Did the American Colonies Pay Too High a Cost for Revolution?: The Conversation
Vincent Geloso and Antoine L. Noël, The American Revolution was costly and that’s why we know that it was exceptional!
We would like to thank Professor Thompson and Messrs. Comegna, Gregg, and Witcher for their valuable responses and insightful comments on our lead essay. Our response addresses some of the comments made regarding the use of counterfactuals, the choice to compare the American economy with Quebec’s economy, the importance of protectionism for infant industries, and the importance of the American Revolution in the development of the American economy.
We agree that we must be careful when dealing with counterfactuals since we enter the “realm of speculation,” as Professor Thompson points out. However, we should point out that we are not drafting a counterfactual the same way that Winston Churchill conjured one when he imagined what the world would have looked like had the battle Gettysburg been won by Robert E. Lee. When economists draw up counterfactuals, they use constraints imposed by economic theory. For example, demand curves cannot slope up; if demand is inelastic compared to supply then consumers pay the larger share of a tax’s burden etc. Each assumption behind a model must then be checked off against historical evidence. Falsified assumptions falsify the counterfactual. With that in mind, a proper counterfactual must be as close as possible to historical reality. This is why our counterfactual is a modest one – it posits that the US would have grown at the same rate as the other British North American colonies.
We acknowledge that our counterfactual cannot perfectly represent the economic consequences of a failed American Revolution. Indeed, a failed American Revolution would probably have resulted in “harsh penalties on the colonies.” However, we know for a fact that the (successful) American Revolution brought significant institutional changes in the colonies. Therefore, our results must be understood as a lower bound for the effect of the American Revolution relative to the scenario where the colonies fail to become independent. In this case, the conclusion we reach can only be bolstered by easing some of the assumptions we made that were designed to cut against our key conclusion.
Messrs. Thompson and Witcher question the use of Quebec to determine how much wealthier the United States became thanks to the American Revolution. Indeed, they argue that the comparison is flawed since Quebec and the American colonies are very different culturally, socially, and religiously. That is a fair point but we should point out that the recent work of one of us has shown that Quebec was growing at the same pace as the colony of Nova Scotia from the 1760s to the 1850s. Also, combining the work of Frank Lewis with that of the present authors shows it also grew at the same pace as Upper Canada (i.e., Ontario) from the 1790s to the 1850s, which is particularly telling as the initial settlers to the area were American Loyalists.
It is also important to mention that Quebec was geographically close to the United States (similar transportation costs when exporting to Britain) and both colonies were important actors in the British grain markets. Furthermore, as we have mentioned in our essay, Quebec had low living standards before 1760 and experienced mild economic growth after the Revolution. Therefore, even though there are important differences between Quebec and the United States, we are confident in our ability to get valid lower and upper bounds for the estimation.
As Mr. Witcher highlighted, even though he disagrees with them, some historians believe that protectionist tariffs were a necessary means to the development of American infant industries. Therefore imposing protective tariffs increased long-term growth. He gives the example of the infant textile industry which emerged thanks to the Jeffersonian trade embargo and grew because of the 1816 protective tariff on cotton and wool textiles. However, both policies negatively impacted the American economy. Irwin (2005) finds that the embargo cost 5 percent of the American GNP in 1807 while Irwin and Temin (2001) explain that the American textile industry would have developed even without the protective tariff, because the British and Americans were making different types of textile products. Therefore, we side with Taussig and believe that protectionist tariffs had, at best, no impact on the growth of the American economy. Furthermore, it is important to note that imposing tariffs on the British gave them ammunition to impose their own tariffs which would negatively impact productive American firms.
We should also mention that there are some aspects of the American revolution that were detrimental that went unmentioned and that are tied with tariffs. The most notable is the role of the tonnage duties which are not included in the estimates of tariff levels by Doug Irwin. The tonnage duties were justified on the basis of funding lighthouses. However, as one of us has shown in work with Justin Callais in the European Economic Review, duties discriminating against foreign ships were raised significantly to 25 times the tonnage duties on American ships. The federalization of lighthouses thus appears to have been a tool to sneak in protectionist measures – which is an extra cost of the revolution.
We should finally point out that we need not explain what made America exceptional. Our attempt to build a counterfactual is based on setting the baseline of an America without any exceptionalism – an America that looked like the British colonies to the North. All we know is that America was exceptional. It paid a deep cost that few appreciate (i.e., the delay of the first age of globalization that we highlight) and yet, it came out on top of the counterfactual. This is truly exceptional. For us, the roots and reasons of American exceptionalism are one debate too far … for now. One step at a time.
What is the relationship between the American Revolution, the subsequent Founding, the rapid economic growth enjoyed by the United States since the 1790s, and America’s eventual emergence as the world’s economic superpower by the 1890s? That is a core question analyzed by Vincent Geloso and Antoine L. Noël in their essay, and a central issue with which the subsequent responses grapple. This goes hand-in-hand with a more speculative question: did the American Revolutionaries effectively give up, at least in the short-term, opportunities for economic growth because they subordinated the prospects for economic gain to their quest for liberty?
Comparative historical and economic analysis of the type in which Geloso and Noël engage is potentially rewarding but also risky to the extent that it involves engaging in what-might-have-been conjectures as well as consideration of counterfactuals. Every counterfactual, for instance, opens up the possibility of others, including some that would likely cancel out the imagined historical impact of the original.
The American colonies might well have benefited from British efforts at trade liberalization in the last quarter of the eighteenth century had they not rebelled and thus remained part of the British Empire. But that absence of rebellion would presumably have meant that none of the economic growth-inducing effects of the political developments that flowed from the drafting, ratification, and institutionalization of the US Constitution would have occurred. Assessing precisely where, economically speaking, the American colonies would have subsequently ended up is a very speculative exercise. That is why I generally prefer, to use C. Bradley Thompson’s words, “a reality-based approach to historical questions.”
That said, Geloso and Noël’s paper does underscore the vital role of human choices and agency in explaining how and why nations do (or do not, as the case may be) embark on particular courses of action that have major economic consequences. The men who signed the Declaration of Independence in July 1776 surely knew that they were effectively opting for a long and difficult war with what was, after all, one of the great military and financial powers of the age. They also recognized that the economic cost of that war for them personally and for the colonies that they represented would be considerable, if not devastating.
A strictly economic weighing of the likely costs of rebellion and revolution may well have resulted in such a declaration never being issued. Indeed, the economic damage inflicted by Britain's efforts to crush the rebellion between April 1775 and July 1776 was already before the eyes of American revolutionaries, whether in the form of the blockade imposed by the British navy or the ravages inflicted on states like Massachusetts by the soldiers of George III. The revolutionaries had reason to hope that French intervention in their conflict with Britain might help them prevail in the long-term, but they neither knew whether Louis XVI would commit France to supporting their revolution nor the form that any such intervention might take or the price that France might demand for its commitment.
And yet despite the certainty of the severe economic consequences of declaring independence and a plethora of political unknowns, the men of 1776 went ahead anyway. As Geloso and Noël remark, “That is saying that there truly is something historically exceptional about America’s founding moment.” Economic growth and stability truly matter, but they are not everything. Some things—such as liberty and the defense of our natural rights grounded in natural law—matter even more and are worth paying a large economic price.
Once again, I’d like to take the opportunity to thank the initial authors, Geloso and Noël, for writing a thought-provoking initial article that the rest of us have been able to engage with. Having said that, I share C. Bradley Thompson’s preference for “a reality-based approach to historical questions.” I too am a contextualist who believes that we must study historical events by paying particular attention to their place and time, and to the individuals that made history happen. Thompson rightfully points out the limits and problems with Geloso and Noël’s counterfactual.
After reading all the essays, it seems clear to me that my co-contributors and I agree that market-liberalism is what leads to economic growth. To the extent that the American Revolution set the United States on a path toward market liberalism, it has contributed toward human flourishing. I imagine that even Anthony Comegna, despite his bemusement at the “zeal for the American Revolution” would agree that the governments established in the various state constitutions and the federal government created in Philadelphia in 1787 promoted human initiative. As Thompson explains, “Relative to all governments hitherto, these new American governments were dramatically limited in their purpose and powers, which means they created large spheres of liberty…” As the economic historian Deirdre McCloskey puts it, common people had to be given the opportunity to have a go.
I’m a big believer in McCloskey’s argument that innovation is the key to economic growth and human flourishing and that liberalism unleashed that innovation. I think my co-contributors would agree, at least in general, with this assessment. As Samuel Gregg has demonstrated, the American Revolution led to the creation of an institutional framework (embodied in the state and federal constitutions) that allowed people to have a go and be inventive. As Gregg explains, “Indeed, a spirit of entrepreneurship swept the country after the Constitution’s ratification, dwarfing that which existed in colonial America.” Gregg continues to show that following the 1790s, laws that protected intellectual property and clarified bankruptcy procedures encouraged innovation and initiative in the young republic. It is unclear, or perhaps unlikely, that these changes would have taken place without the American Revolution.
Yes, market liberalism and the economic benefits it brought began in the Netherlands and Great Britain. The American colonies benefited from this tradition of liberty and a heavy dose of salutary neglect. The United States inherited market liberalism and bourgeois dignity from England, and they went on to magnify it.
Indeed, as the American Republic matured, the institutional framework established in the wake of the Revolution enabled the American people to earn a reputation for their “practical” inventiveness. In addition to improvements in housing and infrastructure, America was filled with inventors: Samuel Morse created the telegraph system; Charles Goodyear developed vulcanized rubber, and Elias Howe invented the modern sewing machine. American economic growth surpassed Britain’s during the Second Industrial Revolution and by the turn of the 20th century the United States was on its way to becoming the preeminent economic power in the world. This was not a product of mere materialism. It was a product of ideas and an institutional framework that channeled individual initiative and entrepreneurial activity into activities that contributed to American flourishing.
While the United States undoubtedly did not live up to the high ideals of the American Revolution (as represented in the Declaration of Independence and the Constitution) and while the country has committed atrocities and made significant mistakes, I would challenge Comegna to name another country that has done a better job of promoting the ideals of market liberalism. As a historian, it seems odd to claim that the Revolution was not “a departure from world history” – it absolutely was a departure. The American Revolution was the first successful liberal revolution and its success helped to encourage the spread of liberalism across Europe in the 19th century. That is to say nothing of the role that the United States played in the 20th century of safeguarding liberalism against the forces of authoritarianism as represented by fascists and communists.
It seems odd to diminish the importance of America’s Founding documents and their positive effects on liberty across the globe. After all, anytime there is a revolution in another country, who do they quote? Thomas Jefferson and the Declaration of Independence. Further, whose flag do the crowds yearning for freedom and self-governance wave? The American flag. The reality is that ideas do matter in the course of history. The American Revolution was justified through radical Enlightenment notions of the individual liberty, dignity, and equality. Its success led to a flurry of constitution making in the new states and eventually a federal constitution that went well beyond the British model in promoting market liberalism, which in turn led to human flourishing. The world is better for the success of the American Revolution and especially for the triumph of market liberalism.
 Deirdre McCloskey has laid out this argument painstakingly in three volumes: The Bourgeois Virtues (2006), Bourgeois Dignity (2010), and Bourgeois Equality (2016). She and Art Carden have also published a shorter and more accessible version in Leave Me Alone and I’ll Make You Rich (2022).
 This line of thinking was inspired by William Baumol’s article “Entrepreneurship: Productive, Unproductive, and Destructive” Journal of Political Economy, 1990.
When American revolutionaries signed the Declaration of Independence, they knew that a war with the world’s greatest military power would follow, and they also knew that the new American nation would face serious economic hardships in the years ahead whether they won or lost. More: if they lost, the leaders of the Independence movement faced death by hanging. In the words of Benjamin Franklin, “We must all hang together, or, most assuredly, we shall all hang separately.” And yet, they went ahead and did it anyway.
The obvious question is, why?
Once we account for the disruption to the American economy caused by the war and by Britain’s various attempts to punish the Americans economically in the years afterward, the evidence seems clear that the long-term economic effects of the Revolution were, on net, positive. And with every passing decade after 1790, the American economy continued to grow at an astonishing pace, despite a quasi-war with France and a second war with Great Britain during the years of the early republic.
Again, the obvious question is, why?
These two “why” questions go to the heart of what the Revolution was about. How we answer them makes all the difference. To address these questions, we must find some way to access the revolutionaries’ intentions: we must find a way to get inside the minds and motives of those who fought for the Revolution and who later designed the political system in which the American economy would function.
We can start to answer these questions by reading the Declaration of Independence and the Constitution of 1787. The Declaration gives us some sense of how and why American Patriots committed everything they had to the revolutionary cause (see America’s Revolutionary Mind: A Moral History of the American Revolution and the Declaration that Defined It), and the Constitution tells us how and why the framers designed and implemented what I have elsewhere called a laissez-faire constitution that provided a political framework for a free-market economy (On America’s laissez-faire constitution, see here, here, and here).
This is what I call doing history from the inside out, i.e., starting with the actors of history and trying to understand their ideas and motives as a way of understanding their actions. (I call this approach the “new moral history” in the Introduction to America’s Revolutionary Mind, which is my attempt to sketch a classical-liberal approach to the study of history.)
There are, of course, other approaches to doing history. One is the neo-Marxist approach favored by Nikole Hannah-Jones and the 1619 Project. This anachronistic approach to doing history studies past actors and events from the outside in, i.e., by superimposing on the past the assumptions, concerns, and prejudices of the present. This “presentist” approach is taken by one of the participants in this forum, who assumes he knows the motives, ideas, and actions of past actors better than they did.
Anthony Comenga’s response to the Geloso-Noël essay oozes with contempt, even ressentiment, for the American Revolution and for those twenty-first century Americans who treat the founding period as though it were somehow important, unique, or special. He’s “puzzled” and “shocked” by those who hold what he calls the “mytho-historical” view of the Revolution that speaks of “American exceptionalism.” He revels in debunking the “national mythology” of the Revolution. As with Howard Zinn and Nikole Hannah-Jones, he seems not to see any good in the American Revolution. Then, in a moment of unbuttoned frankness, Mr. Comegna asserts that George Washington “may not be that far from your bloodthirsty Jacobin or your genocidal Bolshevik.”
Mr. Comegna’s contempt for the American Revolution and its revolutionaries begins with a conceit—a fatal conceit that assumes he knows the motives, ideas, and actions of American revolutionaries better than they did. He mocks the revolutionary generation by claiming that the American Revolution “was no noble sacrifice for the betterment of humanity.” Strictly speaking, the revolutionary generation did not view their actions as a “sacrifice for the betterment of humanity,” but they did think they were launching a novus ordo seclorum based on certain philosophic principles. Alexander Hamilton’s claim in the first essay of The Federalist is only the best-known statement of how the founders’ understood their project:
“It has been frequently remarked that it seems to have been reserved to the people of this country, by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force.”
This is how the founding generation understood the meaning of their founding act; it’s how many European (including English) intellectuals at the time saw what they were doing; and it’s how subsequent generations of Americans saw the actions of the founders. Remarkably, though, Mr. Comenga knows the founders’ motives better than they did. How he knows this is unclear.
I conclude with one example of how subsequent generations of Americans understood the founders' founding act. Consider the Loco-Focos, who were principled defenders of the founders’ principles and institutions during the 1830s and 1840s. The Loco-Focos viewed themselves as the true heirs to the founding generation. They wanted to return to the original constitutional regime ratified in 1788, or at least the Jeffersonian version. According to William Leggett, the goal of the Loco-Focos was to restore the founders’ constitution, which captured “the noble and just sentiment of Jefferson, that the sum of a good government is to restrain men from injuring one another; to leave them otherwise free to regulate their own pursuits of industry and improvement; and not to take from the mouth of labour the bread it has earned.” In 1834, New York City’s Loco-Foco newspaper, the Evening Post, declared its hope that the United States was “destined to prove to mankind the truth of the saying, that the world is governed too much, and to prove it by her own successful experiment in throwing off the clogs and fetters with which craft and cunning have ever contrived to bind the mass of men.”
I may be mistaken, but I’m pretty sure the Loco-Focos did not think the founders were genocidal maniacs. I stand with the Loco-Focos.
 William Leggett, “Morals of Legislation,” in Democratick Editorials: Essays in Jacksonian Political Economy, (Indianapolis, IN: Liberty Press, 1984), 54-55.
 William Leggett, “The Monopoly of the Banking System,” in Democratick Editorials, 81.
I am very glad to see that my fellow respondents gave thoughtful, appropriately generous, and critical responses to our lead authors–even as my initial criticisms and claims were so harsh and wildly out of the leftern wilderness.
Speaking of the wilderness, I was slightly surprised by the insistence that world history would be impoverished without the “development” of the American West as it actually happened. I do not doubt that my colleagues would agree that economic exploitation of the Plains could well have occurred without the decimation and genocide of the Natives, but if you want to claim the supposed benefits of that process while also following a “reality-based approach” to American history, you also then seem committed to endorsing at least many of the actions which caused those outcomes. The reality, after all, is that the rapacious Americans slaughtered Plains Indians and many others whenever they had lucrative opportunities.
Once independence was achieved and the government began positively encouraging westward settlement, so began what the great locofoco radical William Leggett called the “force-pump method” of development. The race to “develop” the West was a giant government-created socio-economic distortion that warped American history into something twisted and unnatural, little different from the process of distorting an economy through state intervention. In an editorial discussing the ideal of a “Free Trade Post Office,” Leggett undermined the supposed necessity of a government postal service and advocated for trust in “the laws of trade.” But with the (white) settlement of the West, as with the mails, the government did everything but trust in “the laws of trade.” Leggett addressed the argument that a government post is necessary in order to “[extend] mail routes through the wilderness, and thus [present] inducements for population to gather together at points which would otherwise remain unimproved and uninhabited for years.” Leggett’s reply to this challenge deserves full consideration because it speaks directly to the reality of how the West was settled in the wake of the Revolution:
To this we answer, unequivocally…We would withdraw all Government stimulants; and let no man suppose that the progress of improvement would be retarded by such a withdrawal. The country would grow from year to year, notwithstanding, as rapidly and more healthily than now. It would only be changing the hot-bed system to the system of nature and reason. It would be discontinuing the force-pump method, by which we now seek to make water flow up hill, and leaving it to flow in its own natural channels. It would be removing the high-pressure application of Government facilities from enterprise and capital, and permitting them to expand themselves in their own proper field. The boundaries of population would still continually enlarge, circle beyond circle, like spreading rings upon the water; but they would not be forced to enlarge this way and that way, shooting out into strange and unnatural irregularities, as it might please land speculators, through the agency of members of Congress, to extend mail facilities into regions which perhaps God and nature meant should remain uninhabited for ages to come.
When the government lays its heavy hand on the table to influence the results of the game, there is always deadweight loss and distortion. In the case of the West, the costs of government-sponsored “development” were the wholesale slaughter of entire peoples, the wiping away of ancient cultures, environmental catastrophes, and distortions of American life to a degree that could never possibly be measured. It was a terrible turning point in history when Americans decided the world was theirs to make and remake at will–like the Revolutionaries who took it upon themselves to decide the fates of others.
 Lawrence White (ed.) & William Leggett (original author), Democratick Editorials: Essays in Jacksonian Political Economy, “Free Trade Post Office,” March 23, 1835.