Capitalism vs. Free Markets
One of the most influential documents concerning the development of this nation is Alexander Hamilton’s “Report on the Subject of Manufactures” (an actual report delivered to the House of Representatives on December 5, 1791). In it he argued for using government to promote large-scale manufacturing: capitalism.
That Hamilton was consciously, explicitly arguing against Adam Smith’s intertwined notions of laissez faire, free markets, and a beneficent “invisible hand” cannot be denied. Smith’s most famous book had been published 15 years before — the same year in which our independence as a nation was declared.
Hamilton opens his “Report” with a summation of Smith’s arguments. He does not directly refute Smith, but he does plead for an exception. His premise was that that large-scale manufacturing is the most efficacious way of ensuring prosperity for a nation (as opposed to a nation with an economy dominated by agriculture); using government to achieve that end was dictated by the new nation’s weak position relative to nations with a well-established, large-scale manufacturing sector in place. (It is an argument that has been repeated many, many times since then.)
Hamilton’s approach to the economy was resisted on the basis of an alternative model emphasizing agriculture and proprietors of small businesses: what became known as the Jeffersonian model. It was a model of an economy with markets as free as any that can be practicably imagined (except that in the event in this country it included bondage slavery).
The centers of power in that conflict of ideas became money and land, respectively. It is at least arguably true that the dispute between those two camps is what led eventually to our Civil War.
The total subjugation of government to the interests of capitalists and financiers for several decades following the defeat of the Confederacy by the U.S. in that war (with the recently formed Republican Party — ‘the Party of Lincoln’ — in power) would seem to bolster that argument. The implications of the outcome of that “contest of power” (Michel Foucault) reverberate today.