Economist Identifies the American System behind China’s Economic Miracle

Michael Pettis, a professor of finance at the Guanghua School of Management at Peking University in Beijing, who also maintains a blog at the Carnegie Endowment, has reposted an article he first published in 2013 titled: “China and the History of U.S. Growth Models.” Pettis quite competently shows that the Hamiltonian “American System” has generated many economic development processes around the world, including the recent economic miracle in China. He traces the American System school while also ridiculing the economic ideas of Jefferson and Jackson. He reports on the influence of Hamiltonian ideas on periods of economic development in Chile, Mexico, Brazil, Japan, and now China, among others. While it is an old article, his reposting it at this time is telling.

A few excerpts:

“I have often argued that the Chinese development model is an old one and can trace its roots at least as far back as the American System of the 1820s and 1830s. This system was itself based primarily on the works of the astonishing first U.S. Secretary of the Treasury, Alexander Hamilton. (See especially his three main reports to Congress: his First Report on The Public Credit of January 14, 1790; his Second Report on The Public Credit of December 13, 1790, and most importantly his brilliant Report on Manufactures of December 5, 1791. The Second Report on The Public Credit is sometimes also known as the Report on a National Bank.)

“Aside from Alexander Hamilton, its intellectual and political godfather, the main proponents of the American System were figures like Henry Clay, Henry and Mathew Carey, John Calhoun, and even Abraham Lincoln himself. Their vision of economic policymaking was looked down upon as naïve and even foolish by most American academic economists schooled as they were in the laissez faire doctrines then fashionable in England. But I think it is hard for any economic historian not to feel relieved that neither the academics nor the Jeffersonian and Jacksonian factions had the clout to force what they deemed good economic policy onto U.S. development. America got rich in part by doing the wrong things.” [He also discusses Friedrich List and E. Peshine Smith.]

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