Book Review

Hamilton's Blessing: The Extraordinary Life and Times of Our National Debt. By John Steele Gordon. (New York: Penguin, 1998. xiv, 220 pp. Cloth, $21.00, isbn 0-80-271323-8. Paper, $11.95, isbn 0-14-027015-9.)

Peter McNamara begins and ends his study of Adam Smith and Alexander Hamilton with a critique of our own era's political economy, and he reminds us frequently of the presentist rationale for looking at economic thought and policy making in the eighteenth century. Today, he argues, our thinking about political economy gravitates to one of two hopelessly flawed beliefs: either that rational self-interest sufficiently guides personal and national economic success (the neoclassical view), or that proliferating government regulations and bureaucracy adequately tame a free market economy (within the liberal and Marxist views). Neither view, argues McNamara, comprehends the real contributions of Smith or Hamilton.	1
Most of McNamara's points about Smith have been made by other scholars, though few of their names appear in this book. Following other analyses, he emphasizes how Smith codified the emerging intellectual split between policy making and market behavior that eventually froze into the separate "sciences" of politics and economics. McNamara also follows a growing scholarly insistence that Smith made this separation, not to exalt the "invisible hand" of free market competition, but rather to convince early modern readers that his economic model of competitive "natural liberty" required the gently guiding hand of government to bring the political economy to fruitful ends. Smith, according to this view, knew that "reason and humanity do not necessarily prevail" and that good statesmen would use the "spirit of natural liberty" in the economy to mute political ambitions. Thus, Smith did not scorn mercantilism in absolute terms but proposed to put economics in the service of good government.	2
By rediscovering Smith's regard for politics, McNamara (following others) brings Smith closer to Hamilton than older scholarship would posit. Still, McNamara insists, there were crucial differences between them. Hamilton was critical of Smith's faith that the economic model itself would soften the harsh reality of politics. Hamilton rejected abstract theorizing and formulas and embraced the reality of shifting "circumstances" that required flexible policy responses and strong statesmanship. Hamilton believed that Smith had an unrealistically positive view about the "sweet" effects of commerce and economic exchange generally, and that Smith erroneously endowed the "science of political economy" with an ability to temper the "interests of politics." Hamilton's genius was to craft a "wise politics" that was premised on a more pessimistic view of human nature and a more skeptical view of capitalism's volatility in the early American nation. Hamilton's politics were pragmatic, his institutional solutions eminently grounded in the needs of his own era. While Smith believed in a rational global "common market," Hamilton believed in wise statesmen who could "think continentally" and serve contentious collections of interests.	3
Just how significant are Smith's and Hamilton's contributions? How much did their beliefs accord with those of the public, or statesmen, around them; how dissenting were these men? McNamara's brief study is not concerned with these or other matters of historical context. Nor when he discusses the passions and interests, free trade and mercantilism, and the roles of legislators—issues near and dear to early modern writers—does he truly engage with the huge modern scholarship about them. He all but ignores republicanism. His narrower purpose is to put these venerable early modern leaders in the service of presentist goals; Hamilton, in particular, had a great social vision that pointed Americans toward commercial and manufacturing greatness, but he "would be stunned at the range of activities now within the sphere of the national government." Shorn of historical context, the comparison of the two men in their own times loses value, and the comparison of them to our era is all but meaningless.	4
John Steele Gordon's little study of the national debt, from Hamilton's era to the present, is full of entertaining anecdotes for the general reader, but it will disappoint scholars of American economic policy making or economic thought. The essay's organizing theme is the persistence of national debt—not always a bad thing, but rarely under control, says Gordon—but, aside from a few portraits of rich and famous investors and presidents, it does not explain public perceptions, intellectual climates, or dissenting perspectives about this national burden. For the early national era, we learn simply that Hamilton bravely refuted popular wisdom that attached national debt to destructive wars and scorned its deleterious effects on economic development. Hamilton "knew" that national debt could fuel power and growth if it was funded and serviced properly, but, as we learn in subsequent pages, Jeffersonians and Jacksonians had no such enlightened understanding. Gordon infers that in the early republic, Hamiltonians offered a program for institutions and policies that initiated sound finances; over the next generations, misguided political administrations, weak presidents, and improperly negotiated fiscal interests (never clearly linked in this study to culture and politics) eroded the "Hamiltonian miracle." Gordon's sustaining point is that we must relearn what Hamilton knew: the size of the debt is not itself a problem, but the sloppy hodgepodge of policies regarding taxing and spending that have accumulated over generations without fiscal planning threatens the body politic. It is not the presence of a national debt, but the uses to which it is put for the sake of political expediency, Gordon insists, that endanger the national interest. His short essay includes no critical apparatus (except for an appendix that totes up the national debt over generations), no references to scholarly discussions, and it leads quickly to fiscal prescriptions (mainly the flat tax) for "the people" today; in this sense, Gordon is probably meant to be read mostly by grass-roots voters.	5
Cathy Matson University of Delaware Newark, Delaware

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