Political Architecture and
Economic Blueprint
John L. Dobra, Ph.D.
Associate Professor of Economics
University of Nevada
Constitution Week
September 17, 2007
Political Architecture and
Economic Blueprint
• Conventional Wisdom is that the
Constitution just created the political
architecture of the republic.
Political Architecture and
Economic Blueprint
• Conventional Wisdom is that the
Constitution just created the political
architecture of the republic.
• The same Conventional Wisdom holds
that the economic implications of the
Constitution are limited to naïve concerns
about property rights, civil liberties and
the powers of Congress.
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
• Article I, Section 8 lists what Congress
may do
• And, by implication, what it MAY NOT do
• Most of what Congress may do is related
to economic activity
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
1. “The Congress shall have Power To lay
and collect Taxes, Duties, Imposts and
Excises, to pay the Debts and provide for
the common Defence and general
Welfare of the United States; but all
Duties, Imposts and Excises shall be
uniform throughout the United States;”
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
2. “To borrow money on the credit of the
United States;”
This is the basis for the issuance of
Treasury Bonds, Bills and Notes as well
as the creation of a National Bank
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
3. “To regulate Commerce with foreign
Nations, and among the several States,
and with the Indian Tribes;”
This was later named by the courts as
the “interstate commerce clause”
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
4. “To establish an uniform Rule of
Naturalization, and uniform Laws on the
subject of Bankruptcies throughout the
United States;”
This requires that bankruptcies are
subject to federal law and go through
federal courts.
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
5. “To coin Money, regulate the Value
thereof, and of foreign Coin, and fix the
Standard of Weights and Measures;”
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
6. “To provide for the Punishment of
counterfeiting the Securities and current
Coin of the United States;”
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
7. “To establish Post Offices and Post
Roads;”
The Postal Service provided a uniform
and secure basis for commerce.
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
8. “To promote the Progress of Science and
useful Arts, by securing for limited Times
to Authors and Inventors the exclusive
Right to their respective Writings and
Discoveries;”
This is the basis for intellectual property
law – patents and copyrights
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
9. “To constitute Tribunals inferior to the
supreme Court;”
This allows the establishment of regional
or “Circuit Courts” as well as specialty
courts like bankruptcy courts and the
Court of Federal Claims which mostly
hears maritime cases.
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
10. “To define and punish Piracies and
Felonies committed on the high Seas,
and Offenses against the Law of
Nations;”
This is a matter of securing commerce.
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
11. “To declare War, grant Letters of Marque
and Reprisal, and make Rules
concerning Captures on Land and
Water;”
This is also a matter of securing
commerce.
Article I, Section 8 – Powers of Congress
– is worth looking in detail in this regard
17. “To exercise exclusive Legislation in all Cases
whatsoever, over such District (not exceeding
ten Miles square) as may, by Cession of
particular States, and the acceptance of
Congress, become the Seat of the
Government of the United States, and to
exercise like Authority over all Places
purchased by the Consent of the Legislature of
the State in which the Same shall be, for the
Erection of Forts, Magazines, Arsenals, dockYards, and other needful Buildings;”
that THE private interest of every individual be a sentinel
if POLITICAL societies enter into a larger society
the general THEORY of a limited constitution
the latent causes OF faction
The
COMPOUND
REPUBLIC
of America
the true springs BY which human conduct is actuated
men are ambitious, Vindicative and rapacious
Men ought not to assume an Infallibility
if angels were to govern, No government would be necessary
ambition must be made to Counteract ambition
justice is the End of government
the necessities of a Nation will equal its resources
Time must bring it to perfection
the best Oracle of wisdom, experience
the system of each State within that state
double Taxations
Power being always the Rival of power
double sets of revenue Officers
the capacity of Mankind for self-government
The Political Theory of the
Compound Republic
• “The design problem confronting the
Philadelphia Convention according to
Madison was one of ‘combining the
requisite stability and energy in
government with the inviolable attention
due to liberty and to the republican form’”
The Political Theory of the
Compound Republic
• Proposition 1: Every person is presumed
to be the best judge of their own interest
– Straight out of Adam Smith’s Wealth of
Nations
The Political Theory of the
Compound Republic
• Proposition 2: No person is a fit judge of
their own cause in relation to the interests
of others. (Fed. #10)
– Note the contrast with monarchial privilege
that created European Mercantilism
The Political Theory of the
Compound Republic
• Proposition 3: With equal, nay with greater
reason, a body of men are unfit to be both
judges and parties at the same time. (Fed.
# 10)
The Political Theory of the
Compound Republic
• Proposition 3: With equal, nay with greater
reason, a body of men are unfit to be both
judges and parties at the same time. (Fed.
# 10)
– A similar point to Proposition 2, but with the
additional point that sovereignty must be
broken up in a “Compound Republic” into
multiple points of limited sovereignty with
“checks and balances”.
The Political Theory of the
Compound Republic
• Proposition 4: Ambition must be made to
counteract ambition (Fed. #51)
The Political Theory of the
Compound Republic
• Proposition 4: Ambition must be made to
counteract ambition (Fed. #51)
– This refers to economic ambition as well as
political ambition
The Political Theory of the
Compound Republic
• Proposition 4: Ambition must be made to
counteract ambition (Fed. #51)
– This refers to economic ambition as well as
political ambition
– Competing economic interest groups is one of
the things Madison had in mind
The Political Theory of the
Compound Republic
• Proposition 5: The interest of the man
must be connected with the constitutional
rights of the place [i.e., position] (Fed. #
51)
The Political Theory of the
Compound Republic
• Proposition 5: The interest of the man
must be connected with the constitutional
rights of the place [i.e., position] (Fed. #
51)
– Rights, civil or property, are subject to a set of
common rules
The Political Theory of the
Compound Republic
• Proposition 5: The interest of the man
must be connected with the constitutional
rights of the place [i.e., position] (Fed. #
51)
– Rights, civil or property, are subject to a set of
common rules
– In other words, no one is “privileged”.
The Political Theory of the
Compound Republic
• Proposition 6: The means ought to be
proportioned to the end; the persons, from
whose agency the attainment of any end is
expected, ought to possess the means by
which it is to be attained. (Fed. # 23)
The Political Theory of the
Compound Republic
• Proposition 6: The means ought to be
proportioned to the end; the persons, from
whose agency the attainment of any end is
expected, ought to possess the means by
which it is to be attained. (Fed. # 23)
– Different decision rules should be used by the
executive, judicial and legislative branches.
The Political Theory of the
Compound Republic
• Proposition 7: In every political institution,
a power to advance the public happiness
involves a discretion which may be
misapplied and abused. (Fed. # 41)
The Political Theory of the
Compound Republic
• Proposition 7: In every political institution,
a power to advance the public happiness
involves a discretion which may be
misapplied and abused. (Fed. # 41)
– Therefore, the power of any decision maker
should be limited
The Political Theory of the
Compound Republic
• Proposition 8: [T]he constant aim is to
divide and arrange the several offices in
such a manner as that each may be a
check on the other – that the private
interests of every individual may be a
sentinel over the public rights. (Fed. # 51)
The Political Theory of the
Compound Republic
• Proposition 8: [T]he constant aim is to
divide and arrange the several offices in
such a manner as that each may be a
check on the other – that the private
interests of every individual may be a
sentinel over the public rights. (Fed. # 51)
– Note the role of “private interests” which
include economic rights.
The Political Theory of the
Compound Republic
• Proposition 9: The accumulation of all
powers…in the same hands, whether of
one, a few, or many, and whether
hereditary, self-appointed, or elective, will
lead to tyranny. (Fed. # 47)
The Political Theory of the
Compound Republic
• Proposition 9: The accumulation of all
powers…in the same hands, whether of
one, a few, or many, and whether
hereditary, self-appointed, or elective, will
lead to tyranny. (Fed. # 47)
– This complements Proposition 8
The Political Theory of the
Compound Republic
• Proposition 10: By a faction, I understand
a number of citizens who…are united and
actuated by some common…interest,
adverse to the rights of other citizens, or to
the permanent and aggregate interests of
the community. (Fed. # 10)
The Political Theory of the
Compound Republic
• Proposition 10: By a faction, I understand
a number of citizens who…are united and
actuated by some common…interest,
adverse to the rights of other citizens, or to
the permanent and aggregate interests of
the community. (Fed. # 10)
– A “faction” is a special interest group, most
commonly, economic interest groups.
The Political Theory of the
Compound Republic
• Proposition 11: Liberty is to faction what
air is to fire. (Fed. # 10)
– In other words, if people are free, they will
pursue their economic interests.
The Political Theory of the
Compound Republic
• Proposition 11: Liberty is to faction what
air is to fire. (Fed. # 10)
– In other words, if people are free, they will
pursue their economic interests.
– And, moreover, that is the way it is supposed
to work.
The Political Theory of the
Compound Republic
• Proposition 12: If a faction consists of less
than a majority, relief is supplied by the
republican principle, which enables the
majority to defeat its sinister views by
regular vote. (Fed. # 10)
The Political Theory of the
Compound Republic
• Proposition 12: If a faction consists of less
than a majority, relief is supplied by the
republican principle, which enables the
majority to defeat its sinister views by
regular vote. (Fed. # 10)
– Some have argued that Madison was a bit
naïve in his belief expressed here.
The Political Theory of the
Compound Republic
• Proposition 13: When a majority is
included in a faction, the form of popular
government…enables it to sacrifice to its
ruling passion or interest both the public
good and the rights of other citizens. (Fed.
# 10)
The Political Theory of the
Compound Republic
• Proposition 13: When a majority is
included in a faction, the form of popular
government…enables it to sacrifice to its
ruling passion or interest both the public
good and the rights of other citizens. (Fed.
# 10)
– But, obviously, not totally naïve.
The Political Theory of the
Compound Republic
• Finally:
• To secure the public good and private
rights against the danger of such a
[majority] faction, and at the same time to
preserve the spirit and the form of popular
government, is then the great object to
which our inquiries are directed. (Fed.
#10)