The American School of Economics

Executive Summary

  • The American School of Economics was the school of economics used earlier in US history.


Along with Fredrick List, Carey was the leader of the American School of Economics. Henry Clay named it the American school to distinguish it from the British School, which Adam Smith proposed. The American School of Economics is described as follows.

“The American School, also known as the National System, represents three different yet related constructs in politics, policy, and philosophy. It was the American policy from the 1790s to the 1970s, waxing and waning in actual degrees and details of implementation. The American School’s key elements were promoted by John Quincy Adams and his National Republican Party, Henry Clay and the Whig Party, and Abraham Lincoln through the early Republican Party, which embraced, implemented, and maintained this economic system. During its American System period, the United States grew into the largest economy in the world with the highest standard of living, surpassing the British Empire by the 1880s.” – Wikipedia

Source: Wikipedia

The American school and thus the system that built the US into the world’s largest economy is the exact opposite of neoliberalism. It is based upon just a few principles. The American School included protectionism (the opposite of free trade), investing in infrastructure, a government-sponsored central bank and issuing government debt-free fiat money (i.e., the Greenback), rejection of class struggle, government support for domestic science and education, and use the central bank to stop speculation. However, today while one hears of neoliberalism frequently, it is as if the American school never existed to most public and most economists. Curiously, Alexander Hamilton, who was considered a British cat’s paw by Thomas Jefferson, supported the American school, as is explained in the following quotation.

“The goal, most forcefully articulated by Hamilton, was to ensure that dearly-won political independence was not lost by being economically and financially dependent on the powers and princes of Europe. The creation of a strong central government able to promote science, invention, industry, and commerce, was seen as an essential means of promoting the general welfare and making the economy of the United States strong enough for them to determine their own destiny.” – Wikipedia

There is not a single YouTube video book entirely dedicated to the American School of Economics. One has to wonder in amazement that the dominant school of economics until the 1880s has so little coverage today.