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The Role of the Market Revolution in the Elections of Jackson and Trump

In antebellum America, the U.S. underwent what historians call “the market revolution.” This is a movement analogous to the “Great Transformation” Karl Polanyi sketched in England and Europe. (Interestingly, Polanyi himself excepts the American experience from the process he outlines given the availability of land for the taking in the U.S. relative to Europe.) The penetration of the market and market forces into the everyday lives of everyday people separates the period of the market revolution and afterward from the time before it. The rise of wage labor and production for markets, rather than production largely for one’s self and one’s family, created different rhythms and risks in life relative to agrarian life prior to the rise of that system.

Consider the two worlds.

First, take an agrarian yeoman who owns a small freehold in, say Maryland, circa 1800. He and his wife (and children) produce almost entirely by, and for, themselves. “The market” exists only on the outward most periphery of their day-to-day lives. “The market” exists at a distinct place and at a distinct time. They go into town on market day every now and then, when they have excess produce of one thing, and they desire to trade it for something difficult or impossible for them to produce themselves. If they do not have any surplus to trade, then they simply make do with what they have. Planting time, harvest time, and vagaries like weather and injuries can dramatically affect their day-to-day lives, even life itself. But worries about recessions, inflation (and deflation, the greater fear of the 19th Century), unemployment, and bank runs (remember, we assumed this yeoman owns his freehold) don’t impinge upon them directly.

After the market revolution, well, any reader of this column will pretty much know of day-to-day life after the market revolution. While technology has changed our lives relative to the life of a worker in, say, 1880, nonetheless, we share with every worker subsequent to the market revolution that few of us produce much of anything for wages that we use immediately for ourselves. That is the result of, and the power of, the division of labor. Most of us work in highly specialized vocations for which we receive money that we then trade for other goods at the many markets available to us 24 hours a day, every day. These markets exist both physically and virtually. Unless we’re in agriculture, planting and harvest time affect us hardly at all (and then only whether certain heirloom tomatoes are available). What we eat barely changes with drought or rain, and whether we break a leg doesn’t even affect what many of us produce. But recessions, inflation, unemployment, mortgages and more can really affect us, sometimes dramatically.

We don’t need to romanticize agrarian life of yesteryear, or minimize the risk and burdens of that life (which Polyani and some historians do) to recognize people of course respond differently to the vagaries of market society relative to the vagaries of agrarian life. To wit, the risks in agrarian life come largely from without the human world, whether from nature or from providence. Politics does not address causes of those risks because it cannot control those causes. (Consequences might be another matter.)

Risks in market society, however, manifestly derive from human choices and actions, even if people do not understand how those choices and actions create those risks. People who feel threatened will usually invite the government to intervene when the causes of those threats come from the choices and actions of other people.

Widespread beliefs that elites created a system that benefits them at the expense of the common person preceded both the elections of Andrew Jackson and Donald Trump. In both cases development of a market society precipitated those beliefs. (We can discuss whether the respective beliefs are warranted, but that’s distinct from the fact of the beliefs themselves.)

In the case of Jackson, a national market had been birthed in the decades prior to his election. This created prosperity in some places, and pain and dislocations in others. In important markets, workers in one state were now in competition with workers they had never seen, and would never see, in other states. Capital was more mobile than ever, and deployed more anonymously than in the past. Buyers saw the relative prices for competing goods, but of course did not interact directly with the worker who produced those goods.

Workers felt downward pressure on their wages from the competition of the other workers they did not know and would never see. They felt the burden was not shared equally among Americans. As historian John Lauritz Larson writes, people were encouraged by Jacksonian rhetoric to blame the Second Bank of the United States and “market forces” as “tools used by bankers and moneyed ‘aristocrats’ to defraud hardworking people.”

In the case of Trump, a truly international market had been birthed, or at least significantly deepened, in the decades prior to his election. To be sure, there existed a well-developed market system throughout the U.S. and Europe for over a century. And, to be sure, economic pangs developed with the inclusion of Japan in this system as it recovered from World War II. But the (relatively) uniform affluence of these countries prevented too much dislocation.

In the 1980s and 1990s, however, “globalization,” the extension of the market system almost throughout the entire world, represented a significant expansion in the market system. Capital and goods could cross national borders more easily than ever before. Many capital owners never would see the workers their capital employed. And in many markets, workers in one nation now competed with workers they had never seen, and would see, in other nations. U.S. workers felt the competitive pressure on their wages, and sometimes at the cost of the own jobs. Yet they could see most American elites doing better than ever. To many, the game felt rigged. Many demanded a political response, even if they did not quite know the cause of what they were experiencing.

This is no more than the sketch of an hypothesis. Yet in the case of both Jackson and Trump, it seems a plausible case can be made (or, better, that a plausible hypothesis can be posited) that a significant expansion of the market system precipitated populist political sentiments that sent Jackson, and Trump to the White House. In Jackson’s case, the expansion of the market system to the U.S. nation as a whole precipitated the movement that sent him to the White House. In Trump’s case, the expansion of the market system beyond the U.S. and other developed nations precipitated the movement that sent him to the White House.

Reader Discussion

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on September 11, 2017 at 10:16:23 am

Jackson may well have been an anti-market populist; I am not qualified to judge. But his message on the Second Bank of the U.S. (http://avalon.law.yale.edu/19th_century/ajveto01.asp) presents well-reasoned constitutional and economic arguments for his veto, and I can't help but think that he was more sophisticated than the caricature that historians often sketch.

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Brian Mannix
on September 11, 2017 at 11:57:26 am

Prof. Rogers:

Fair enough insofar as it goes; but it would appear to overlook the many non-economic "interests" of the electorate and tends to elevate the role of *interest* over the role of *opinion* (ideology / political allegiance, etc) in the electoral choice made in the last election. A not unreasonable argument may be advanced that the "basket of deplorables" scenario played an equal, if not larger, role than the globalization element.

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gabe
on September 11, 2017 at 14:16:19 pm

Case 1:

"In Jackson’s case, the expansion of the market system to the U.S. nation as a whole precipitated the movement that sent him to the White House.

Case 2:

"In Trump’s case, the expansion of the market system beyond the U.S. and other developed nations precipitated the movement that sent him to the White House."

Another perspective:

Case 1:

The "American" social order , circa 1825, was reaching sufficient "scale" that it could support the step to an Open Access society (per North, Wallis & Weingast) in the development of "Open" markets (human transactions) made necessary by the continuing (with that growth of "scale") specialization (division) of labor for distribution of increasing ("scale") and more specialized production. "Open Access" was established firmly around 1840-50; ending the earlier constraints on "open" markets and the somewhat "mercantile" domination and limitations on distribution systems.

As human transactions, "open" markets were (are) "messy" which affected reactions in the production of the principal labor, agriculture.
Thus began early collective actions to constrain either "markets" or the circumstances in which they occur. With continuing increases in "scale, "industrialization" impacts on labor and the further impacts of urbanization, collectivist momentums increased along with oppositions to "open" (or certainly to "unregulated") markets as chief determinants of distribution of goods and returns on labor. The game was on to "design" or engineer other ways to provide for the essential role of "markets" necessary to the **effective** operation of a specialization or division of labor society.

The various methods tried and ancillary social objectives related to distribution have impacted the market systems for allocations of labor, distribution of goods and incomes to points have reduced the perceived effectiveness of economic activities in the social order; thus, bringing us back to a condition of **LESS** Open Access, comparable (change for change) to the conditions @ 1833-37.

In the same periods there were at least two major expansions of "scale" as methods of industrialization and distribution advanced in most of the West (or created movements of people where advancements lagged) 1870 -1914 and 1948 - 2001.

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R Richard Schweitzer
on September 11, 2017 at 14:21:33 pm

OOPs

Forgot to insert

CASE 2:

preceding the next to last paragraph.

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R Richard Schweitzer
on September 11, 2017 at 14:33:06 pm

In general I think James Rogers' posts are thought-provoking and well-reasoned. In this post he puts forward a hypothesis that is identified as such. Hypotheses are meant to be tested, and deflating a flawed hypothesis helps to advance discussion and inquiry. I hope that's the spirit in which this post will be taken.

Andrew Jackson's first electoral victory in 1828 had nothing to do with economic stresses in an emerging market economy. The country was undergoing a period of sustained prosperity, due to the "American System" economic policies of President John Q. Adams (which were rooted in George Washington's policies and revived by Abraham Lincoln). There was no widespread discontent with the Bank of the United States; the BUS helped promote economic development and facilitated trade between the regions. The people wanted the Bank, and they wanted Jackson as president.

Jackson's core backing was a coalition of nascent Wall Street banking interests (with Martin Van Buren as their political operative) and Virginia Slavepower aristocrats, both of whom had their selfish reasons for disliking the Bank of the United States. That was who advanced Jackson for president in 1824, and of course his popularity as a war hero gave his candidacy a life of its own and eventually (next time around) propelled him into the White House. Still later, it was Jackson's opponents who, banking on the popularity of the Bank, chose to make it the central issue of the 1832 election, which led to lots of loose talk in the Jacksonian camp about aristocratic privilege, etc., that seems to have had little to do with the outcome of the election. And the eventual dismemberment of the Bank of the United States led to a financial crash that precipitated the first-ever economic depression in U.S. history.

With Trump, on the other hand, there has been growing working-class discontent because of ongoing economic malaise that promises nothing but slowly downward mobility for their families. "Making America great again" presumably means rebuilding our infrastructure and manufacturing base, which was actually the goal of the earlier "American System" policy orientation.

Perhaps some words are in order regarding the hypothetical Maryland farmer in 1800. He always grew some tobacco as a cash crop, because, going back to colonial times, tobacco WAS cash. Every small farmer was plugged into the international market through tobacco, and through their needs for metal products: guns, tools, and horseshoes, not to mention ammunition and whatever luxuries they could afford from across the ocean. The small farmers usually had some sort of credit arrangement with nearby plantation owners, who added their bit to his own tobacco harvest, for trade with the (usually Scottish) factors who set up shop on landings by the side of the river or bay.

The globally-connected market economy was somewhat different in colonial New England, where tobacco wasn't available to substitute for the chronic lack of specie. What arose, within each autonomous town community, was a network of debts and services, whereby (for example) Joe the laborer could help Farmer Jack with his harvest, being "paid" with a write-off of his earlier debt to the local merchant, after Farmer Jack brought his surplus harvest in to settle his own accounts and purchase (often on credit) supplies and/or luxuries from Boston or England. It was only the most primitive settlements on the frontier that weren't plugged into the transatlantic market in some form or other, and even then they needed to trade for guns, ammunition, horseshoes and iron tools.

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John Schmeeckle
on September 11, 2017 at 17:08:58 pm

Richard:

If I may, let me "edit" (enhance, I hope) your comment:

"The various methods tried and ancillary social objectives related to distribution have impacted the market systems for allocations of labor, distribution of goods and incomes to points have reduced the perceived effectiveness of economic activities in the social order;" [ thus, necessitating the redistribution of COSTS to attain the *ancillary* objectives]...."

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gabe
on September 11, 2017 at 17:14:05 pm

John:

Great stuff here!

Correct me if i am incorrect (or "mis-remembering") but was not the Depression of 1837 the most severe (relatively weighted, of course) in US history and did it not also have one of the shortest durations - all owing, perhaps, to Van Buren's policy of doing nothing - unlike the "scientific approach" of FDR and his Keynesian cohorts.

BTW: I do not think that anything you have written here runs counter to the Open Access explanation advanced by North, et al AND R. Richard.

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gabe
on September 11, 2017 at 17:52:41 pm

Sure !

However, my study of COST REDISTRIBUTIONS (so far) seems to indicate that those trends (in displacing market functions) are more recent (say, late Ted Kennedy), beginning to sharpen c. 2000, et seq. . The increases in kinds and extents of "regulations" having that effect have been contra market, and pro collective [IMO].

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R Richard Schweitzer
on September 11, 2017 at 18:03:00 pm

I should add to "the increases in the kinds and extents of regulations, . . . "

(coupled with the other interventions and changes in the functions of administration of all levels of governments)

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R Richard Schweitzer

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