that “by the immutable laws of nature,”
the people “are entitled to…property.” In
the Virginia Declaration of Rights (1776), property was labeled as being an
“inherent” right. Massachusetts (1780)
called it a right “natural, essential, and unalienable.” Other States used similar language.
Deprivation
of one’s property rights by the government was seen by the Founding Fathers as
an injustice, and an act of tyranny (let alone, the fact that infringement of
one’s property rights was detrimental to the proper functioning of a free
market economy).
of one’s property rights by the government was seen by the Founding Fathers as
an injustice, and an act of tyranny (let alone, the fact that infringement of
one’s property rights was detrimental to the proper functioning of a free
market economy).
Through
the incessant urgings of the utopianists and communitarians of the Founding Era
to the constant propaganda and indoctrinational teachings of Marxists and
socialists of the modern world, the argument in favor of capitalism is becoming
less prominent.
the incessant urgings of the utopianists and communitarians of the Founding Era
to the constant propaganda and indoctrinational teachings of Marxists and
socialists of the modern world, the argument in favor of capitalism is becoming
less prominent.
The
Founders’ argument for a free market economy stems from their belief that all
men are by nature equally free and independent, and have certain inherent
rights,” one of which is “the means of acquiring and possessing property, and
having the right to freely possess, trade, sell or buy that property as they
see fit. Their definition of property
did not rest solely on real estate, either.
When referring to property the Founders were referring to all
possessions, be they tangible instruments of ownership (guns, food, vehicles,
one’s home, jewelry, etc.)
Founders’ argument for a free market economy stems from their belief that all
men are by nature equally free and independent, and have certain inherent
rights,” one of which is “the means of acquiring and possessing property, and
having the right to freely possess, trade, sell or buy that property as they
see fit. Their definition of property
did not rest solely on real estate, either.
When referring to property the Founders were referring to all
possessions, be they tangible instruments of ownership (guns, food, vehicles,
one’s home, jewelry, etc.)
As a
free people, then, we all may freely use our talents to acquire property and to
keep or use the property as we see fit. For
individuals or government to forcibly prevent someone from acquiring property,
or to use coercion to transfer property from one person to another, deprives
that person of the fruits of his labor, and is a violation of individual liberty. From the point of view of justice, then,
governmental interference with property rights is immoral, and unjust.
free people, then, we all may freely use our talents to acquire property and to
keep or use the property as we see fit. For
individuals or government to forcibly prevent someone from acquiring property,
or to use coercion to transfer property from one person to another, deprives
that person of the fruits of his labor, and is a violation of individual liberty. From the point of view of justice, then,
governmental interference with property rights is immoral, and unjust.
Property
rights and a free market economy were seen by the people of the Founding Era as
being an assurance of a prosperous society. Without property rights, they believed only
the tyrants would be able to enrich themselves, as they force the general
population into bondage. Property rights
and a free market economy, therefore, were viewed as being essential for liberty
and the pursuit of happiness. Everyone
needs food, clothing, and shelter, and therefore has a right to acquire and
possess these goods, for the sake of mere life and for the sake of the good
life. The role of government is to
restrain itself from interfering with those needs, and to provide an orderly
society so that one may continue to encounter opportunities to satisfy those
necessary needs of life and happiness.
rights and a free market economy were seen by the people of the Founding Era as
being an assurance of a prosperous society. Without property rights, they believed only
the tyrants would be able to enrich themselves, as they force the general
population into bondage. Property rights
and a free market economy, therefore, were viewed as being essential for liberty
and the pursuit of happiness. Everyone
needs food, clothing, and shelter, and therefore has a right to acquire and
possess these goods, for the sake of mere life and for the sake of the good
life. The role of government is to
restrain itself from interfering with those needs, and to provide an orderly
society so that one may continue to encounter opportunities to satisfy those
necessary needs of life and happiness.
To
maintain liberty, and a free economy, the protection of property rights and
economic liberty is paramount. Wealth,
after all, is not finite, where one person’s ownership is another’s
deprivation. Wealth is created, and the
opportunity to possess property is indefinite in a free economy. The Founders believed the right to own,
possess, and transact property included more than merely the possession of what
one has, but also the acquisition of what one needs or wants in the future.
maintain liberty, and a free economy, the protection of property rights and
economic liberty is paramount. Wealth,
after all, is not finite, where one person’s ownership is another’s
deprivation. Wealth is created, and the
opportunity to possess property is indefinite in a free economy. The Founders believed the right to own,
possess, and transact property included more than merely the possession of what
one has, but also the acquisition of what one needs or wants in the future.
In Federalist
Paper #10, James Madison wrote, “diversity in the faculties of men, from which
the rights of property originate…. The protection of these faculties is the
first object of government.”
Paper #10, James Madison wrote, “diversity in the faculties of men, from which
the rights of property originate…. The protection of these faculties is the
first object of government.”
From Madison’s
point of view, an individual owns himself (mind, body, and talents) first,
therefore, no one has a natural right to own anyone else. There are no natural masters or natural slaves,
and the first object of government is not to secure the physical property
acquired by the employment of our faculties, but to protect the faculties
themselves. Our individual minds,
bodies, and talents, after all, are the things that are necessary in our quest
to acquire property. Madison offered, “From
the protection of different and unequal faculties of acquiring property, the
possession…of property immediately results.”
point of view, an individual owns himself (mind, body, and talents) first,
therefore, no one has a natural right to own anyone else. There are no natural masters or natural slaves,
and the first object of government is not to secure the physical property
acquired by the employment of our faculties, but to protect the faculties
themselves. Our individual minds,
bodies, and talents, after all, are the things that are necessary in our quest
to acquire property. Madison offered, “From
the protection of different and unequal faculties of acquiring property, the
possession…of property immediately results.”
If all
members of the society have a right to acquire and possess property, competition
is a natural outcropping. Some
properties may be more scarce than others, and in such a condition of scarcity
an opportunity to buy and sell, and accumulate wealth, emerges. Non-owners possess a right to acquire, and
the owners of scarce items have a right to defend their possessions, or provide
a price of their own choosing for the item in question. We must then ask ourselves, “at what point
must government legislate rules to ensure an orderly flow of commerce,
especially when it comes to scarce items?”
members of the society have a right to acquire and possess property, competition
is a natural outcropping. Some
properties may be more scarce than others, and in such a condition of scarcity
an opportunity to buy and sell, and accumulate wealth, emerges. Non-owners possess a right to acquire, and
the owners of scarce items have a right to defend their possessions, or provide
a price of their own choosing for the item in question. We must then ask ourselves, “at what point
must government legislate rules to ensure an orderly flow of commerce,
especially when it comes to scarce items?”
In
many ways, this is where the rubber meets the road. Economics is intertwined with the application
of natural law and natural rights, and while we possess a natural right to
property and the pursuit of happiness, we must ask, “Does government have a
duty to establish legislation to ensure a proper set of rules so that we may
exercise our right to acquire property effectively, and trade or sell that
property as we may wish?”
many ways, this is where the rubber meets the road. Economics is intertwined with the application
of natural law and natural rights, and while we possess a natural right to
property and the pursuit of happiness, we must ask, “Does government have a
duty to establish legislation to ensure a proper set of rules so that we may
exercise our right to acquire property effectively, and trade or sell that
property as we may wish?”
First
and foremost, from the Founders’ point of view, it is essential that government
restrain itself as much as possible when it comes to private ownership. Property should be used as each owner deems
best, and through local government policies government should encourage
widespread ownership among citizens.
and foremost, from the Founders’ point of view, it is essential that government
restrain itself as much as possible when it comes to private ownership. Property should be used as each owner deems
best, and through local government policies government should encourage
widespread ownership among citizens.
The
Framers viewed government as a necessary evil.
While a potential of tyranny always exists when a governmental entity is
present, it is through government that law enforcement and emergency services
are provided, which in turn promotes freedom.
Instead of awaiting the inevitable theft of one’s property, and feeling
the need to spend all of one’s time protecting one’s property, with government
in place a justice system and a law enforcement agency exists to ensure the
protection of one’s property against infringements by others, including unjust
infringement by government itself.
Framers viewed government as a necessary evil.
While a potential of tyranny always exists when a governmental entity is
present, it is through government that law enforcement and emergency services
are provided, which in turn promotes freedom.
Instead of awaiting the inevitable theft of one’s property, and feeling
the need to spend all of one’s time protecting one’s property, with government
in place a justice system and a law enforcement agency exists to ensure the
protection of one’s property against infringements by others, including unjust
infringement by government itself.
Market
freedom then leads to the ability of all free members of the society to sell
anything to anyone at any time or place at any mutually agreeable price. While it may be necessary to ensure, through a
justice system, that government defines and enforces contracts, all other
government policies must revolve around the concept of ensuring that the market
place remains free from as much outside intrusion as possible.
freedom then leads to the ability of all free members of the society to sell
anything to anyone at any time or place at any mutually agreeable price. While it may be necessary to ensure, through a
justice system, that government defines and enforces contracts, all other
government policies must revolve around the concept of ensuring that the market
place remains free from as much outside intrusion as possible.
Without
a reliable method of exchange, however, all of the principles of the free
market system fall flat. To facilitate
market transactions, there must be a medium of exchange whose value is
reasonably constant and certain. If
there is no stable method of exchange, then there can be no accurate measure of
market value, which would create a situation where the prices of goods and
services fluctuate greatly. A rapid and
extreme fluctuation in prices would cause an elimination of debts and
investments through inflation, and property would be able to be taken by simply
manipulating the supply of money.
a reliable method of exchange, however, all of the principles of the free
market system fall flat. To facilitate
market transactions, there must be a medium of exchange whose value is
reasonably constant and certain. If
there is no stable method of exchange, then there can be no accurate measure of
market value, which would create a situation where the prices of goods and
services fluctuate greatly. A rapid and
extreme fluctuation in prices would cause an elimination of debts and
investments through inflation, and property would be able to be taken by simply
manipulating the supply of money.
The
issuance of “Bills of Credit” nearly doomed the fledgling United States before
the Revolutionary War was even complete.
The “Continental” turned out to be a fiat paper currency that drove
inflation to unforeseen levels, and by the end of the whole ordeal the economic
turmoil caused by the manipulation of paper money by both State, and the government
under the Articles of Confederacy, led to a strong demand for an end to
government-issued paper money. In
Article I, Section 8 of the U.S. Constitution a return to hard currency (coined
money made of precious metals) is established, and in Article I, Section 10 the
States are forbidden from emitting bills of credit or coining their own
money. It also calls for only gold and
silver coin to be used as a tender in payment of debts.
issuance of “Bills of Credit” nearly doomed the fledgling United States before
the Revolutionary War was even complete.
The “Continental” turned out to be a fiat paper currency that drove
inflation to unforeseen levels, and by the end of the whole ordeal the economic
turmoil caused by the manipulation of paper money by both State, and the government
under the Articles of Confederacy, led to a strong demand for an end to
government-issued paper money. In
Article I, Section 8 of the U.S. Constitution a return to hard currency (coined
money made of precious metals) is established, and in Article I, Section 10 the
States are forbidden from emitting bills of credit or coining their own
money. It also calls for only gold and
silver coin to be used as a tender in payment of debts.
The
issuance of fiat paper money, however, was not staved off for very long, and
over the last one hundred years the issuance of paper money has become the norm
not only in the United States, but throughout the world.
issuance of fiat paper money, however, was not staved off for very long, and
over the last one hundred years the issuance of paper money has become the norm
not only in the United States, but throughout the world.
James
Madison explained the fears regarding fiat paper money in Federalist Paper #44. He wrote, “The extension of the prohibition
to bills of credit must give pleasure to every citizen in proportion to his
love of justice, and his knowledge of the true springs of public prosperity….
[S]ince the peace, [America has suffered] from the pestilent effects of paper
money, on the necessary confidence between man and man; on the necessary
confidence in the public councils; on the industry and morals of the people,
and on the character of Republican Government.”
Madison explained the fears regarding fiat paper money in Federalist Paper #44. He wrote, “The extension of the prohibition
to bills of credit must give pleasure to every citizen in proportion to his
love of justice, and his knowledge of the true springs of public prosperity….
[S]ince the peace, [America has suffered] from the pestilent effects of paper
money, on the necessary confidence between man and man; on the necessary
confidence in the public councils; on the industry and morals of the people,
and on the character of Republican Government.”
Madison’s
explanation states that the trouble with fiat paper money was both moral and
economic. In addition to creating an
economic crisis, the Framers believed paper money to be unjust, and immoral,
due to the negative influence these instruments of exchange had on economic
efficiency, prosperity, and the ability of the average citizen to fairly buy
and sell.
explanation states that the trouble with fiat paper money was both moral and
economic. In addition to creating an
economic crisis, the Framers believed paper money to be unjust, and immoral,
due to the negative influence these instruments of exchange had on economic
efficiency, prosperity, and the ability of the average citizen to fairly buy
and sell.
That
said, the Founders also understood that in such a system the utopian schemes of
equity would not apply. In Federalist Paper
#10 Madison noted, “From the protection of different and unequal faculties of
acquiring property, the possession of different degrees and kinds of property
immediately results.” In other words, people
with more talent and ambition will generally acquire greater wealth. Such is the reality of a free market system,
and a political system based on liberty.
said, the Founders also understood that in such a system the utopian schemes of
equity would not apply. In Federalist Paper
#10 Madison noted, “From the protection of different and unequal faculties of
acquiring property, the possession of different degrees and kinds of property
immediately results.” In other words, people
with more talent and ambition will generally acquire greater wealth. Such is the reality of a free market system,
and a political system based on liberty.
However,
differences in wealth create another dynamic that does not exist in a
collective system based on social equality.
As one emerges with greater prosperity, to maintain that prosperity one
must continue to encourage the growth and success of one’s endeavors. Normally, these things are accomplished by
expanding one’s entrepreneurial aspirations, which in the end benefits other
members of society through the increase of employment opportunities, and
increased security to protect one’s properties and money.
differences in wealth create another dynamic that does not exist in a
collective system based on social equality.
As one emerges with greater prosperity, to maintain that prosperity one
must continue to encourage the growth and success of one’s endeavors. Normally, these things are accomplished by
expanding one’s entrepreneurial aspirations, which in the end benefits other
members of society through the increase of employment opportunities, and
increased security to protect one’s properties and money.
James
Wilson wrote, “The right of private property seems to be founded in the nature
of men and of things…. Exclusive property multiplies the productions of the
earth, and the means of subsistence. Who would cultivate the soil, and sow the
grain, if he had no peculiar interests in the harvest?” In short, an economic order in which some
acquire more than others is the condition of greater prosperity for all.
Wilson wrote, “The right of private property seems to be founded in the nature
of men and of things…. Exclusive property multiplies the productions of the
earth, and the means of subsistence. Who would cultivate the soil, and sow the
grain, if he had no peculiar interests in the harvest?” In short, an economic order in which some
acquire more than others is the condition of greater prosperity for all.
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