Federalist 36
In my last essay I observed how Hamilton divided society into economic “classes,” by which meant not rich and poor but different kinds of economic activities, ways by which people made wealth and thus contributed to the common-wealth as well as constituted a distinctive set of interests. Our Constitutional system largely regulated these clashing interests by making it difficult for any one to get the upper hand and thus use the coercive power of government to advance their distinct set of interests, often adverse to the interests of others or to the aggregate interests of the polity as a whole.
Hamilton, still arguing in Federalist 36 in the context of taxation, allowed for two exceptions to this general agonistic politics. The first was the merchant class who he claimed to be “the friend of all.” All producers had to get their goods to market, but one interesting aspect of the merchant class is that they don’t themselves produce goods; rather, they enrich themselves by managing (some would say exploiting) the system of exchange. Aristotle had long ago drawn the distinction between those who engage in productive wealth-making — useable or necessary goods such as food and shelter — and those who made their wealth by either latching on to or speculating on the economic activities of producers. He argued that not only did this form of wealth-making weaken the economy but was also morally suspect. By the time we get to the formation of the American constitution Scottish writers Adam Smith and David Hume had attempted the moral case for the merchant class, arguing that by facilitating economic exchange they also moderated political, religious, and moral differences. Hamilton shared this confidence concerning the moral probity of merchants as well as the way in which they would gain the confidence of all.
Along with merchants he identified “the learned class” as having a leavening effect on society. We might today refer to them as “the elites,” and in Hamilton’s day they might have been referred to as “the natural aristocracy” — those of sufficient talent and rectitude that they could not only be trusted to rule but would provide a counterweight to the excesses of democracy. Little did he imagine how that class, supposedly “disinterested,” would defend its interests by presenting itself as the defender of democracy.
Hamilton says this:
“There are strong minds in every walk of life that will rise superior to the disadvantages of situation, and will command the tribute due to their merit, not only from the classes to which they particularly belong, but from the society in general. The door ought to be equally open to all; and I trust, for the credit of human nature, that we shall see examples of such vigorous plants flourishing in the soil of federal as well as of State legislation; but occasional instances of this sort will not render the reasoning founded upon the general course of things, less conclusive.”
I want to focus on the use of that word “merit,” so common now but far from common then. Usage dates back to the 12th century to refer to those who had demonstrated enough moral worth that they deserved divine pity. The reciprocal idea that merit requires reward, that those who possess it are deserving of something, remains to this day. But what is it, in Hamilton’s usage, that they are deserving of? The most obvious answer is power, and they deserve it because they have demonstrated they can be trusted with it, Washington being the most obvious example. But what if “merit” would come to mean something else, that is, not people who demonstrated their moral worth through action but instead pivoted off the emoluments of an inherited position so that status and credentials would count for more than would character?
Early Americans had tried to eliminate that possibility by passing laws banning primogeniture and other laws of inheritance, thus severing the link between generations and disestablishing wealth and status. However, America has has periods where these intergenerational ties proved stronger than expected, resulting in a bifurcation between those who thought themselves entitled to rule and an increasingly seething populace that believed the meritocrats ruled in their own interests. These periods of tumult and unrest are populist in nature; the meritocrats denouncing populism and those toward the bottom seeing it as s genuine expression of democracy. Much of our recent talk about “threats to our democracy” tracks this division and indicates how language is used to legitimate efforts to rule.
Criticisms of the idea of a meritocracy and its potentially corrosive social effects can be found in the writings of Edmund Burke and Alexis de Tocqueville. In 1958, Michael Dunlop Young published his satirical The Rise of the Meritocracy, wherein he repeated the claim that the central problem of a meritocracy is that people tend to believe that they have risen to the top on their own merits, while those who are left behind are, by extension, without merit. Social life would then become a competitive enterprise that featured battles for wealth, status, and power and — here’s the key thing — the victors would not only get to enjoy the spoils, but people at the bottom were seen to be there as a result of their lack of ability. In other words, as Burke and Tocqueville both saw, an emphasis on merit would deepen social divisions by erasing the sense that people on top have obligations to the people at the bottom. This loss of the old idea of noblesse oblige would mean, Tocqueville observed, that the new ruling class would have “all the vices and none of the virtues of the old aristocracy.”
The meritocratic idea, critics complain, is in its nature anti-democratic. Very rarely do rich people and poor people interact with one another as they once did (especially since many rich people opt out of the system of public education altogether, an impulse that was fully revealed in the admissions scandals of some years ago, the central point of which was that meritocrats would game the system to the advantage of their progeny, especially if those kids were lacking in merit). Educated people tend to be drawn to vibrant, large cities, thus creating a brain drain in the “backward and benighted” places they left behind. Once in those cities, they tend to cluster in neighborhoods.
Meritocracies allow those who rise to the top to feel as if they have earned everything they have. This attenuates both a sense of gratitude and a sense of obligation toward those “beneath” them. A certain consequence of an emphasis on meritocracy is that it will breed both contempt and resentment. It rewards those who have been favored by nature and chance, and punishes those who haven’t, and this means, in a democratic society, that a certain amount of guilt is built into the condition of those who have risen to the top and the expiation of said guilt becomes a social imperative, which is why they have such elaborate symbols and ceremonies surrounding the idea of diversity. On the other end it generates resentment and envy for those on the losing end of the success sweepstakes. And just as the debates in the founding generation concerning merit involved the effects on places, so do they today, because the sorting and distribution of wealth and privilege affects not only individuals but also the great variety of places that make up the American landscape.
This all tied in to the Anti-federalist concern that the national power of taxation could be used by highly organized and well-heeled interests to reallocate wealth in the country, impoverishing some areas while enriching others. Skeptical that merchants would operate simply as go-betweens and more skeptical that the learned class would operate without passion or prejudice, the Anti-federalists believed that the best way to handle wealth redistribution was as locally as possible, where those who passed revenue bills would have a vested interest in protecting that place and its distinctive features as well as the people who lived there, in whose fate they shared. Furthermore, the specific needs of a place, as well as its capacities, could not be determined from a distance. Only those close-at-hand could make those determinations.
Hamilton responded to those claims in this essay also. As to whether the federal government did not have sufficient knowledge or resources to address local circumstances, he offered the following counter-arguments:
The same problem would attend relationships between states and counties or townships. Hamilton made a great deal of this analogy throughout his essays: since the federal government is to the states what the states are to local governments, logic would dictate opposing state governments as well.
The only kind of knowledge that is really needed is knowledge about the operations of production and exchange. This is the specialized knowledge of experts, and for that reason …
… The finances of a nation should be handled by one or few men. Aristotle’s idea of a “mixed regime” was that it would combine rule by the one, the few, and the many. Hamilton’s argument that “the one” and “the few” should control the finances went directly against the idea that revenue raising should be determined in “the people’s house.”
But Hamilton maintained that taxation expertise was easily “procured from any well-informed man, especially of the mercantile class.”
Hamilton repeated his claim that there wasn’t sufficient variety of places in America to justify the lack of uniformity in taxation. “The circumstances that may distinguish its situation in one State from its situation in another must be few, simple, and easy to be comprehended.” (See Article I, section 2 as well as section 8.)
The federal government could simply take over or borrow what the states were already doing.
In this final essay on the taxation power, Hamilton repeated his claim that since not all possibilities could be anticipated no limits on the power of taxation should be considered. In a turn that infuriated the Anti-federalists, he argued against imposing limits since the whole idea of a federal taxation power was experimental anyway. Why would you limit experiments? And, he continued, if the states didn’t like the way the experiments were conducted, they had it in their power to push back: “When the States know that the Union can apply itself without their agency, it will be a powerful motive for exertion on their part.” The result would be a constant back-and-forth struggle for primacy between the state and federal governments. Hamilton optimistically noted that this struggle would result in “reciprocal forbearance” and where there was “common interest” we could “safely count” on cooperation. In an example of his magical thinking he believed that “when the particular debts of the States are done away, and their expenses come to be limited within their natural compass, the possibility almost of interference will vanish. A small land tax will answer the purpose of the States, and will be their most simple and most fit resource.”
Given the pooled power and resources of the newly energized federal government, the Anti-federalists worried that the authority and power of the states would gradually be eroded. Hamilton did little to allay these fears, arguing that the federal government should use its resources to “attach” state officials “to the Union by an accumulation of their emoluments” so that the channels of influence would run from the states “instead of making federal influence flow in an opposite and adverse current.”
Hamilton concluded his meditations on taxation by introducing two ideas that gained little traction at the time but would down the road. The first was the idea of a system of progressive taxation that would make “the luxury of the rich tributary to the public treasury,” and thus “diminish the necessity of those impositions which might create dissatisfaction in the poorer and most numerous classes of the society.” The government could thus maintain “the preservation of its own power” by guarding “the least wealthy part of the community from oppression!”
The second idea that Hamilton advanced involved the ways in which emergency conditions or crises would enhance the government’s power. Not coining the phrase “never let a good crisis go to waste,” Hamilton understood the concept. How far, after all, is that formulation from Hamilton’s? “And the government, from the possibility of such emergencies, ought ever to have the option of making use of them.”
Director of the Ford Leadership Forum, Gerald R. Ford Presidential Foundation
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