Some things never go out of fashion.

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Alexander Hamilton's Comeback

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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What is the key to national economic success? In one view, let’s call it the Hamiltonian, big business and government work together to achieve national prosperity and greatness. In the other, the Jeffersonian, the government that governs best is the one that stays out of the way of -- and occasionally helps -- plucky small businesses.

There are other views too, of course, but in the U.S. these have been the big two. The taxonomy is borrowed from Michael Lind, who outlines it near the beginning of his book, “Land of Promise: An Economic History of the United States,” before boldly asserting that:

Whatever is good about the American economy is largely the result of the Hamiltonian developmental tradition, and what is bad about it is largely the result of the Jeffersonian producerist school.

I’m skeptical of this claim -- it seems like the interplay between the two has itself been a strength -- but I probably should get past the first chapter of Lind’s book before coming to any conclusions. I read several reviews of “Land of Promise” when it came out in 2012, but only bought it (in digital form) late last night, right after I got home from seeing a performance of Lin-Manuel Miranda’s new musical, “Hamilton.”

This obviously says more about me than the current state of the long-running rivalry between Alexander Hamilton and Thomas Jefferson, but based on the rapturous reception at New York’s Public Theater last night, Miranda’s track record, and the fact that I’ve been singing bits of the opening number to myself all day (and I really don’t do stuff like that), I’m willing to predict that lots of people will experience such Hamiltonian moments during the next few years. The show just started previews this week, but it already feels like it has the makings of a cultural phenomenon. “The 10-dollar Founding Father without a father,” in Manuel’s memorable phrase, may be about to hit it big, again.

This is potentially relevant in an economic sense because the Jeffersonian ethos has dominated mainstream political rhetoric on U.S. economic policy for a couple of decades now. Startups and entrepreneurship drive prosperity, the argument goes. Government is mainly an obstacle. Infrastructure is irrelevant.

Such attitudes were understandable and probably healthy as a reaction to the statist, corporatist consensus of the 1940s through 1960s. Many of America’s actual economic institutions (especially its central bank) have remained more Hamiltonian than Jeffersonian despite the rhetorical shift. Still, I sometimes fear that as a nation we’re at risk of losing awareness of the Hamiltonian roots of economic growth.

Yes, the creators of modern Silicon Valley included a few guys in their garages. They would have just stayed in their garages, though, if it hadn’t been for massive government spending on research, mainly military research. In his book, Lind tells of a quasi-governmental endeavor established by Hamilton in 1791, the Society for Establishing Useful Manufactures in what became Paterson, New Jersey. It didn’t amount to much in Hamilton’s lifetime, but over subsequent decades it played a key role in supporting innovation and mass production in textiles, steel and airplanes.

Not that Miranda’s musical gets into all of this. The libretto is adapted quite faithfully from Ron Chernow’s great, great 2004 Hamilton biography, and there are moments of staggering economic wonkiness (including a Hamilton-Jefferson rap battle over credit policy), but the focus is on more universal themes such as love, friendship, ambition, rivalry, betrayal and loss.

There’s economic significance to ambition, though. Miranda’s Hamilton is defined by it. There’s lot of Horatio Alger in his story: orphaned immigrant teenager arrives in New York with nothing and works his way to the top. There’s excess, too. Hamilton pushed himself and others way too hard. That’s why his story ends in tragedy. His ambition, though, was inclusive. He wanted his friends to succeed. He wanted his city to succeed. And most of all, he wanted his fledgling nation to succeed. Let’s see if that Hamiltonian tradition can make a comeback.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net