Sunday, June 14, 2015

The Founders Find The Invisible Hand

There is a core incongruity at the center of the Constitution.  It might even be described as a core incompatibility. By every historical example available to the drafters at that time, it shouldn’t have worked.

Republics, to the extent they existed, had either grown large, autocratic, unwieldy, and then collapsed on themselves (like the Roman Republic), or remained small and un-influential, like the numerous Swiss Cantons, each of which had their own armies, border controls, and currencies.

In effect, Madison, on behalf of the Nationalists, was arguing three things, all of which were open to dispute.  The first was that the system created by the Articles wasn’t working, and the nation was the lesser for it. The second was the reason the Articles weren’t working was because of the weaknesses of the republican system: The “democratic” elements that existed in each state—local government, a state legislature, a chief executive, bred insularity and a tendency to be dominated by special interests.  Madison abhorred factionalism.  But the third was a peculiar elide.  The same system that did not work on the state level could and would work if applied nationally.  

This wasn't easily sold. There was obviously vigorous “political” opposition. The larger and more powerful states liked their heft, and the smaller ones liked their autonomy.  In their respective communities, within their fiefdoms, the new structure might have had some flaws (a bankrupt national treasury and unpaid soldiers came to mind) at a national level, but, at home, it looked pretty good. State government was certainly more representative and less dictatorial than a distant King, and it was unquestionably more representative of their interests.

But, even if one agreed, politically, with the first two of Madison’s points, where was the intellectual justification for the third? If each state was an example of a smaller form of republic, with an executive and a state legislature, and local municipalities, all tending to local interests, why wouldn’t that same lack of broader vision also apply to a Federal Government?  In fact, why wouldn’t a more powerful central structure amplify the very shortcomings Madison was critiquing—more factionalism, more pettiness? 

David Stewart, in his recent book, “Madison’s Gift” says Madison’s solution is “mechanistic, suitable to an age in which clockworks were a powerful metaphor.”  In effect, Madison would build a better mousetrap, where systemic checks and balances would create an environment of vigorous debate, followed by both consensus and decisiveness. 

Stewart’s formulation is in line with most contemporary evaluations—the Constitution as a marvelous and enduring machine, begun as a contract, or better yet, a compact, between consenting adults, self-correcting and perfect.  As a lawyer, it appeals to my sense of order and of bilateral obligations. 

But, I don’t find it fully satisfying.  Madison was too intelligent to believe that the small state government model was fully scalable.  First, to create a muscular new nation, you needed muscle at the top.  That involved an element of coercion—not as much as his fellow author of the Federalist Papers, Hamilton, wanted, but nevertheless, someone, or some body, had, at certain times, to be King. You could devise a system where the respective parts of government could review each others’ actions, and even reverse them (the power of the purse, Judicial Review, the veto, veto-override, etc.) but that process had to have limits.  There had to be finality.

Second, I doubt Madison trusted men enough to think any system he or anyone else devised would always be up to the task.  The very things Madison worried about— "No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity. With equal, nay with greater reason, a body of men are unfit to be both judges and parties at the same time" (Federalist 10)  are not fully resolved by his schematic, and he had to have realized that.  His own “first draft”, the Virginia Proposal, which presumably reflected his true desires, was far more top-heavy than what was ultimately adopted.  And, he initially opposed the Bill of Rights, switching sides after he saw it as a political necessity, not necessarily a philosophical one.

Madison may have been influenced by Adam Smith’s The Wealth of Nations, adapting Smith’s idea of a self-regulating economic marketplace to the possibility of creating a political one.  In this construct, Madison would have agreed with Smith’s idea "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest” and would have applied it to government.  Think of it as type of embryonic rational choice theory, where the aggregate political behavior as expressed through the actions of government reflects the sum of the choices made by elected representatives. They, in turn, are directed by the preferences or restrictions of the people who sent them there.  Thus, the sum, if properly channeled (through Stewart’s grandfather’s clock?) must reflect consensus and compromise.

Joseph Ellis, in The Quartet doesn’t buy the Adam Smith analogy.  By 1787, he feels, the drafting of the Constitution is beyond heavy philosophizing and into practical politics.  Madison was acting as a skilled political partisan doing what he had to do to get the legislation he wanted.  And what he wanted was a strong central government—certainly a lot stronger than the Articles provided.  If he had to compromise at the margins to do it, that was irrelevant to the larger goals. 

I think Ellis discards the idea a little too quickly, maybe because I prefer to romanticize the situation just a bit.  The Constitution was carefully thought out, and argued, and intensively negotiated. It has compromise written all over it. It might have been the best deal Madison, Hamilton, Washington, Jay and the Nationalists could have struck, but I don’t think Madison signed on to it just because it was a deal.  I think he needed something more—some confidence that the apparent incongruity of arguing that something he himself said had failed at the state level would work the national one was not really incongruous.  He didn't want his baby to fail.   

That confidence, I suggest, came from the negotiating process itself.  Remember, what was going on here was basically unprecedented.  A free people were setting the terms upon which they would agree to limit their freedoms.  The fact that they could do such a momentous thing implied that, perhaps, rational actors could look for profit and loss in a political context.  Put in the worst possible light, even if the negotiators may have come into the room looking solely for their own benefit, "by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."

What shouldn’t have worked, quite miraculously, did.  We are still around, kicking, screaming, elbowing, and looking for every last bit of personal and political profit.  Perhaps that’s because we expect that our market, sooner or later, will self-correct, and the monopolists, the price-gougers, the purveyors of inferior and outdated products will be shown the door.

Well, at least that’s the theory.   We can discuss this again next November. 

June 14, 2015

Michael Liss (Moderate Moderator)

Please join us on Twitter.

Or, if you would like to be notified of a new post (we don't sell advertising or email addresses), please contact us.