The Debate Jefferson-Hamilton and the economic challenges for the 21st century.

The most recent book written by Yuval Noah Harari, “21 Lessons for the 21st Century,” is a fascinating approach to how is happening at this historic moment. The entire world is facing tremendous challenges. On one side, the increasing of the totalitarian states, and on the other hand, a very complicated Pandemic that is challenging the efficiency of Political Liberalism as the way to resolve public problems.

Harari’s fundamental thesis is that the world is in a “historical regression” because liberalism could not solve economic inequality. This situation produces political polarization, an incredible desire to go back to the past, and an intense cultural War.

Harari points out that Globalization has been increasing poverty, forgetting the most vulnerable people worldwide, and State is not working to solve this situation but increasing its size. Furthermore, political radicalism is appropriating the public debate, reducing the power of democracy and its legitimacy.

Why is this connected with the famous Hamilton-Jefferson Debate? In the beginning, both tried to understand the State’s ideal size and what kind of political attributes would be most important in social and complex situations. Moreover, both are philosophical approaches to understand the actual situation. If we go back to this debate, it is possible to get insights above our time.

Most countries are dealing with a dilemma: how to rescue the economy by avoiding the expansion of the Covid-19. Furthermore, another question is: how to prevent the State’s political influence against individual freedom using the Pandemic as an excuse to increase the government’s political power? This situation was adverted by Jefferson when he criticized the idea of a Big State with a dangerous size.

The question at the bottom is essential: Would the State get more influence in the political freedom after the Pandemic or, on the contrary, the individual will have the same liberties guaranteed by the US Constitution? This Essay tries to answer it.

Let’s check history. After obtaining its independence from the British Empire, the United States faced the most critical challenge that all countries have: defining what type of political system would rule citizens and government relations.

The United States has been a particular country due to its origins: unlike Europe, there is no millennial history that defines its citizens’ integration processes. Unlike the Latin American countries, no method of miscegenation determines the synthesis of two different cultures.

That is why many years ago, the sociologist Seymour Martin Lipset coined the concept “American Exceptionalism,” which is nothing more than the consideration of the particularity of the United States compared to all other countries: it was the only one based on an idea (freedom, democracy, a Republican Government), unlike the others that were born by cultural clashes, conquests by blood and fire or diplomacy.

This historical retrospective is crucial to understand much of the management process that countries have had both in terms of health and economics, since the different legal frameworks determine, in almost all cases, other mechanisms and speed of response to the Pandemic.

When the George Washington army defeated the British Crown, the political class integrated revolutionary concepts such as legitimacy from citizens’ will. The main political actors of that time gave themselves up to intensely debating the State’s political and organizational structures that had just been born.

With all of these ideas, they integrated a form of Federal Government, which maintained autonomy for every 13 colonies.

One of the most relevant issues in this confrontation of political positions is the State’s size. Jefferson believed in having a limited government, with defined and clear institutional checks and balances, in addition to States having as many freedoms as possible. Also, he believed that agriculture should be the economic engine since it would lead to other sectors’ growth. He fought for a gradual accumulation of capital in the national economy.

On the other hand, Hamilton wanted and longed to replicate the British government model without falling into a monarchy's extreme. He considered that a Strong Government was necessary, with a substantial Army, where War and conquest were the economy's engines. Besides, he believed in creating a strong central bank, distributing credits for economic sectors, and protectionist tariffs with national criteria to promote a robust national economy.

The clash between these titans was immediate. Both visions were in opposition to each other. Jefferson distrusts a Central Bank that issues debt, arguing that this would become a brake and a burden for future generations in the future. Hamilton argued that, without national credit, it was impossible to finance the reconstruction of the sectors after the War of Independence.

In foreign policy, Hamilton aspired to create a robust military alliance with Great Britain and increase the ​​nascent nation's influence in Europe. Jefferson was more sympathetic to creating ties with France, once allies in the War of Independence. Also, he fought for a defensive foreign policy rather than influence.

Those who supported Hamilton were businessmen from the North. Those who supported Jefferson were farmers from the South. A magnificent personal and intellectual struggle arose between both. With John Adams in the Presidency, Hamilton gains strength, and then he loses it when Jefferson is elected President.

Beyond the historical antecedent, this debate takes effect, among other things, to understand the complexity of events throughout the history of the United States and particularly in this context of the Pandemic.

Hamilton wanted to replicate the British government model, without falling into the extreme of a monarchy considering a Strong Government, with a substantial Army, where War and conquest were the economy's engines. Kissinger, in his book “Diplomacy,” argues that the US is a nation with two hearts in foreign affairs:

  • The idealistic approach (Jefferson).
  • Defending freedom and becoming the country as a Lighthouse to protect it in the entire world.
  • The pragmatic heart: The Hamilton intention to protect with extreme army borders and to get the World Leadership.

Hamilton was more open to the importance of international relations in economics; he believed in credit, markets, and technology. Beyond the political conjuncture, the debate is about two visions of the State. There are two models and legal structures that determine how the country is going to build its development.

Hamilton was more open to the importance of international relations in economics; he believed in credit, markets, and technology. Beyond the political conjuncture, the debate is about two visions of the State. There are two models and legal structures that determine how the country is going to build its development.
This struggle between different precepts is becoming present in various ways in which the US tries to solve health and economic challenges at the same time.
For example, it becomes more difficult for local governments to remain genuinely independent of the Federal Government every day. With an insufficient capacity to manage the most straightforward problems since the increase of the Federal Power. Jefferson wanted lower tariffs helping farmers keep the price of imported goods soft, something necessary in these times when Small businesses are struggling to survive.

The authoritarian temptation is always present in democracies, Jefferson aware. The only vaccine against that is the construction of citizens engaged and informed, but they require and contribute their efforts to protecting freedoms. Sadly, we are in an epoch where most individuals are victims of the Mass-Media manipulation, a kind of power without counterweights. For example, Hamilton had little faith in the ordinary person making informed government decisions, something happening now because social media is manipulating the masses. On the contrary, Jefferson believed that with education, the people could make necessary choices about their government, as only they could preserve liberty.

Hamilton believed in power. Jefferson, in the institutions. While Hamilton believed in the Law’s interpretation, Jefferson was more orthodox: Any Power must respect the Constitution.

This point is relevant in times like today. Harari warns a Supranational Power in the world is held in large international companies, which decides over the democratic will. In this sense, Jefferson is right. It is essential to put limits on Economic Power when financial capital seems to have more political power than democratic institutions.

Covid-19, however, places us in a position where we must be pragmatic: the State rules must use Jefferson’s political ideology to the extent that it guarantees freedoms. It is necessary to return to this vision when the crisis ends.

On the contrary, to face the Pandemic, State rules must become as Hamilton proposed. The challenge of reconciling the economy and health requires extraordinary measures, mostly not related to the Constitution’s formal interpretation.

Can this transition be made? It will largely depend on the political processes that the United States chooses. And, also, in the way in which democracy reconciles the challenges of an increasingly changing technological world.