What is the True American Liberalism?

Ivan Jankovic
Introduction:
With the rise of the Tea Party movement in the US and its subsequent entrenchment into the
Republican party mainstream, the centre of political gravity seems to have shifted rightwards,
from the centrist establishment republicans towards the small government, libertarian wing of the
party. The election of many libertarian-leaning members of the House of Representatives and the
Senate in 2010 and 2012, as well as the movement for the state nullification of federal laws, 1 best
exemplify this trend. The surge in popularity of Ron Paul among the younger voters, with
significant impact on the debates in the party was also noticed by many observers. 2 The last year
Senate filibuster of the appointment of the director of the CIA, led by libertarian senator Rand
Paul over the issues of civil rights and executive power, as well as Ted Cruzs 21 hour filibuster
speech on the Obamacare, newly energized the small government constituency in America. Even
the proponents of the old-school Republican party and media elites concede that Pauls and
Cruzs filibuster efforts signified their elevation as the major national figures and in the same
time entrenched the classical liberal and libertarian ideas into the republican mainstream. This is
one of the immediate reasons to ask the question: is the recent resurgence of the classical liberal
ideas an aberration, a short-term trend, or maybe it has some deeper cultural and historical roots
in America, and if yes, where they could be found?

1 The Tenth Amendment Center, established by Michael Boldin in California closely tracks the state level
initiatives to block or nullify the federal laws. The most important initiatives thus far include California,
Colorado, Wahsington nullification of the federal anti-drug laws, Missouri preventive nullification of the
federal anti-gun laws and ongoing South Carolina nullification of Obamacare (see
http://tenthamendmentcenter.com/).
2 See for example an article in New Yorker from 2011 which argues that Ron Paul is much more than a
typical run of the mill right-wing politician
(http://www.newyorker.com/online/blogs/johncassidy/2011/12/why-ron-paul-isnt-just-another-right-wingnut.html) . There are scores of similar media portrayal in the last couple of years admitting big impact that
Ron Paul is making in Republican politics.

This simultaneous resurgence of federalism/decentralism and the free market philosophy within
the Tea Party in recent years is not a coincidence; it represents the newest historical embodiment
of a very old American tradition, unifying the ideas of local self-government and minimal
intrusion into the private economic and social interactions of the people. This tradition goes back
all the way to the colonial and early revolutionary periods and has never entirely disappeared in
America, although it has been under a heavy assault of the movement for political centralization
and welfare state in the 20th century.
Liberalism?
The very term liberalism in North America nowadays lost any connection with its original
meaning in the 17th and 18th centuries, and all the way through the Progressive era. Ironically,
John Deweys rhetorical ploy, to give collectivism, as a distinctly unpopular idea in America, a
nicely sounding and time-honoured name,3 by calling it liberalism, came to define the way the
term is used by both proponents and opponents of Deweys philosophy. Liberal in American
political jargon became almost synonymous with socialist or social-democrat, so much so that
many contemporary liberals are trying desperately to shake off this old name as a ballast and
refashion themselves as progressives again.
However, for a different reason, the things with American liberalism are not much clearer even if
we go beyond those linguistic (mal)practices of the 20 th century and consider liberalism in its
original context of the 18th century, as a philosophy of political and economic liberty,
individualism and limited government. Who were the true American liberals in this classical
liberal sense, the proponents of free market economy and minimal state? The answer that the
prevailing wisdom of American historiography gives us is deeply misleading, and in some
respects even outright false. Both progressive and conservative historical orthodoxies agree that
the classical liberal thinking coincides with something called commercial liberalism, starting
with Alexander Hamilton and federalists, and then continues with the Whigs and into the early
20th century with the republicans.4 The alternative political tradition that goes from the antifederalists, via Jeffersonians and Jacksonians to the 20 th century is considered to be a proto3 Dewey developed this conception in his paper Liberalism and its Future published in 1935, see
Dewey, 1935.

social-democratic and preparing the way for the progressives and the New Deal. This tradition is
given different names and labels, from social-reformist, agrarian, radical democratic and so
on, but the essence of all these interpretations is that it emerged as a popular or democratic or
socialist (mainstream historians rarely distinguish between those terms) resistance to the
prevailing spirit of commercial liberalism. For the sake of simplicity we could call these two
different and opposed political traditions Hamiltonian and Jeffersonian.
When we study more deeply the founding debates and the history of the early republic, it
becomes obvious that the second, so called radical democratic tradition is much closer to what
we would nowadays call classical liberal or libertarian than the Hamiltonian tradition. What
historians dubbed the commercial liberalism and what really starts with Hamilton and
federalists would more conveniently be termed crony capitalism or mercantilism, namely the
belief in the employment of state power in order to orchestrate and advance the economic
development of the country. On the other hand, Jeffersonians and Jacksonians, the purported
political ancestors of Woodrow Wilson and FDR believed in laissez-faire, non-interventionism
and an ultra-minimal state. Hamiltonians promoted political centralization as empowerment of
the political class to mastermind the economy and monetary and banking policy, whereas
Jeffersonians believed in the local self-government, states rights and very limited federal power,
as the surest bulwarks of freedom.
The main reason for the persistence of this misperception of Jeffersonian tradition as anticapitalist and Hamiltonian as a classical liberal one is the fact that the American historiography is
for more than a century dominated by Marxists and semi-Marxists who have a very simplistic
understanding of economics; the big difference that exists between Adam Smith laissez-faire
(the doctrine of Jeffersonians) and the 17th century mercanitilists (the doctrine of Hamiltonians)
is not a big deal from the Marxist point of view; both are the doctrines of the bourgeoisie.
Additionally, those authors always tend to analyze political processes in terms of the class
struggle between the representatives of the oppressors and the oppressed. In the case of the
early American political debates they decided that the federalists who were closely allied with
the big banks and commercial interests were to be the oppressors, which meant the puppets of
4 This tendency is equally visible in the progressive historiography, for example Beard 1965; Jensen
1963, Parrington 1937, as well as among the members of the neoconservative or liberal nationalist
school, eg. Zuckert, 1996; McDonald, 2000.

the bourgeoisie, which meant that their opponents had to be good guys, i.e. some kind of
socialists or proto-socialists. Charles Beards canonical study An Economic Interpretation of the
Constitution of the United States (Beard, 1965) pioneered this kind of approach and launched it
into the historical mainstream. In Beards study the new Constitution was concocted by the
representatives of the big banks, land speculators and bond holders, themselves with a big ax to
grind, in order to centralize power and advance their own private interests. The opponents of the
Constitution, the so called anti-federalists were depicted as the champions of the small guy and
the working people, who were against capitalism and bourgeois interests, and for democracy,
paper money and debt relief. The entire school of thought, inspired by Beard had emerged that
went far beyond him, to include Jefferson and his followers as well as Jacksonians into this
Pantheon of the champions of the working people and opponents of capitalism (Main, 1961:
Schlesinger, 1953).
The first impetus to break the hold of this interpretation was an insight that Hamiltonian
federalists were much more in tune with the progressive political thinking than anti-federalists.
Cecilia Kenyons article The Men of Little Faith (Kenyon, 1955) was a big game changer in
this regard: herself a left-winger and a progressive, she saw that Beardian extolling of antifederalists and Jeffersonians as the champions of the people was very dangerous and
misguided. She offered instead a picture of anti-federalists as the narrow-minded, libertarian
men of little faith, excessively and obsessively worried about big government and political
centralization and not in the least inclined to the typical 20 th century liberal causes, such as
government redistribution and regulation. On the contrary, argued Kenyon, the anti-federalists
were the extreme laissez-faire fanatics, whose classical liberalism was insofar stronger and more
extreme than Hamiltons, as they rejected any form of government regulation of the economy
whatsoever. Their opposition to the Philadelphia Constitution was prompted neither by their
agrarianism, nor by their proto social-democratic concern for the downtrodden, but by their
extreme and stubborn form of classical liberal dogmatism, threatened by the Constitutions
nationalist and democratic character. The real precursor of the New Deal and 20 th century
liberalism was, according to Kenyon, Hamilton, the American Rousseau with his emphasis on
general will and nationalism, and his creation of a strong national government as a preferable
arena for achieving the later democratic big leaps forward of the 20th century (Kenyon, 1955).

Some other authors also questioned the conventional wisdom by finding free market
elements in Jeffersons philosophy (Hofstadter, 1941: Appleby, 1996) or among the Jacksonians
(Rothbard, 1995), but there has not been a systematic exploration of the tradition as a whole.
American libertarianism is not a novel doctrine, and it is not even an early revolutionary doctrine
as one might have thought. It actually starts in the colonial period and represents perhaps the
leading intellectual orthodoxy of that period, especially in the 18th century.
On the one hand, from the mid-18th century Americans are under overwhelming influence
of a tradition that Caroline Robbins described as radical Whig tradition of England, pioneered by
James Harrington in the 17th century and most forcefully formulated in the early 18 th century by
the British pamphleteers and journalists Trenchard and Gordon in their famous Catos Letters
(Robbins, 1961). The radical Whig doctrine was libertarian both in economics, where those
authors resisted the new schemes of mercantilism advanced by the British Parliament, taxation,
regulation of business, paper money, national bank, as well as corruption in the form of public
pensions and bureaucratic patronage; and in politics, where the radical Whigs castigated
centralization of power, attack on the traditional British medieval liberties and privileges by the
newly emerged executive and administrative state. Radical Whigs abhorred political power as
such, wanted to revive the traditional Saxon liberties of the English free holders and to limit
the power of the Parliament by making the MPs the mere delegates of their local constituencies
(Wood, 1969; Bailyn, 1967). This tradition crossed the Atlantic very early in the 18 th century and
as Bernard Bailyn and Gordon Wood among others extensively documented it became the
leading political orthodoxy in the North American colonies. Catos Letters were endlessly printed
and reprinted, commented on, invoked, plagiarized, enjoying something of a cult status among
the men of letters and intellectuals in America.5
On the other hand, there was in North American colonies another element which facilitated the
absorption of this radical Whig doctrine of government, and that is a semi-anarchic institutional
structure of the domestic political societies. For the better part of the 18 th century the colonies
were not ruled almost at all by the British government; a policy of salutary neglect left most of
the job of governing the colonial societies in the hands of local notables and political elites.
Americans grew accustomed to the system in which the British were just regulating the
commerce with foreign nations, but all internal affairs they were virtually invisible. Moreover, as
5 For the reception of Catos Letters in American see especially Bailyn, 1967.

early as mid-17th century, a strong sense of a separate existence emerged in North America, one
of the expressions of which was a right of incorporation that the colonial bodies illegally
appropriated from the Crown (Kaufman, 2009). All leading North American universities, led by
Harvard and Yale were illegally set up by the colonial assemblies, in a clear act of defiance to the
standard doctrine of the prerogative of the Crown to grant the rights of incorporation (Kaufman,
ibid.).
It was quite natural for the Americans of the 18 th century to perceive themselves as selfgoverning polities, for the most part independent of the jurisdiction of British Parliament,
although in a cultural and economic unity with the British Commonwealth. This is the same kind
of enlightened liberal decentralism we can see in Goethes attitude against German political
unification, Cattaneos analogous stance vis a vis Italian unity or in Tocquevilles critiques of the
centralized state in France.6 This nowadays defunct combination of localism and liberalism was a
natural condition for the colonial Americans, it was the air they were breathing and a self-evident
truth of their political existence.
From this combination of ideas and influences emerged the rebellion against the British
Parliament which ended in secession in 1776, and this attitude carried Americans through the
Revolutionary War, strengthening their sense of political independence and civilizational
mission. When the War ended the challenge to this political vision and experience did not come
from without, from a hostile foreign power, but rather from the domestic political cabal pushing
for a strong national government.7 As early as 1780-81 many of the people who will come to be
known as federalists just 7 or 8 years later, started to propagandize for a national, consolidated
government that would do away with the anarchy prevailing under the Articles of
Confederation, which was a very loose association of independent colonial polities. And the
American libertarians, led by anti-Federalist writers and Thomas Jefferson reacted against this by
trying to reassert the traditional American scepticism towards strong government, economic
6 For Cattanneo s philosophy see Carlo Cattaneo. Civilization and democracy : the Salvemini anthology of
Cattaneo's writings; edited and introduced by Carlo G. Lacaita and Filippo Sabetti ; translated by David
Gibbons.Toronto : University of Toronto Press, c2006. For Geotthe, see Hans Hermann Hoppe. Democracy. The
God that Failed. Transaction Publishers, 2001.

7 For a comprehensive overview of the political dynamic in the period 1780-1787 see Jensen, 1963 and
Rothbard, 1995.

regulation and standing armies. The entire rich political doctrine of decentralism, going from
anti-Federalists and Jefferson to Jacksonians and eventually Calhoun, was a reaction to the
emergence of modern state in America with the new Constitution.
The real crystallization point of the American early history is in the 1790s, one of the most
tumultuous and in the same time intellectually most productive decades in the nations history.
The real birth place of American libertarian theory is the formation of the first party system in
America; the clash between Jefferson and Hamilton over the first National Bank and economic
policy of the first Washingtons administration. The issue was both the concept of sovereignty
and territorial organization and economic philosophy. If anything is a clear testimony to the dual
nature of American libertarian thought, its simultaneous emphasis on localist decentralization
and free markets thats the debate surrounding the creation of the first Americas quasi Central
bank.
That was a debate first on economics: the argument that the federalists, led by Alexander
Hamilton, put forward was a thoroughgoing program of economic mercantilism. Among other
policy measures that Hamilton came up with and which were at the bottom of the very idea of
imposing a new constitution included high protective tariffs for domestic industries, paper money
and national bank in order to increase the investment in domestic business, a generous programs
of subsidies and monopolies for domestic corporations, known later as internal improvements
or what would have been called nowadays infrastructure investment. 8 It has been argued
oftentimes that the new Constitution, and federalists as its proponents, sought to protect the
private property rights, contracts and sound money, reigning in the paper money anarchy that the
states were inflicting upon the nation. Yet, it would be more appropriate to say that Hamilton and
federalists did not want the states to emit the paper money, but reserved that privilege for the
federal government.
Jeffersons response to this challenge was two-fold: an affirmation of free market economics,
especially by translating and/or promoting the writings of the French and British liberal
economists, most notably Adam Smith, Jean Baptiste Say and Destutt de Tracey, and entrenching
their arguments into the American political mainstream; and on the other hand using the states
rights arguments to thwart the Hamiltonian protectionist schemes based on the generous
interpretation of the federal legislative and executive powers. On the one hand, Jefferson was
8 For Hamiltons mercantilist program see Hamilton (1957).

arguing that Instead of embarrassing commerce under piles of regulating laws, duties, and
prohibitions, could it be relieved from all its shackles in all parts of the world, could every
country be employed in producing that which nature has best fitted it to produce, and each be
free to exchange with others mutual surplusses for mutual wants, the greatest mass possible
would then be produced of those things which contribute to human life and human happiness; the
numbers of mankind would be increased, and their condition bettered. (Jefferson, 1969: 216). So,
the entire Hamiltonian enterprise of using government to mastermind economic development
was fundamentally misguided from the purely economic point of view.
However, it was also unconstitutional. In a letter to James Madison from 1792 discussing
what the Virginia legislation should do in regard to the newly enacted National Bank Act. Here is
Jeffersons reasoning from a constitutional point of view:
The assembly should reason thus. The power of erecting banks and corporations was not
given to the general government. It remains with the state itself. For any person to
recognise a foreign legislature in a case belonging to the state itself, is an act of treason
against the state, and whosoever shall do any act under colour of the authority of a
foreign legislature whether by signing notes, issuing or passing them, acting as director,
or any other office relating to it shall be adjudged guilty of high treason and suffer death
accordingly. (Jefferson, 1990: 432-33).
So, according to Jefferson, executing an unconstitutional federal law was an act of high
treason punishable by death. In the subsequent Kentucky Resolves written in 1798 in the midst
of the crisis caused by the Alien and Sedition Act Jefferson would affirm this doctrine of the state
sovereignty and of derived nature of the federal powers by saying that nullification of federal
laws was a rightful remedy for the unlawful practice of a federal government not respecting
the constitutional compact. The most memorable passage of the first Kentucky Resolve written
by Jefferson said:
Resolved, That the several States composing, the United States of America, are not united
on the principle of unlimited submission to their general government; but that, by a
compact under the style and title of a Constitution for the United States, and of
amendments thereto, they constituted a general government for special purposes
delegated to that government certain definite powers, reserving, each State to itself, the
residuary mass of right to their own self-government; and that whensoever the general
government assumes undelegated powers, its acts are unauthoritative, void, and of no
force: that to this compact each State acceded as a State, and is an integral part, its coStates forming, as to itself, the other party: that the government created by this compact

was not made the exclusive or final judge of the extent of the powers delegated to itself;
since that would have made its discretion, and not the Constitution, the measure of its
powers; but that, as in all other cases of compact among powers having no common
judge, each party has an equal right to judge for itself, as well of infractions as of the
mode and measure of redress.9
Jacksonian writers and politicians who inherited the Jeffersonian libertarian-states rights
mantle further developed and refined the typical themes of this tradition. A band of economist
writers and advisers led by William Leggett, William Gouge, Amos Kendall and Condy Raguet
further developed and refined the Jeffersonian free trade and hard money doctrines coming close
to the modern Austrian schools doctrines of the paper money as a cause of business cycle and
upholding strenuously gold standard and full reserve banking.10
In addition to that Jacksonian continued the earlier Jeffersonian doctrine of states rights.
President Martin Van Buren in his book The Origins of the Political Parties in the US directly
traced the lineage of the Jacksonian party to the Jeffersonian republicanism (Van Buren,
1967[1867]). Actually, there has not been a discontinuity between the two; by and large the same
political forces that prevailed over the period 1800-1824, under the name Jeffersonian
republicans, seamlessly re-emerged in the 1830s under a different name of Jacksonians, but
carrying the same political doctrine and same old convictions: free market philosophy (even
more strictly elaborated) and the states rights emphasis on local self-government and the same
rejection of Hamiltonian economic and social program. The project of dismantling the Second
National Bank of United States and the creation of an independent Treasury were the signature
achievements of presidents Jackson and Van Buren which were right out of the Jeffersonian
libertarian playbook. We can follow the lines of this political tradition even after 1850s but it was
substantially eroded after the Civil War 1861-1865 which cemented the depiction of states rights
as a sinister rationalization of slavery. In the coming decades of the 19 th century there were some
great statesmen who followed the broad Jeffersonian-Jacksonian tradition, most notably Grover
Cleveland but the tradition as a whole was defeated.

9 For the treatment of nullification see Woods (2010) and Kilpatrick 1965.
10 For Jacksonian economic thought see Leggett (1988), Gouge (1968) [1883], Byrsdal 1967, or
Rothbard, 1995.

Conclusion
What we see these days as a reinvigorated resistance movement against the federal supremacy
and for state nullification, against the central bank and paper money, is not some new political
pathology, as both Left and respectable Right are trying to portray it, but rather an ancient and
long time ago mainstream American political tradition, lost in the collectivist and centralist furor
of the long 20th century. Radical libertarianism of states rights is as American as apple pie.
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