Laissez-faire and Empire

William Appleman Williams ( Empire As A Way of Life: An Essay on the Causes and Character of America’s Present Predicament Along with a Few Thoughts about an Alternative ) notes the tradition from mercantile to laissez-faire policies in the Jacksonian era: “We are dealing with the transition from a state-building – hence more centralized, organized, controlled, even partially planned – kind of capitalism to a far more individualistic, random, free-marketplace capitalism.”

Yet, crucially, he adds that “Free-enterprise capitalism did not abjure – let alone abandon – The State. It merely used it in different ways.” Entrepreneurs “continued to rely upon funds supplied by fellow taxpayers.” Williams cites as examples “all the direct and indirect public subsidies that have funded the toll ways, the canals, the railroads, the automobile industry, the airlines, and other business ventures.”

He’s right about this, but as he continues he goes off the rails. Williams argues that this doesn’t violate the tenets of classical capitalism, but is consistent with the policies advocated by Adam Smith, who “admitted that the Anglo-Saxon-Americans could not have wriggled upward from the muck of backwardness and underdevelopment without a strong common effort coordinated and directed by a strong government.” And, according to Williams, Smith, like the mercantilists, believed that the State was necessary for expanding the marketplace. The success of capitalism, as Smith saw it, depended on continued expansion as expansion depended on capitalism: The purpose of free enterprise is “the prosperity . . . the splendour, and . . . the duration of the Empire.”

The context for the quotation from Smith is not about the purpose of free enterprise but about the proper British response to the American colonies, in a 1778 address concerning the state of the conflict with the American colonies. The relevant paragraphs read: “If the complete submission of America was brought about altogether by treaty, the most perfect equality would probably be established between the mother country and her colonies; both parts of the empire enjoying the same freedom of trade and sharing in their proper proportion both in the burden of taxation and in the benefit of representation. No expensive military force would, in this case, be necessary to maintain the allegiance of America. The principal security of every government arises always from the support of those whose dignity, authority and interest, depend upon its being supported. But the leading men of America, being either members of the general legislature of the empire, or electors of those members, would have the same interest to support the general government of the empire which the Members of the British legislature and their electors have at present to support the particular government of Great Britain. The necessary mildness of such a government, so exactly resembling that of the mother country, would secure the continuance of the prosperity of the colonies. They would be able to contribute more largely; and, being taxed by their own representatives, they would be disposed to contribute more willingly.

“That the complete submission of America, however, should be brought about by treaty only, seems not very probable at present. In their present elevation of spirits, the ulcerated minds of the Americans are not likely to consent to any union even upon terms the most advantageous to themselves. One or two campaigns, however, more successful than those we have hitherto made against them, might bring them perhaps to think more soberly upon the subject of their dispute with the mother country: And if, in this case, the Parliament and people of Great Britain appeared heartily to wish for a union of this kind, it is not, perhaps, impossible but that, partly by conquest, and partly by treaty, it might be brought about. Unfortunately, however, the plan of a constitutional union with our colonies and of an American representation seems not to be agreeable to any considerable party of men in Great Britain. The plan which, if it could be executed, would certainly tend most to the prosperity, to the splendour, and to the duration of the empire , if you except here and there a solitary philosopher like myself, seems scarce to have a single advocate. A government which has failed in accomplishing, what seemed to them to be very easy, is, perhaps, with some reason, afraid to undertake what would certainly prove very difficult. After the unavoidable difficulty, however, of reconciling the discordant views both of societies and of individuals, whose interests might be affected by this union; the greatest difficulty which I have heard of, as resulting from the nature of the thing, is that of judging concerning the controverted elections which might happen in that distant country. ”

This is certainly a pro-imperial statement from Smith, but it has nothing to do with capitalism. It is a proposal that re-structuring of the empire as a confederation of equal states has the best chance for preserving the empire.