October 22, 2021 Reading Time: 4 minutes

Daniel R. Mandell’s The Lost Tradition of Economic Equality in America, 1600-1870 adds to the historical literature exploring American interventionism in the colonial and antebellum periods. Restrictions on prices, incomes, and ownership were not introduced as wartime measures or invented during the New Deal. Instead, as Mandell explains, they have been with us since the beginning. Intervention is, as Jonathan R.T. Hughes called it, The Governmental Habit. The Lost Tradition of Economic Equality in America, 1600-1870 commits a familiar sin by judging policies by their noble or egalitarian intentions. Still, Mandell’s search for a lost egalitarian tradition is a more helpful contribution to the growing literature on the “New History of Capitalism” than books locating American prosperity in exploitation or late-twentieth-century classical liberalism in conspiracies.

Economics teachers looking for ways to connect their classes on price controls to the rest of the curriculum will find a lot of examples and illustrations of price controls in action during the early years of the American experiment. The period Mandell analyzes features the usual denunciation of those unsung heroes, the “speculators.” On page 107, for example, we read about how the New England preacher Elhanan Winchester “taught schoolchildren through his Plain Political Catechism that public lands should be sold only to settlers and not to speculators or land companies.” However, like many books in this literature, The Lost Tradition of Economic Equality in America, 1600-1870 doesn’t wrestle with how prices solve serious social problems. It also doesn’t do much with the idea that selling land to the highest bidders might be in the best interests of the very people about whom preachers and humanitarians like Elhanan Winchester were most concerned.

To use just one example I underlined when I first picked up the book, Mandell discusses “minimum wages and other measures to support laboring men” without very clearly explaining that these measures were specifically exclusionary to the benefit of “laboring men” (emphasis added) but to the detriment of anyone else (p. 3, see the discussion on pp. 56-57 again). I also cannot help but wonder if the populists would have curbed their regulatory excesses if they had understood what Milton Friedman taught us; namely, that “inflation is always and everywhere a monetary phenomenon” that happens when there is too much money chasing too few goods. 

The parts of the egalitarian tradition that fundamentally misunderstood what prices do, why inflation happens, and the consequences of price controls are interesting and important history. I hope they stay just that: history and not guides to policy. Deirdre McCloskey has called economics the social science of the post-magical worldview. Still, pretty much everyone in the late 18th century was fully ensconced in flat-Earth versions of economic theory and economic history. We should no more trust their prescriptions of price controls to fight inflation than we should trust their medical contemporaries’ prescriptions of mercury or leeches to fight disease.

Mandell documents the egalitarian tradition clearly and ably, but he and others writing on these issues give too much credence to egalitarian goals. They should pay more attention to how different policies or endeavors change people’s incentives and, therefore, have unintended consequences. Mandell quotes Abigail Adams in a letter to her husband John in which she wrote of a “great general cry against the Merchants, against monopolizers &c. Who tis said have created a partial Scarcity.” Mandell then writes,

The result, she told John, was that five hundred Bostonians ‘carted’ six Salem merchants who had bid up prices and refused to take currency; the crowd had dumped the miscreants in Roxbury under threat of death if they returned.

I found this passage especially intriguing given that these merchants were from Salem, and almost every American schoolchild encounters the Salem Witch Trials in history classes and then again in English. As a matter of intellectual history, what are we to make of the Bostonians but that they thought the Salem merchants were practicing economic witchcraft? Did anyone explain how threatening merchants with death, robbing grain merchant Andrew Belcher because he had planned to sell his grain for higher prices in the West Indies, or forcing Boston merchants to sell sugar at a “just price.” might affect people’s future incentives? In the short run, the mob might get Belcher’s grain or the merchants’ sugar at bargain prices, but at the cost of lower future supplies as people think twice about doing business in places where they have a credible reason to suspect mobs might rob them. Mandell also seems to assume that the prices the merchants wanted were unjust while the prices the mob demanded were “just.” On what grounds?

In this and other respects, The Lost Tradition of Economic Equality in America joins other historical analyses in putting power too close to the story’s center. Marx wrote that “the history of all hitherto existing society is the history of class struggles,” but I think Marx was wrong. In the long run, I believe historical inquiries emphasizing incentives and the institutions of exchange–which James M. Buchanan suggested economists should do back in 1964–will bear more fruit.

I learned a lot from Mandell’s informative account of how liberal and counter-liberal ideas spread. On page 77, we learn that “In the state and national governments, liberal economic ideologies seemed to replace commonwealth or ‘just price’ rhetoric by 1780.” As the quantitative analysis of old texts proceeds, we will learn if what “seemed” was so. In addition, he describes the change in ideas in the 1830s on p. 113: 

In the 1830s a tidal wave of American-authored schoolbooks burst forth, facilitated by the emergence in the North of state-organized public school systems and vastly improved printing technology and distribution networks. These works focused on practical matters, American history, and foreign cultures, while encouraging the ‘middle class’ values seen as necessary to succeed in the industrializing market economy.

The discussion proceeds apace through the trials and travails of nineteenth-century liberalism and the efforts of the National Reform Association (NRA), which “renewed and popularized an American individualist form of socialism even as the international collectivist socialist movement emerged.”

I learned a lot from The Lost Tradition of Economic Equality in America, 1600-1870, and I review not as an expert on the historical period specifically but as someone who knows a thing or two about the economics that is missing from most of this literature. The book is a valuable contribution revising stories about early American commitments to economic “hyper-liberalism,” as Mandell calls it. Knowledge will advance when this literature merges historical craftsmanship like Mandell’s with economists’ methodological individualism and the notion that the hyper-liberals might have been right.

Art Carden

Art Carden

Art Carden is a Senior Fellow at the American Institute for Economic Research. He is also an Associate Professor of Economics at Samford University in Birmingham, Alabama and a Research Fellow at the Independent Institute.

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