said good but thank you that is really such a crucial part of the heart. this book to you all. thank you so much for coming out tonight. man, this is a tremendous achievement. let's give it up for antonia

good afternoon, everybody. i'm yuval levin of the american enterprise institute an's my pleasure to welcome you to a set of conversations about capitalism and the american founding. today's gathering is part of a large and ambitious project for us here at aei. and i want to say just a few words about it before we get started. 20, 26, two years from now, will mark the 250th anniversary of the american founding. a lot of organizations are going to find ways to recognize that milestone in a variety of ways. but in thinking through what kind of distinct contribution we

might be able to make, in particular, we thought that we should produce something of a ■plasting intellectual product through a set of conferences that then will yield a set of books and educational materials. beyond that, explore how americans now should understand some of the key themes and questions at issue in our country's founding. those materials can outlast the anniversary, can serve educators and students and citizens for many years to come. and to do that, they'll draw on scholars from a variety of fields with a diversity of viewpoints to offer americans some wisdom about ourl inherita. and so, over the course of more than two years, we're hosting eight scholarly conferences here at aei, each of which will be devoted to a particular facet of the character and legacy of the american revolution. the first of these was held late last year on the theme of democracy and the american revolution. today's is about capitalism or economics and the revolution. future conferences will look at

the founding and the revolution through the lens of religion, of affairs and other subjects. each conference then will result in a book of essays on that subject, as well as all kinds of video and audio and digital products. and the books will then be gathered into a collection to be published in time for the july 4th, 2026 anniversary and to be widely available as a civic resource available to public libraries, to college and high school teachers and beyond. our goal really is to create literature around the founding and to help inform and reinforce the growing movement, to strengthen civic education and civic learning in america. this is, as i said, the second of those conferences and our aim today is to think about the founding and the american revolution through the lens of economics and of the market economy, which the united states quickly came to embody in the world in the wake of the revolution 1776, the year that we mark as the beginning of our nation's life.

the anniversary we're celebrating was also the year that adam smith published the wealth of nations, ak that came to be known as the definitive early account of the principles and character of the market economy. and so we are approaching the 250th anniversary ofhe declaration and of the wealth of nations, which may be a fortuitous coincidence or maybe, as the marxists used to say, there's no such thing as a coincidence. and the two really are intertwined by much more than chance. nk about the economic dimensions of the american founding. with the help of five great scholars of the subject today from different fields. each of them looking at the question from ati each is producing an essay for a volume on this subject, and so we'll speak a arguments of thatd then they will engage in conversation with each other an. we'll do that in two panels. the first will be moderated by mywhite and will feature deirdre mccloskey chris thomas and richard epstein and the second moderated by me will feature cost.

we've dubbed our theme capitalism and the arirevolution part because the term capitalism has become kind of provocative in our time. in fact, every single one of the panelists first approached them with this title, hae about using the term capitalism in describing the subject we're taking up. and once that became clear to us, then we knew for sure that we had to use that term. capitalism defenders of the market economy, in a sense, are now often uneasy with that term because it might give the wrong idea about the nature or the organizing principles of our economic system. critics of the market economy very often n capitalism as something of an insult. we're using that term because we think that it might force everyone involved in these conversations to stop and define their terms a little, to think hard about just what we mean when we approach the american founding and its era through an economic lens precisely because it is contested.

maybe it will keep us from assuming too much and force us to really get to the bottom of things. the american revolution plainly had some inescapable economic dimensions, and the nation it launched has been identified with the commercial economy and the market economy more or less from the beginning. that gives us a lot to talk about and think about, and so we'll get started doing that. the first panel, as i id be moderated by my colleague, adam white. adam is a senior fellow here at a leading scholar of the law and constitutionalism with a particular focusadministrative e supreme court, the separation of powers, the foundations, really, of american republicanism. he's co-directing this project to mark the 250th anniversary, the founding, along with our colleague john yoo and myself. and he will introduce the first session and get us going. so, adam floor is yours. thank you, yuval. thanks, everybody, for joining us today. and thanks especiall to our speakers for this first conversation onmerce and the founding. now, about a decade after the american revolution began, john,

as americans began to deliberate on a new constitution, commerce was, of course, a central theme. and interstate commerce was a significant. but, of course, at the beginning of it all, the declaration of independence itself and the debates leading up to it. commerce was a significant part of the conversation. the reasonsrhetoric around the n revolution in the first panel, we're so lucky to be joined by three speakers will explore a different try to ask a few questions. connecting commerc■re in the founding era to to politics, to the markets, and to statesmanship. i suppose somebody has to point out the irony of today's conversation happening on tax day. but of course, for the new englanders in the room, i want to especially wish them a very happy patriots day. maybe that's a more positive way to start this conversation.

i'll introduce each of our three speakers in reverse order from how they're going to give their opening statements. richard epstein is the lawrence, a tisch professor of law at new york university, a senior lecturer at the university of chicago and a senior fellow at stanford's hoover institution. his countless writings include simple rules for a complex world an liberal constitution. before him, we'll hear from professor deirdre mccloskey. she holds the cato institute's isaiah berlin, chair of liberal thought. she's a distinguished pross emerita of economics and of history at the university of illinois at chicago. her myriad books include the bourgeois virtues, ethics for an age of commerce and i think most recently, why liberalism works. how true liberal values produce a freer, more equal, prosperous world for all. but first, we'll hear from christopher demuth. chris is the heritage foundation's distinguished fellow in american thought and

heritage's b, kenneth simon center for american studies. but in this building, we think of him first and foremost as president of aei from 1986 to 2008, following his public service in the reagan and nixon administrations. every day on my way into the building, i turn and i see chris. the statue of chris smile at me as i walk in. chris, it's nice to see you in person so why don't you go first? thank you. thank you. you've all. it is easy events of the american revolution and found in the birth of a nation of free marketé& listen. the resistance to the british navigation acts and other trade restrictions, the constitu tional convention convened to end the economic turmoil of the articles of confederation.

the constitution's protections of property and contract the fledgling government's bold funding of war debts and establishment of a national bank. it is important to recognize, however, that these were matters of intense controversy. hamilton's debt and banking proposals were bitterly contested and enacted narrowly with a fair amount of political subterfuge. federalists and democratic republicansly on federal and state roles in economic policy, crony capitalism, making sport of many anti-market nostrums were prevalent in the state legislatures before and after the constitution. the founders were in broad agreement about natural rights and private property, but disagreed sharply on the application of those principles to practical questions. the remarkable thing is that so many hotly debated issues were

decided in ways that further a order. that is the fundamental question of the rise of american capitalism. quotations from the declarationt and convention diaries can illuminate this question but cannot answer it. for this, i recommend our colonial heritage, which was the source of the founders words and deeds and of our ensuing prosperity. my answer is that the colonial and founding periods established an order of competitive pluralism. i use this coinage to distinguish from the liberal pluralism that is often said to be the essence of american nationhood. a mosaic of cultures, religions, ethnicities, peacefully coexisting in a spirit of mutual respect, or at least toleration. competitive pluralism sees this diversity differently as a dynamic, disparate institutions,

traditions and associations, competing for adherents, prestige and prerogatives. liberal elements is a feature of american pluralism, but the defining feature is energetic. a association building and promoting and proselytizing on behalf of matters, moral and practical, personal and political. competitivedi4 pluralism has bea critical source of vitality in american culture, science and religion enshrined in the first amendment. it is also been the organizing principle of our politics, government and commerce in politics and government. institutions compete for votes, jurisdiction and power in commerce. institutions compete for resources. customers and profits. the two orders have a common provenance. the founders disagreed about many things, but they were all suspicious of power and wary of tions. their hostility was born of

experience with british monarchs, aristocrats and ministers, and with their traitorous frictions and business. business monopolies, among other things. for many of them, immediate experience was reinforced by study of ancient history and modern philosophers from montesquieu to adam smith. that's not the whole story. many founders were also suspicious of political democracy and comfortable with hierarchy and meritocracy. but the british settlement of the eastern seaboard and western frontier had been localized, culturally diverse and entrepreneurial, led by pioneers o were accustomed to freedom of action and jealous of their prerogatives. when the time arrived for construct a national , america was an adventitious regime of multiple self-made sources of authority. they had to be accommodated in some way. the entrenched interests pushed

for decentralized nation rather than, as in britain, centralization. these circumstances produced a strong bias for the first thought dispersed, fragmented power in both government and commerce. my thesis is that a competitive political order permitted men of commercial temperament to establish an economic order of competitive capitalism. here is a broad brush summary. first, in the colonial period, old world culture and new world circumstans laid the groundwork for the institute lutyens erected at the founding. the settlers were adventure ers, seeking a new life in a faraway land, beginning with a perilous ocean voyage, followed by daunting uncertainties and challenges. tocqueville's 1835 assessment was nature and circumstances have made the inhabitant of the united states an audacious man.

that of historian carl douglas in 1951 wasame in the first shi. many settlers were religious refugees, but their leaders were necessarily self-rule and practical. the puritan john winthrop and the quaker, william penn, came from wealthy. welcome to british families and developers.uas they and many denomitional copies. edition the defining feature of american religion. tocqueville thought religion was a prime example of our gift for voluntary association. americans, he said, so completely confused. christiane, city and freedom that it is almost impossible to have them conceive of the one without the other. the colonies were either joint stock companies owned by private investors or royal land grants to favored individuals private fo profit colonization reflected english political

traditions and in the 1600s, the rise of the bourgeoisie and the distress in circumstances of monarchs and ministers through decades of war and revolution. in contrast, the spanish came as conquest stories of the government. the french as trappers and merchants who were agents of the crown with no political rights of their own. the colonies were rich in resources, but starved for goods and credit and isolated by a mighty ocean. seaborne commerce required capital investment. reliable connections and foreign ports, and astute management of the enormous risks of ocean transport. this led to theof the businessmen in new england. merchants became influential personages equally and eventually supplanting the d church leaders in colonial government. the■s merchants ignored the motr country's mercantilist export and shipping restrictions until

london finally got its act together and clamped down. after 1707, paving the way eventually to revolution in meantime, the merchants were facing complex commercial voyages with multiple perils. they hit on the idea of trading risk as a commodity separate from the physical commodities being transported and subject to estimation valuation and market exchange. that was the capitalist invention of insurance. it led to the american f freedom as self-ownership. if the future could be reckoned with rather than passively accepted as implacable fate, then the individual could take response ability for his own lives course, including eventually the slaveab ships. the colonists most consequence to innovation was converting the land from aerostat from

aristocratic endowment to democratic capital. the settlers made ready use of america's most abundant resource, often by squatting, which was illegal in britain, but natural and hard to police in the vast territory. in fits and starts, colonial legislator legislatures promoted widespread land ownership, ship and circulation through public recording of deeds and mortgages by liberalizing creditors remedies against the debtors land. they lowered interest rates and made land routine secured for commercial investments. and every day transactions. joseph's story would write that colonial legal reforms made land a substitute for money. on the eve of the revolution, per capita income in the british colonies was higher than in britain and europe and much higher than in spain and portugal. and france's colonies. americans were 2 to 3 inches

taller than european was in the northern colonies. more than 70% of families owned their own land. population was surging thanks to high immigration and high fertility. actions and institutions of the founding of the enterprising, self-governing, decentralized society that settler culture and circumstances had given rise to. most of the signers of the declaration, in contrast tution were men of commeshippers and sd developers and speculators. they were much more liberal and practical than those who read most revolutions leisured, nobles and clergy inflamed intellectuals, disgruntled with military officers in contemporary paris. the members of the committee on public safety had no experience in the world of commerce and

exchange. the constitution did not establish a policy direction for the new nation. but instead a political structure in which policy would be determined by institutional competition. separation of powers was a republican adaptation of british and european forms, but also drew on commercial experience. as madison wrote in federalist 51. the policy of supply going by opposite and rival interests. the defectf better motives might be traced through the whole system of human affairs. private as well as public. i had to quote the federalist at some point. so there it goes. separation of powers was intended not only to police corruption, however, but also to promote division of labor in the three distinctive government functions. hamilton's genius debt assumption and banking schemes were an immediate vindication of executive specialization. they would never have been adopted by a legislative

government and were key to business confidence and economic growth in the new republic. executive congressional rivalry did not by any means always produce good economic policy, but checks and balances limited the supply of policy of all kinds. cumbersome government gave a wide berth to energy in the private executive's. several semi sovereign states was a colonial fait accompli to the despair of madison, washington, franklin hamilton and others. it turned out to be the constitution'simportant economic contrivance. states seized the leadership of national economic development and displayed great capacities for promotion and risk taking, leading often to bankruptcy. when jackson abolished the national bank, the states lacked state banks leapt into the breach. the course of empire was for the

national government to acquire and distribute the territory through the states, to build the interest structure and small landowners and businesses to develop the economy. the founderstal federalism was a regime of competition among states for businesses and investments. early results of primary ed and entail further democratizing the land and the chartering of hundreds and then thousands of new fangled limited corporations that had hardly existed before. state articles of incorporation were usually for specific owners and purposes, which promoted rent seeking and corruption. here, indiana was the big innovator. amending its constitution in 1851 to require that quote all laws shall be general and of uniform application. third, and ver briefly in

conclusion. rn technology and culture have eroded competitive pluralism in economic affairs. the national executive has acquired tremendous centralized power and even lands ownership, having given away or sold most of the land. in the 19th century, it now sequesters nearly 30% of the nation's land and more than 90% of the western states. private enterprise and government have joined forces through highly articulated laws, regulations and taxes and through many nonpublic arrangements and real time mutual surveillance. much of the contemporary criticism of american from both right and left is aimed not at capitalism per se, but rather at political capitalism. the consolidation of scoercion t seeking, restoring institutional

or competition within government and between government and private enterprise is a cynical mention of improving the productive, the productivity and the reputation of american capitalism. thanks for next, we'll hear from professor mccloskey and should hear over here while she's making her way to the podium.ofr questions later on in the conversation. and for those who are watching live online, you can submit your questions either two ways, either on twitter or by email. information for both is on the events page. professor, thanks for the thank you, dear. i have a speech defect. it's a free country, so if you can't stand it, you can run screaming from the room every glorious fourth i read out loud the declaration of independence.

it's a splendid document. it adopt this. it's in spirit. it could. custom, but as an economist and his economist and his dorian, i'm sorry to report that the declaration of independence is not altogether god's own truth. what's its core truth? wrote, in honor of slaves. is it all men and women? there are created equal? but the economic of independencd the implied course of the american revolution and it's

seeking hammock. it's economic consequences. again implied by theif king geop his evil will be rich and free, are not historically supported. in the first place. the declaration claims.■z in detail that the cause of the vamerica revolution was the tyrannical behavior of good, of. george and third in parliament and in person particular for my purposes as an economic history

historian, it claims that the economic effects of being a part of the british empire in the way that they at large took colonies, were by sharp contrast with, say, england in jamaica was to impoverish theoo colonials. it's been shown by economic history historians that as economists who are historians, but also by historians who are historians,true. but in fact, the. colonials or taxed notably less than these innocents of the home country, and that the long

standing navigation acts, which dated indeed from the from the 16, 16 hicks days when the english enemy was holland, were not large causes of economic distress in the new world. so as as a causecontrary my earn as a college marxist. you economic causes were not so interested to the. to the to the causes of the america they weren't at least in a way that's

age of trump. they weren't, at least in their objective character, their real effects were small. these impositions, these two tyrannical economic impositions. but the beliefs about them and ■hthe claims about them and the agitation about the in the 1760s and and. 1770s were real enough cause of the american revolution. they created three parti, such as we have now in 2024, so called patriots or whig whig

party prepared to. commit their wealth, their lives and their states, its sacred honor to what amounted to treason against the crown, and on the hand, another third of small population, free population who were to tories, some of whom not a large share actually, but some of whom fled when thel who fled? who fled the country after. 1783. and as is always the case, a large third in the middle, third we've come to call inden the de,

of course, was to try to persuade the independence toet mo them to join the patriot cause. now what then was the economic effect of the war itself? it was disastrous. the war was bloodier per capita than the say that than than the than. this second of america's two civil wars. a higher percentage of american colonists and both sidesd in the struggle. and it was economically as wars tend to be a catastrophe.

there's a of a queasy■n keynesin view that wars are good for commerce. well, the hell they're it turns out that killing people and raping women women and burning houses and blockading ports is not good for business. so the narrow■4 velvet victory after. sir eric togo, which brought the french in and the final battle, it's interesting to note that there were as many french soldiers at the battle as native americans or americans, and then the slow negotiation is really a

piece. it was a close thing. it could have gone the other■ way, had the british not felt it was a existential threat and if the french, if the benjamin franklin had not been so eloquent in his clothing, especially his coonskin cap, so it a close thing and a bad thing,ar is hell. as someone said about the sick second american civil war. so how about then the economic consequences after the war, after 1783? well, we've heard, the concern adoration was not a striking economic success.

barriers among themselves, as by the way, is still true in india. now. and though there were accomplishments, economic great accomplishment of the. 1780s before ourn was the northwest ordinance, which for the enormous block of land of north of the ohio, south of canada, east of the. mississippi, that the british you know, somewhat a strange act of not paying2$ attention handed over to the colonists, perhaps

because they thought that the indians would give them so much trouble that it wouldn't be or wouldn't be worth. was important but in the short, even that grea acquisition and even the. the even greater acquisition of the new orleans purchase. and then this one pleasant business, the 1840s of stealing half of mexico to supplement it all that was not important in. the 2030 even 40 years after the declaration of independence that period up to around.

1818 ten perhaps because after all there was another war with britain. in 1812, which had very bad effects. and what should and i don't mean george washington, i mean this place. had it killed it in the cradle. that would have been a good idea. but it didn't. economic growth in the united states. was zero or negative. the the figures are indistinct, of course, but economic historians have concluded that it was not the case, that it was a good idea to break from the empire, to be out of the british empire, and to be indeed in some ways hostile to british economic

affairs. it was it was a bad period period. colleagues of mine in economic history have argued that american economic growth so in the 19th century, it would have been much faster earlier had. well, now let's see, what's the counterfactual? had the united states stayed in the empire, had the revolution not happened, if we had become canada, so to speak, because in making these assessments, economic or political social, you always need to consider the counter]# factual. what would have been the case? what were the realistic alternatives? i think and i think the case is

quite strong economically that staying in the empire would have been the course of the wisdom. and indeed, ben franklin believed so until very late. he worked tirelessly in pennsylvania and in in london to try to persuade people to cool their tempers and to trouble si. they. colonials and the reach a sensible agreement. there. there's not much case to be made that the united states was made greatly better off than, say, canada by being outside of the empire in such a violent way.

but there is one respect in it for, for example, the romans, the grave matter of slavery would, i think, have been solved. you in a much more sensible than a great civil war. if we had continued to be part of a slowly. liberalizing move, the uk after 1833 in the british empire, slaves were emancipated with owners, a proposal that was made by moderate abolitionists, the united states, and turned flatly by the slave owners among whom s our friend thomas jefferson.

in. six 1885, richard rumbold, a radical, egalitarian in england, was hanged in edinburgh in and as he was permitted to do so under english law, he couldn't give a speech from his his scaffold and did it in the he said to, i'm sure the amusement of the crowd gathered to see the see the entertainment more entertaining even than than c-span. he said, i think that no man born of god above another.

for nothing comes into the world of the saddle in his back, nor any booted and spurred to ride him. now, in the last letter that thomas jefferson wrote, turning down an invitation to travel to watch england to give ao weeks e quoted this very sentence without attributing the issue. he was that the phrase was quite well known that he assumed perhaps that is of correspondent would know that it was this great englishman. that was perhaps the lasting consequence as economic,

political and social of the american revolution. i'm just now read a reading and democracy in america, which is good thing to do. that it's equality, that was the key. the peculiarity of our country, i think it's not the equality of outcomes such as socialism recommends or the equality of opportunity that are our friends, that some of our friends think they can achieve. but equality of permission, the kind of permission that you are speaking of that had grown up in the scene. these have been teens in 18th century and these shores.

it's that idea that was important to about the declaration the war, the outcome. it's that idea that all eventuallyven people of good color the colonial women queers and the rest were to liberated in motto in the seal of the american academy of arts and science says it said says so liberate it, tap to flaunt under you of liberty. they flourished. they flourished and they eventually did. but it didn't require a revolution. thank you.

let's return to coming to address. i'm trying to imagine in this alternate history we'd have to rebrand this whole place instead of it would be the empire enrprise institute. well, i mean, listen to speeches that are rather lofty and lawyers always have the duty to be more prosaic on and i will try to keep to that tradition while being informative. let me first make a couple of general statements about the situation. i think that there can be too much pessimism for too much optimism by chris. and the question is how you find some kind of immediate position. i think the first thing that we have to say about the colony period is if chris is statements are true that wealth was higher and that physical health was greater and people were told it couldn't have been all that bad

under british rule. and i think the point that david made that relative speaking compared to the home where the colonies were relatively likely taxed, were in fact probably the case on the way in which these things were done. and so there's always a little bit of the tory in me notwithstanding and in the way in whi everything went for a lawyer. however, if you're trying to figure out what'sturn the lens e to change the focus a:f■ó bit. and there's very little legal development in the colonial period. indeed, before the establishment of the united states supreme cour w was of course, a feature not of the articles of confederation, which had no judicial or branch, but only of the federal constitution, which created article three courts with exceptional power, including the united states supreme court. so when i try to talk about the founding period from a legal perspective, you don't spend much of your time prior to 1787 and you basically treat the founding period as going through

the initial justices and through the period of john marshall. and the question , how do you want to evaluate this? and the first point takes off from what you've all is that nobody at the period ever themselves capitalist it wasn't that it was a dirty term at that time. it wasn't a term at all. a capitalism essentially is a term that comes in in the mid 19th century was introduced largely for negative purposes to explain why it is that socialism was serious, more superior. and you have to remember what it means. it meant the government ownership of all productive of production was that and whatever the united states economy was, it certainly wasn't that because there were very different traditions about private property and the way things were all. so the question then i're not te great movements of the 19th century having to do with the railroads and regulated industries and so forth, what you do is you think of capitalism in the lat18th and

early 19th centric as being part of a commercial republic in which manufacture was not the dominant mode, although it was obviously important. but there were sorts of things having to do with the way in which competition and trade would start to take place and so when i wrote my particular contribue to this volume, what i did is i started to look only at the federal decisions, largely in the united states supreme court, to get some measure of the extent to which we can say. this was a commercial republic. well, what is a commercial, i think is defined quite correctly by chris the muse. it's one in which competitive, decentralized forces are going to be able to work themselves out so that no competitor can use force to block somebody else from entering into a market. and taking his particular customers away by offering their goods lower prices and the antithesis. this turns out to be a form of protectionism in which tho incumbents can in fact, impose some kind of restricons on the

way in which other people seek to enter these kinds of markets so as to hobble them in particular fashion and the way in which you try to figure out what is or is not a good company is to figure out what the ratio is between competition. on the one hand and protectionism on the other. an doing this, it's already a very sophisticated because you think back to the way in which the spanish and the french operated. that w an issue that you had to worry about. it was simply slave ownership, domination, expropriation of one kind or another. and compared to those particular horrors, a protected monopoly is a sign of virtue, rather than the sign advice. but compared to the aspirations ses country, competition is going to dominate monopoly in a way that starts very early on in english history and goes all the way through the se antitrust laws in the late 19th and early 20th ntury. start to look at the ledger and the way in which this

thing begins, it turns out that we really have a very mixed history on the relationship between the two things. chris was right to point out that our friend madison that madison hamilton and the way in which he consolidated the natural debt, national debt, organized the bank, at least in the earlyourationalize of the wd finances that had come out of the huge debts that were incurred in the revolutionary war. but then if you start to look a little bit further, the jacksonian critique of the first bank as essentially a monopoly institution, that's a basically stopped everybody else from doing anything. an independent base had a lot of power associated with this operation, and it wasn't a bad thing, but it's probably a good thing when multiple state banks screw up after the veto of the second bank in the 1830s. if you look earlier on on this thing, i mean, one of the most striking features of the federalist paper is the stuff in federalist number 11 where hamilton,s to advocate a protection monism is

a dominant policy in terms of our relationship to our european people, he said. it would be just a terrible thing to. have states in competition with one another. what we have to do is to remain a united front. and there's only one purpose to have the united front, which is to raise tariffs, which in fac conflict, which is on the economy, when daviricardo later, he made a very powerful point. you raise tariffs. it turns out the demands that you have for their goods are going to go down and whatever you hope to gain by the tariff, you're going to lose by the shifts in the relative values of currency so that it will make it more difficult for you to export goods. so there's no strategy of protection which doesn't lead to dual ruin, and that still the basic condition today. but there was at no point a tariffs. and when you start to think about some war, the differential impact on tariffs between northern and southern states was not the dominant course. slightly, surely was, but was

one of these things which in fact really had the same kind of operation starting to look in other places and, you see the same kinduivalent history both ways, getting to very ioned commerce and one of the dominant provisions of the united states constitution is the commerce clause. and i will now read it aloud to you. congress shall make no shall have the power to regulate commerce with foreign nations. among the several states and with the indian tribes. you start to look at the piece in the middle was the one which was least well formed and understood commerc the several states and the ability to regulate commerce with foreign nationsrobably a hamiltonian device to make sure that you could impose the kinds of tariffs that you wanted to do it. when you start getting on to the domestic front, the key question is, can you form some kind of united market inside the united states or are young to allow

tariff barriers between states to break you up? and it turns out the american solution is very much similar to that of the eugainst foreign competition and they try to open up exchange within the borders and that's exactly the way the early american history started to go. so that if you look, for example, at the first and greatest case dealing with the commerce clause, it's a case called gibbon's and ogden. and it was decidedly 1820s. and the question in that particular c whether you could take a boat from elizabeth town, new jersey, into new york city, or did you have to be exclusive unless you could getl? waters from the heirs of the successes in title from fail fulton, who was given the exclusive right as an inducement to develop the steamship. now you cannot think of a worse policy than giving people territorial monopolies to do things if yowa subsidy, it's ont does it. and in this particular case, it turns out this is not a patent

that they were claiming, but the right to exclude everybody else. and it would mean that the commerce would be balkanized. so marshall, who's very key to that particular situation, says, when we talk about commerce, we talk about something that extends into the interior, the state by way of navigation. this is not an elaborate embellishment. this was, in fact, the law of issues that time in an earlier case called and in 1816, chancellor kant, who is one of the greatest jurors of the first half of the century, basically said commerce power under the federal government allows them to establish tolls. stations at the borders and to police the citizens. they go from one side of the border to the other side of the border, but cannot follow those particular ships into the interior of the state, which means there was nothing whatsoever that you can do to open these states up and prevent balkanization on these grounds. and what marshall did is effectively overcame that. and the great unresolved problem within that particular system was whether we had no particulf

legislation is the mere existence of federal power sufficient to prevent the states from doing all sorts of terrible things and i think in the end, that position essentially take place. and so as you fast forward, it turns out the dormant commerce clause was the strongest source of competitiveness between states in a world in which congress was just supposed to do something about this, never did anything about it at all. so that essentially this solution carried the day and created computer session. but the statute itself, a chameleon, as was the situate with respect to gibbons and ogden, because there's still the coastal trade. and one of the things that marshall said in this case is the united states would control the coastal trade, which means that it can now impose at the federal level various kinds of monopolies on the kinds of ships that canrt to think about what's a modern illustration of that, it's the jones act, which essentially says that boats in the united states have to have u.s. licenses in order to

essentially engage in commerce. so you do yose opinion having a very strong set of impulses associated with protection of competition and at the same time imposing a kind protectionist elite that puts people on the other side. and th w way in which virtually every major doctrine started to work. so to give you another kind of example with respect this,t the contracts clause contract shall make no or no states shall make any law impairing the obligation of contract. it's very delphic and it has some very good uses. and it turns out it also had some very bad uses in terms of the way in which it ran. so one of the great problems in the period is there was no generalized protection for economic freedom in the federal constitution, which would apply to stopping states from dominating it. and it's very clear limited and enumerated federal powers, the vast bulk of the so-called police powers stuff had to go

with the states. and that, of course, meant that you could have highly productive legislation on the one hand. but you could also get highly protectionist legislation on the other hand. anthe question was there anything that you can do about this? and in one of the most instructive cases have to ask is when you look at the contract scores, what does it protect? only existing contract orsrotect in some future generation? and this issue became very important in the united states, in one case, existing contracts were protected. and then they were overprotected because the way inch council th9 wrote the particular provision if the contract was protected, you could not discharge it in bankruptcy, which is absolutely a ruinous set of rules. and you make a doctrine absolute when in fact, like all constitutional doctrines and it's a very important topic to do, it has to be subject to a general set ofs having to do with the police power and just comp sation, the

first of which is note constitud of which is not written into the commcescores, and you have to gm both there. so if you can't discharge these contracts, bankruptcy, it's just a tremendous difficulty forhe way in which you're going to reorganize society because there's no effective way in which assets committed to failed enterprises can be redeveloped to, push to something else and that was our good friend marshall being too in the protectionf contract. on the other side, there's a great case ogden and saunders, in which the issue is whether or not the contracts at any prospective application. and if you do this, the question is what does it require? tell me when i should be done. i will just push. okay, so what happens is the reason why it turned out that marshall and story together were in dissent was they could not answer the question. if course prospective and you don't allow any interference with contract, you can't have a statute of frauds and you can't have a

licensing system. both of these things are utterly indispensable for commerce, particularly in a trade which is ng term viable assets. the system dies. if the only thing you have an oral promise and what he could not explain is why you need why was because one of the great oblems in nsdoctrine is to figut terms have to be implied in the document as a function of natural law or theory. this is widely derided today and most modern circles. but as somebody who cut his first on roman law and medieval law, the entire system of law always with this. and one of the conditions that you had was it was always permissible to introduce various kinds of forms that would increase the security of transactions as these things did. so that everybody's better off in a ferocious than they were before. even if you're not allowed to impose things like minimum wage laws which are going to restrict contractual opportunities. so formalities have become a very powerful exception.

if marshall and storeyad that point front and center, they have saved the hypothetical and say that e we're going to strike now are partizan rent seeking like of the sort that is fairly they missed all of that particular point and so what happens again is you have insufficient power to control contract where in fact they become sufficient, highly disruptive that you cannot figure out how to end them. on the one hand or to protect stuff in the last case. i'll just give you by way an illustration has to do with government one. just real briefly, there's very briefly, i'll just mention one thing. i changed my last bit. one of the things that really is an extreme advantage in the united states is development of a patent system. they had one in england, but the english system was so artificial, so contrived, so expensive that anybody did a serious history of the growth of law and english industrialism. the late 17th, 18th century and so forth. so the patents would have a

relatively small part to play in it because you couldn't get one come to the american system. and jefferson said, no, we have democratic patent system, low entry fees. we're going to have a professionalized office to start to do these things. we're going to encourage them. and so patents have a much larger place to play in the united states system than it did in the british and in the british system. they were both protective of property rights, but exclusive a rival property rights coming in the in the american system it tended to be more pro productive than it did elsewhere. so it's a very mixed position, but compared to any other system on the face of the world, all blemishes were relative small, which is why productivity in fact is very good on a comparative measure.■ but why at the same time as against an idealized version, there are a number of false steps. i think. fair to say that there were numerous and important, but as a percentage of the economy taken by the relatively small chris the moose ded on his dower. the sky above these particular

protections as we get into the 20th century gets very one proposition. the;= federal has the right to choose whether we want or monopoly and all. and that proposition which was sanctified in the new deal as a counter for the subsequent decline in the economic vitality of the united states. thank you. thank. i only want to. so needless to say, i ozwill gie both chris and richard an opportunity before we finish to respond to the address proposal that we would have been better off british. and i'll give you the last word, deirdre, but we'll save that for a moment. i want to pick up a couple of threads that i saw in both chris's and deirdre's remarks. chris when you discussed the early american history as an of commerce, the founding ge successful men of commerce. and if i remember correctly in

the notes you shared with me ahead of time, you took care to point out that early american co transatlantic trade required required real capital, required businesses, real size and magnitude. so you touch on both commerce among sort of we call them maybe ordinary americans shop and farmers and so on, but also the kind of large enterprises that are george washington, other great■újr statesmen founded and administered. i guess my point your remarks point to both the importance of commerce in shaping an all americans and also the role of commerce in shaping american statesmen. and i'd love to hear more about how you think that both of those dynamics into the american founding. you said something that stood out to me. you said the real effects of commerce for small in the founding but belief but the beliefs were enough causes of the founding. and is it fair to me to add

maybe beliefs in the habits of or give rise to that? i'd love to hear further word of that in a similar vein, both in terms of speaking just to sort of americans across the board was it did have a unique on the men who signed the declaration of independence even more so than the rest of americans. they were persuade. i'd love to hear more about that. and then i'll give richard the final word. so we'll start with with chris. chris commerce and, all americans. commerce, american statesmen. is one of those more important than the other, perhaps. the if you get into it, there's an enormous literature their entire devoted to the question you have raised. and there are people have made their career saying, you know, , mostof farmers. they were living on the farm. they made their own furniture.

they raised their own crops, and they most of the crops themselves or part of them with their neighbors, there wasn't much of a commercial society. gordon wood, who spoke the first of your sessions, wrote a magnificent essay on this subject and came down on the side of commerce that even the simple remote farmers were dependent on trade for for many things and that that the spirit of was was very alive but in any event, a commercial culture did grow up in the especially along the ports and harbors and and coasts and became a very part important part of america. the john winthrop and the puritans, they wanted to have a theological league governed, self-sufficient nation up in new

england. and very early on they, they, they invested in some man, some iron or manufacturing facilities complete disaster. and it was clear very early on in the 1600s that america was going to be an extract of an agricultural society. so there are going to be many people the economy who are not people of commerce, but they depended on people of commerce because so much that they required had come from abroad and those people of commerce ended up as in many societies important political figures, they rose they rose. and in government they when the revolution came along henry knox these, a bookseller. and so he ki of goes into logistics and he turns out he's really really good at it. and you have lots and lots of practical people, many of them very small businessmen that are

form an army, a founding generation, that that is quite unique. so i'm glad you say that word practical. that's the word i was looking for, because on the one hand, we can think of the founding era spirit of enterprise as the maybe the founding generation, a bit too unrealistic about what they achieve or what they're entitled to. but i think it's the side of things that these were not just successful men of commerce, but practical men of commerce that perhaps made them uniquely well-suited to found a country to win a revolution. what was the that was the revolution of sober expectations. 50 years ago, usa out of aei, maybe ther commercial experience made them uniquely, uniquely well suited for this. but let me give theodorou a chance. say, i think that is your read your question to chris and his

answer are very similar. have a very have have a three in common that ideas matter and that if the cato institute or the have any point it's to say it's to encourage ideas. i. george would george will's my i