On March 9, 2023 Robert Atkinson, the founder and president of the Information Technology and Innovation Foundation, published an article, “How ‘National Developmentalism’ Built America,” on the website of The American Conservative. This article is a welcome contribution to the current national discussion on economic policy, and in some ways—intentionally or unintentionally—it echoes many of the themes raised by President Donald Trump in his March 4 speech at the Maryland CPAC conference.
Mr. Atkinson’s primary target is to expose the fallacy of the free trade ideology associated with Adam Smith. In a concise 1,800 words, he presents a rapid fire review of American history, and he demonstrates that the role of state governments and the national government have been indispensable, throughout the entirety of American history, to the promotion of manufacturing, infrastructure and science. He conclusively shows that the historical dynamic of American economic innovation and discovery had nothing to do with the magic of the marketplace but was promoted and steered at every step by the actions and intention of government.
From the earliest interventions, such as the Erie Canal and the developments of steamships and railroads, through to the 20th century emergence of Bell Labs, the invention of the transistor and the creation of the Internet, Atkinson demonstrates that it was the protectionist system developed by Alexander Hamilton, not “free trade,” that fueled American economic development. Atkinson also highlights the importance of the American military in establishing key industries which led to explosive economic growth. It is, of course, possible to greatly expand upon his examples, including the development of nuclear energy and the manned and unmanned space program.
Is It Possible Today?
For an unbiased reader, i.e., one not in the clutches of an ideology, there can be no honest disagreement with Mr. Atkinson’s argument. The question arises, however, is it possible to revive and effectively implement such a “Developmental” policy in 2023? This raises questions that go beyond the scope of what Atkinson writes, but they must be addressed if such a radical shift in economic policy is to be successful.
The first thing to recognize is that we are not dealing with simply competing economic “theories.” In the mid-19th century there were two mutually hostile competing economic systems: the American System approach of Hamilton; versus the British East India Company school of Bentham, Smith, Malthus, Ricardo and the Mills (all products of the East India Company's training facility at Haileybury). One stood for human development and the other for human exploitation. These were not mere textbook theories, but competing systems as to how economic policy should be conducted. That reality is still with us, even now, almost two centuries later.
In the last 50 years the imperial anti-American “free trade” system has risen to dominant ascendency. Today it defines all the actions of the Federal Reserve, the global Central Banking system and the un-regulated “offshore” and “shadow” financial markets. It is a system of unbridled usury, thievery and financial speculation. Lyndon LaRouche once remarked that the first step toward returning America to economic sanity would be to take ALL of the changes in U.S. economic, financial and monetary policy that have been implemented since assassination of President John F. Kennedy and repeal every one of them. That would be a start.
Beginning with the post-1971 creation of a global monetary system of “floating exchange-rates” and then spurred by Margaret Thatcher’s 1986 “Big Bang” restructuring of the London financial markets, what has been created is an all-encompassing financial system based entirely on usury. The 1999 Gramm–Leach–Bliley Act and the subsequent explosion of “financial derivative” contracts signaled the end of an American Credit System designed to promote productive physical economic development. What passes for Economics today—all of it—is simply monetary theory. It infects the entire field of present-day economics, from right to left. Today’s 21st century version of the Federal Reserve functions solely to protect and promote this speculative usurious racket. No in-depth economic recovery is possible if it is not dismantled.
The Correct Approach
If our Government is to be successful in promoting the type of technologically-progressive economic rebuilding which Mr. Atkinson indicates, certain changes in financial policy must be implemented. Otherwise, no well-intentioned piecemeal approach will work. Such efforts will be stymied at every turn by the financial vultures.
The first requirement is to establish, at the federal level, a National Credit System which will direct the flow of new credit into new advanced capital goods production and basic infrastructure. Private banks will be given the option of participating in such loans, as we begin to reestablish sound banking practices. This system of credit is to be formed explicitly on a gold-reserve basis, in partnership with other nations, thus reestablishing stable trading practices. The model for sovereign credit generation is Alexander Hamilton’s Bank of the United States, but even the functioning of more recent examples, such as FDR’s use of the RFC, are illustrative of the approach to be taken.
Second, the policy of government must be to either outlaw or to tax into extinction all speculative and usurious income practices. These are feudal practices which have no place in a modern technologically-oriented economy.
Third, banking, tax and tariff policy must all be oriented toward the goal of promoting a high rate of technological progress in the production of physical-goods output. Providing that this approach is strictly adhered to, there is no danger of uncontrolled monetary inflation. Economic growth does not cause inflation; unchecked usury does. All efforts to “stimulate the economy” without checking the growth of usurious profits will only result in more inflation.
Provided that the financial/monetary approach described above is implemented, then Mr. Atkinson’s prescribed ‘National Developmentalism’ becomes a goal that is eminently realizable.