Samuel Gregg (@drsamuelgregg) is the Friedrich Hayek Chair in Economics and Economic History at the American Institute for Economic Research and the author, most recently, of The Next American Economy: Nation, State, and Markets in an Uncertain World. City Journal associate editor Daniel Kennelly spoke with him about the book.
You argue in the book that America has strayed from the Founders’ vision for a free-wheeling, entrepreneurial “commercial republic.” How have we strayed?
Today’s America looks more like a European social democracy than we are willing to admit. In texts like Washington’s “Farewell Address” and The Federalist Papers, we find an ideal of a republican form of limited government and a society that is free and highly commercial in its orientation. The sheer size of government’s reach into the economy via regulation and the degree to which many Americans economically depend on the state have made that original vision seem far away indeed.
What are the main components of any effort to restore the Founders’ vision?
Obviously, policies that diminish the state’s reach into the economy and allow space for reinvigorating civil society are essential. Even more important is a normative vision, which clarifies that the case for entrepreneurship, competitive markets, and dynamic trade goes far beyond economics. If free marketers can offer only “more stuff produced more efficiently” as their central message to Americans, we will lose the argument with interventionists, who are adept at dressing up the economic nationalist case in patriotic garb. In other words, free marketers need to combine their economic arguments with a focus on political economy. Adam Smith understood this.
At a time when politics on both the left and the right seems increasingly framed in nationalistic or protectionist terms, what is a political way forward for an economic freedom agenda?
First, we must show how economic-nationalist policies are against the interests of America as a sovereign nation and the interests of Americans, including blue-collar Americans. In other words, we must take the argument onto terrain that economic nationalists claim as their own. Second, it’s imperative to demonstrate that protectionism and industrial policy fuel cronyism, collusion, and the triumph of the politically well-connected over everyone else. Taken together, it amounts to an appeal to national interest and self-interest, but it’s also about mobilizing people to address a deep problem in the body politic.
How do you square China’s rise—and America’s national security concerns more broadly—with the economic vision laid out in the book?
The approach that I suggest is what my book calls “free trade realism.” That involves acknowledging, as did Adam Smith, that genuine national security concerns trump economics. And there are genuine national security issues with China. But that doesn’t translate into America getting into trade wars with China or forcing American businesses to leave China, let alone adopting Chinese-style industrial policy ourselves. There are many things we can do—prosecute Chinese businesses that engage in intellectual property theft, restrict the export of sensitive technology, and so on—without embracing the type of protectionist policies that will hurt America as much as China. Moreover, we should underscore that American businesses are already leaving China under their own volition as economic conditions deteriorate there because Beijing has abandoned even its limited economic-liberalization policies.
The last chapter of the book contains a short but intriguing discussion of Catholic philosophers Michael Novak and Jacques Maritain. How do they fit into your argument?
Both Maritain and Novak recognized that the economy and commercial society had acquired particular form in America because of ideas about commercial republicanism that flourished in the Founding period, thanks partly to the Scottish Enlightenment, which exerted a powerful influence upon key Founders. They concluded that the case for markets in America had to be grounded in core principles of the Founding, for therein is found the legitimacy for markets in America. And if you win the legitimacy argument, you stand a good chance of winning not just the economic argument, but the political one.
What are you reading?
I just finished Hayek: A Life, 1899–1950. I learned a great deal about the deeper background to some of Hayek’s thought and the man himself. Now I’m rereading an intellectual biography of another prominent Keynes’s critic, Jacques Rueff: un libéral français. Rueff was, in my view, one of the twentieth century’s best monetary economists, and his ideas are as relevant today as they were half a century ago.
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