Free-market capitalism is losing supporters these days. Wall Street occupiers blame banks, financial firms, and Wall Street for the bad economy. President Obama derides free markets, in true straw-man fashion, as you’re-on-your-own economics with “a free license to take whatever you want from whoever you can.” Even some Republican presidential candidates have inveighed against capitalism.
What about the Founders? What did they think about free-market capitalism?
Although the term capitalism was scarcely in use at the time of the Founding, the Founders supported the principle of economic liberty underlying it. The Founders understood that property rights and free markets were constitutive elements of what it means to be free. They therefore believed that government has a responsibility to protect the rights of all to participate in the economy by upholding contracts, lifting artificial trade barriers, and protecting the right to acquire, possess, and freely use property.
The Founders did not, however, advocate a completely “laissez-faire” economic policy, since they understood that the government had a role to play—a limited role—in regulating the economy. For example, at the time of the Founding, the government inspected goods that were imported into the United States and created licensing systems for certain professions—such as medicine—that were essential to public health and safety. Such regulations strengthen a free-market economy by protecting consumers from fraud and by expanding the opportunity for all to participate in the market by ensuring the reliability of goods and services.
The Founders’ defense of limited regulations enacted by elected representatives is a far cry from the Progressive embrace of far-reaching regulations made by unelected and unaccountable bureaucrats.
This question was reprinted from the new First Principles page at Heritage.org. For more answers to frequently asked questions, visit http://www.heritage.org/Initiatives/First-Principles/basics.