The transformation from mercantilism to a laissez-faire economic system with limited government interference and free trade. The market revolution found its fullest historical expression in the United States during the Jacksonian Era.
As a historical concept, the market revolution has several uses. First, it denotes the transformation from mercantilism, in which the monarchy controlled the economy for political and dynastic policy ends, to a laissez-faire ideal in which the self-interests of individuals dictated what constituted a fair price and fair wage. Before this, the economic and political needs of the monarchy, such as revenue for war, determined prices and wages. Second, it is an expression of the revolution that took place in several areas of American colonial life from 1760 to 1815 that made the laissez-faire ideal so intellectually attractive to the new nation, seeking its path in a hostile world—hostile because the United States claimed the double mantle of independence and democracy universally applicable to all nations. Natural rights and natural law found expression in political institutions and the economy.
Theories of Market Revolution
Adam Smith’s Wealth of Nations (1776) was the ideological cornerstone of the market revolution. The sum of individual self-interests, as guided by an invisible hand coupled with the work ethic, the labor theory of value, division of labor, and deferred gratification (all expressed as natural laws) equaled the public welfare. A republic of concerned citizens replaced the dynastic state, rejecting the “old order” of corruption. Representative government was government limited by a written constitution. The market revolution found its fullest historical expression in the United States. By the time of Andrew Jackson’s presidency, the common law upheld the free-market ideal: no-holds-barred competition generated maximum economic growth. Under the judicial leadership of both John Marshall and Roger B. Taney, the Supreme Court created the constitutional basis for a national economy predi cated on private property and the legal protection of contracts.
As secretary of the Treasury during the Washington administration, Alexander Hamilton envisioned a partnership among merchants, manufacturers, leading agriculturalists, and the federal government. Via a national bank, federal aid to internal improvements, a tariff policy, and a strong court to protect the rights of the holders of private property, Hamilton advocated the development of a national economy. (Library of Congress)
John Locke, an American philosopher, gave the basic outline to polity and economy with his ideas of possessive individualism, natural rights, the right of revolution, and self-interest. Among other influences, the Lockean tradition maintained a suspicion of government: it should be limited and small. When combined with the romantic agrarianism of Thomas Jefferson and other thinkers, Locke’s philosophy was a powerful antigovernment force in American history.
As secretary of the treasury in the Washington administration, Alexander Hamilton provided an alternative policy. He saw a partnership among the wealthier groups and the federal government. By way of a national bank, federal aid to internal improvements, a tariff policy, and a strong court to protect the rights of private property owners, Hamilton’s policies truly endorsed a national economy. As the saying goes, the nation’s heart belonged to Jefferson, but its head belonged to Hamilton. Over time, the policies significantly influenced the market revolution and the outbreak of the U.S. Civil War and beyond. The Civil War had many consequences, not the least in this context was the strengthening of the federal government as expressed in the nonmilitary legislation passed during the conflict.
Several other factors contributed to the market revolution. Besides the elements already cited, the westward movement and the frontier thesis of Frederick Jackson Turner helped loosen the bonds of the past and made the laissez-faire ideal attractive. To be sure, these same groups used government when it served their interests. After all, the government, at whatever level, was the people writ large.
Transportation Revolution
The transportation revolution as represented by steamboats and railroads used governmental aid and private enterprise to shape the national economy and a market revolution as the population “leaped” the Mississippi River and moved beyond the Rocky Mountains toward California. Despite the political opposition of Jackson and others, the transportation revolution was not to be denied, as witness the enterprise and success of the Erie Canal. Ohio and other states joined New York in the canal craze. It was soon followed by the technological refinement of the steam-powered railroads, which were destined to play a major role in the U.S. Civil War.
The social consequence was the Jacksonian revolution, the rise of the ideal of the common man. This common-man ideal was the cultural icon of the market revolution, drawn on the varied elements of the enlightenment as expressed in the New World. The desire was not just to understand the world, but also to change it, and nowhere was the dictum clearer than in the United States. The market revolution was both cause and consequence, and the irony was that by the mid-nineteenth century slavery was the great moral and ethical contradiction in American life.
Drawing on Locke’s and Isaac Newton’s concepts, with a dash of philosophical skepticism, the revolutionary explosions in politics and economy meant a market revolution. Liberty, equality, and fraternity became the modern trinity of secularism. Institutional and personal tension and stress existed among the concepts of liberty, equality, and fraternity. For example, historically Americans often confused equality regarding the vote and social rights with economic equality of opportunity. The result was a public debate in which the discussants talked past one another. These revolutionary processes were tempered by another legacy from the enlightenment.
It was the didactic enlightenment that questioned the merits of skeptical and revolutionary enlightenment. For people who supported the didactic, the universe was intelligible. Clear and certain moral judgments were possible. The Scottish moral philosophers such as Adam Smith, Thomas Reid, Adam Ferguson, and others accepted the “giveness” of human society, the limits of reason, and a belief in the general saneness (the “common sense”) of human nature. Their creed intellectually supported the market revolution that characterized antebellum America. Of course, this ideal still garners massive political support today.
By rhetorically supporting the “natural” institutions of family, religion, and education, the market revolution contributed to the creation of the antebellum American middle class. Capitalism became the dominant and ideal institution. In addition, the market revolution was dialectically linked to public education. A surge in literacy and a proliferation of educational institutions accompanied the changed status of those who experienced this revolution.
While the market revolution liberated many institutions from the heavy hand of tradition, it contributed to a debate regarding the future of the United States as a democracy versus a republic. (The word “Democrat” first appeared in the English language in 1789.) Fearing that a democarcy meant mob rule headed by a “primitive” such as Andrew Jackson, many voters and theorists desired a republic that defended the rights of property, the sanctity of contracts, and a limited franchise. They wanted a republic in which the market elites shaped state policy to suit their economic designs and desires. Equality became equality of opportunity rhetorically available to all men, elite or frontiersman. The market defined democracy.
While Andrew Jackson, a slaveholder, expressed the rise of the common man, Abraham Lincoln, an admirer of Henry Clay’s American System and a critic of slavery, was also part of the market revolution. Such were the complex and fascinating consequences of the market revolution.
Donald K. Pickens
See also: Transportation and Trade.
Bibliography
Maier, Pauline, et al. Inventing America: A History of the United States. 2 vols. New York: Norton, 2002.
May, Henry F. The Enlightenment in America. New York: Oxford University Press, 1976.
Muller, Jerry Z. The Mind and the Market: Capitalism in Modern European Thought. New York: Knopf, 2002.
Pessen, Edward. Jacksonian America: Society, Personalities and Politics. Homewood, IL: Dorsey, 1969.
Sellers, Charles. The Market Revolution: Jacksonian America, 1815–1846. New York: Oxford University Press, 1991.
Sheriff, Carol. The Artificial River: The Erie Canal and the Paradox of Progress. New York: Hill and Wang, 1996.
Stourzh, Gerald. Alexander Hamilton and the Idea of Republican Government. Stanford: Stanford University Press, 1970.