The View From 1776

The Scottish Enlightenment and America’s Founding:
American Genius

By Robert Curry

“America has produced genius that towers above all other countries in only one field, namely politics: one can argue that the Federalist Papers are the greatest work of political theory ever penned, or that Abraham Lincoln is the supreme visionary among Western political leaders.”
David P. Goldman

Goldman is a brilliant and original thinker, and he has again pointed to a fact of great significance.

Yet his observation immediately invites a question: what was the source of that towering genius?

It is widely recognized that America was truly blessed, far beyond any reasonable expectation, in the wisdom and greatness of soul of the Founders and of Lincoln.  (Lincoln, I would argue, deserves to be counted among the Founders for completing their work.) That is surely part of the answer.  The French got Marat, Robespierre and the Emperor Napoleon; we Americans got Madison, Hamilton and George Washington.

So remarkable are the Founders that many Americans believe that a more than benign Providence was at work. The evidence for that belief is everywhere.  Washington again and again apparently miraculously protected from harm in battle, and the orphaned, illegitimate Hamilton whisked from obscurity in the Caribbean to serve brilliantly at Washington’s side in the war, at Yorktown and in the first administration are just two examples in the marvelous chronicles of the gathering of the Founders.  No wonder that Washington himself believed that Divine Providence had guided events in the Revolution and the Founding.

However, the source of America’s genius at politics goes beyond that awe-inspiring assemblage of men.  America, the Founders remind us, was founded on a set of self-evident propositions.  In designing the government and envisioning the nation, the Founders were quite consciously relying on and working with a well-considered set of arguments and ideas that were grounded in a profound understanding of history and of human nature.  America’s Founding was the result of the greatness of the ideas that guided those men, as well as the greatness of the men who relied on those ideas.

Today in America, the greatness of the Founders has not been completely forgotten, but we have, for the most part, lost sight of the philosophy that guided their deliberations.  Most reasonably-educated Americans believe that the Founders more-or-less relied on the ideas of John Locke for the Founding, and that thereafter practical-minded America was too busy opening up the frontier to bother with philosophy.  As a result, America did not get around to creating a native-born American philosophy until the advent of pragmatism.

This version of the story of American thought is much worse than a caricature; it is profoundly wrong.  In fact, the Founders relied on America’s native-born philosophy, the American Enlightenment, a philosophical tradition that reigned supreme in America, according to Jeffry Morrison, for more than 150 years.  The American Enlightenment tradition was widely accepted in academia and in American society in general until well after Lincoln’s death.  It was only eclipsed in academia by pragmatism, according to Allen Guelzo, around the beginning of the 20th century, falling victim to its adherents’ failure to adapt to the new system of politics within academia.

Called, almost interchangeably, common sense philosophy or moral sense philosophy by historians of the 19th century, American philosophy descended directly from the American Enlightenment that informed and inspired the Founders.  American philosophy emphasized common sense and the moral sense because of its indebtedness to the Scottish Enlightenment.

Scottish Enlightenment philosophy was set in motion by Francis Hutcheson, founder of the moral sense school.  Hutcheson mentored Adam Smith and occupied the chair of moral philosophy at Glasgow before Smith.  Thomas Reid, who succeeded Adam Smith in that same chair of moral philosophy, founded the other wing of Scottish Enlightenment philosophy, the common sense school.  The ideas and arguments of Hutcheson, Smith and Reid shaped the American Enlightenment profoundly. 

The Scottish Enlightenment was brought to these shores by a wave of enthusiastic scholars and clergy from Scotland, scholars like John Witherspoon and William Small who mentored Madison and Jefferson, and also by Americans like Benjamin Rush who had gone to Scotland to study. 

The thinkers of the Scottish Enlightenment and the people who carried their ideas to America arrived just in time to provide the foundation for the American Enlightenment and to shape profoundly the American Experiment.  The great men and the ideas they needed met in the historic moment.  Perhaps this matter of perfect timing is as remarkable as the men who received it and the use those men made of their opportunity.

And if we want re-capture the view from 1776 in order to understand the thinking of the Founders, perhaps the best place to start is with the Enlightenment tradition that informed their thinking.

Fed chairman Ben Bernanke and New York Times liberal-progressive polemicist Paul Krugman disagree about the Fed’s monetary policy.

Krugman continues to expound the view that, if the Fed accelerates its rate of creating phony dollars, consumers will go on a spending splurge and businessmen will put their excess cash reserves into expanding their operations and hiring more people.  Earlier he advocated multi-trillion dollar increases in government stimulus spending, i.e., fiscal policy, for that purpose.  To answer the fact that such policies have never worked, Krugman and his fellow Keynesian economists always say that, however huge government spending may have been, it wasn’t big enough.

There may be a short-term flare up of business activity, as with Obama’s cash-for-clunkers or subsidies for home purchases, but such stimulus spending merely pulls already-intended purchases into the immediate term.  As soon as the stimulus spending or subsidy ends, purchases drop below their earlier rate.

There is no historical precedent for a government spending its economy into prosperity.  The ultimate result is inflation and fundamental dislocation of the sectors of its economy.  It was tried, in a major way, in the 1960s and early 70s.  We got stagflation: soaring unemployment and the highest rate of inflation in peacetime history.  Franklin Roosevelt tried it in the 1930s.  After twelve years of the Great Depression, unemployment was still at 17% in 1940.

In our last major engagement with phony-money inflation, during the 1970s’ stagflation, not only did businesses not expand, many shut down entirely.  The Midwest, formerly the industrial heartland of the nation, became known as the Rust Bowl because of its abandoned manufacturing plants.  Inflation made American businesses uncompetitive with foreign producers, wiped out more than half the purchasing power of people’s savings and incomes, and dislocated huge swaths of capital investment and jobs.  People’s investible funds were plowed into inflation-proof assets like jewelry, precious metals, and art, none of which did much for employment. 

The phenomenon of leveraged buyouts led to the liquidation of long-established businesses and the discharge of their workers.  Why?  Inflation had reduced corporate profits to such an extent that the entirety of company could be bought by tendering for all of its common shares at depressed prices on the stock market.  Take-over entrepreneurs than sold off pieces of a company’s least profitable business and used the proceeds to pay off their acquisition debt.

All of that was the consequence of the Federal Reserve’s hubristic presumption that they could create just a little bit of inflation and keep it under their control.

Even Bernanke recently has stated that the Fed’s mandate to stabilize the dollar outweighs, at the present time, its duty or ability to create full employment.

Let it be noted that Fed’s announced intention to create inflation at the rate of 2% per annum contravenes its mandate to stabilize the dollar.  A stable dollar, by definition, means zero inflation.  And inflation is, also by definition, increasing the supply of fiat, paper money faster than the increase in output of real goods and services (before Nixon took us off the gold exchange standard in 1971, inflation meant the Fed’s creating dollars out of thin air in excess of the government’s gold holdings).