The Founding Principles of a Free Society

An Introductory Essay on Property, Contracts, and Commerce

Most governments and societies are guided by certain animating principles that give life to their institutions and way of life. The great eighteenth-century political philosopher, Charles Louis de Secondat, Baron de La Brède et de Montesquieu (more commonly known as Montesquieu), makes this point in his treatise The Spirit of the Laws (1748), wherein he distinguishes between the “nature” of government and its “principle.”

By the “nature” of government, the Baron de La Brède meant the ultimate source of political power in a particular form of government and its related structure, functions, forms, and formalities. According to Montesquieu, there were three basic forms of government: 1) republican; 2) monarchical; and 3) despotic. He defined the nature of republican government as “that in which the people as a body, or only a part of the people, have sovereign power,” the nature of monarchical government as “that in which one alone governs, but by fixed and established laws,” and the nature of despotic government as that form of government where “one alone, without law and without rule, draws everything along by his will and caprices.” In the American context, the “nature” of the American government could be described as a constitutional republic defined by popular sovereignty, separation of powers, checks and balances, and federalism.

By the “principle” of government, Montesquieu meant that motive force which makes the government “act.” The principle is a kind of spring that sets the government “in motion” Similarly, John Adams declared in his influential pamphlet Thoughts on Government (1776), “The foundation of every government is some principle or passion in the minds of the people.” Adams’s claim is no less true of the United States than it was of the former Soviet Union, monarchical France, imperial Rome, or democratic Athens.

One way to think about the distinction between the “nature” and “principle” of government, at least in an American context, is by reflecting upon Abraham Lincoln’s meditation upon and use of Proverb’s 25:11 (i.e., “a word fitly spoken is like apples of gold in pictures of silver”) to describe the blessings enjoyed by the American people—i.e., our “free government” and “great prosperity.” What made America great, Lincoln wrote, was not simply accidental:

It has a philosophical cause. Without the Constitution and the Union, we could not have attained the result; but even these, are not the primary cause of our great prosperity. There is something back of these, entwining itself more closely about the human heart. That something, is the principle of “Liberty to all”–the principle that clears the path for all–gives hope to all–and, by consequence, enterprize, and industry to all.

The expression of that principle, in our Declaration of Independence, was most happy, and fortunate. Without this, as well as with it, we could have declared our independence of Great Britain; but without it, we could not, I think, have secured our free government, and consequent prosperity….

The assertion of that principle, at that time, was the word, “fitly spoken” which has proved an “apple of gold” to us. The Union, and the Constitution, are the picture of silver, subsequently framed around it. The picture was made, not to conceal, or destroy the apple; but to adorn, and preserve it. The picture was made for the apple–not the apple for the picture.

What was the animating principle that set the original American government in motion? Put differently, what is the motive force of a free society? What principles drive a free society?

The answer to these important questions can be seen by asking a few more. What kind of society—which way of life—did America’s Founding Fathers seek to create for their fellow citizens at the end of the eighteenth century? What kind of men and women did they hope to foster and bring to the fore? What were their ultimate moral, social, and economic aspirations for the American people?

The most important principle for eighteenth- and nineteenth-century Americans was the love of freedom or what they sometimes called the “spirit of liberty.” The Americans dedicated their lives, their fortunes, and their sacred honor to the cause of freedom. During the revolutionary period, they planted liberty trees, danced around liberty poles, formed the Sons of Liberty, and Patrick Henry exclaimed, “Give me liberty or give me death.” In the context of the imperial crisis and the war for independence, the Americans mostly just wanted to be left alone. They rejected the idea that freedom exists by virtue of government permission. Freedom is a necessary condition of human life; it is the social oxygen that allows men to live and live well.

Before we proceed any further let us define our terms. Freedom or liberty is that state where and when individuals are free to think, choose, and act without interference from other individuals or from government. (Alexis de Tocqueville suggested, mistakenly in my view, that “equality” was America’s dominant idea, but I do not think that the Founding Fathers would have agreed with the Frenchman.)

Most eighteenth century Americans, certainly those of the revolutionary generation, understood and used the words freedom and liberty interchangeably. Followers of John Locke’s revolutionary moral and political philosophy, the Americans often defined freedom in purely Lockean terms. In the Second Treatise of Government, Locke defined freedom as synonymous with the rule of law and a system of justice that protected and expanded liberty of all men.

[T]he end of law is not to abolish or restrain, but to preserve and enlarge freedom: for in all the states of created beings capable of laws, where there is no law, there is no freedom: for liberty is, to be free from restraint and violence from others; which cannot be, where there is no law: but freedom is not, as we are told, A liberty for every man to do what he lists: (for who could be free, when every other man’s humour might domineer over him?) but a liberty to dispose, and order as he lists, his person, actions, possessions, and his whole property, within the allowance of those laws under which he is, and therein not to be subject to the arbitrary will of another, but freely follow his own.

Freedom was the polestar of the American Revolution and the American Founding. Lockean freedom means liberty “from restraint and violence from others.” It is a man’s freedom to “dispose, and order as he lists, his person, actions, possessions, and his whole property” under the rule of law and to be free from the “arbitrary will of another.”

Put slightly differently, freedom is that state, space, or condition in which individuals are free to think, choose, and act absent the initiation of physical force by other individuals or by governments. It is to be free from and free of the force or coercion of others. Freedom is the state of being left alone. It’s the liberty to govern oneself and to pursue one’s own happiness as determined by oneself.

Paradoxically, the existence, maintenance, and preservation of freedom requires government to support it. The only proper and legitimate function of government in a free society is to protect the individual from acts or threats of aggression or violence. The government of a free society effectually acts as the individual’s proxy, to whom he deputizes his right of self-defense. The government of a free society will provide a legal framework and a system of justice that expands rather than constricts freedom. “The end of law is not to . . . restrain,” John Locked wrote, “but to preserve and enlarge freedom.” The purpose of law in a free society is to define and preserve the boundaries of individual freedom—boundaries that safeguard all individuals against the initiation of physical force (e.g., violence and theft) or fraud (e.g., breach of contract).

The paradox comes from the fact that government has a monopoly on the use force, which means its capacity for violating the freedom of individuals is immeasurably greater than that of any individual or group of individuals. Laws, by definition, are backed by the threat of coercion, which means that government is potentially the single greatest threat to freedom because it controls the greatest amount of coercive force. In today’s context, the coercive force of governments is backed by a military with artillery, tanks, fighter jets, naval destroyers, rockets, nuclear weapons, etc. The trick is to give government the power necessary to secure freedom for all but not so much power that it can used to violate the rights of its citizens. In the words of James Madison,

The great desideratum in Government is such a modification of the Sovereignty as will render it sufficiently neutral between the different interests and factions, to controul one part of the Society from invading the rights of another, and at the same time sufficiently controuled itself, from setting up an interest adverse to that of the whole Society. 

Thus, the government of a truly free society must be strictly limited to certain well-defined purposes, namely, the functions of defense and retaliation against those who initiate force against others. In concrete terms, this means a government limited to three functions: police, courts, and national defense. By contrast, a government with this much power and its purpose defined as promoting the “common good” would almost certainly degenerate into an authoritarian government or worse.

Directly connected to the idea of freedom was a concomitant principle that brought freedom to life in a social context, namely, the doctrine of individual or inalienable, natural rights. The recognition of inalienable rights made freedom possible. The principle of individual rights served a dual purpose for the Founders: first, as a socially and legally recognized license to act in a social context; and second, as a legal fence that protects the freedom to act. Only by protecting men’s natural and unalienable rights can me be free. Freedom and rights provided the moral foundation for the free society created by America’s Founding generation.

Freedom and rights are the necessary preconditions or foundations of a free society, but a free society that is just and prosperous recognizes other necessary principles as well. The Founding generation also recognized three secondary and much more concrete principles that naturally grow out of freedom and rights, namely, the inviolability of private property, the sanctity of contracts, and the freedom of commerce. Less abstract than freedom and rights, these three principles are visible, tangible, and actionable; they ignite and energize men to act in order to improve their lives, and they are recognized in concrete terms in the law.

This introductory essay and the three that follow will examine how the Founding generation and their heirs understood, developed, and institutionalized these three animating and life-giving principles in their revolutionary governments, which, built on the more fundamental principles of freedom and rights, are also the building blocks of a free, just, and prosperous society. To slightly modify the metaphor and to be more precise, property is the cornerstone of a free society, contracts are the cement, and commerce is the keystone of a free society. Our ultimate purpose is to rediscover, understand, and hopefully revivify the Founders’ forgotten moral principles and the role they played in creating the freest society in world history.

A Reality-Based Approach to Moral Principles

Before we turn to the historical origins, institutionalization, and development of these principles in their American context, I’d like to walk you through my own thinking in determining what these principles are and how they might have arisen in the minds of America’s Founders. What I’m presenting here is speculative and should not be viewed as the exact process of reasoning employed by the Founding Fathers, but I do suspect there is a connection.

When we look out at the world today, or at any time in the past via the study of history, we observe men and woman taking certain actions to improve the condition of their lives. These actions include: 1) acquiring, keeping, and disposing of things (i.e., property); 2) forging agreements and making promises with each other to do certain things (i.e., contracts); and 3) producing and trading goods and services (e.g., commerce).

These actions are universal and timeless. They can be observed in people everywhere and throughout all time. Property, contracts, and commerce are thus discrete things (hence their status as nouns), but they are the result of certain specific kinds of actions that serve general and specific ends. These concrete things and the actions that bring them into being are the mainsprings of a free, flourishing, and civil society. Men pursue property, contracts, and commerce because they are necessary and good for their lives. Freedom and rights are higher-level principles that launch and make property, contracts, and commerce possible.

Just as we can observe men and women acquiring, bargaining, promising, producing, buying and selling, we can also sometimes observe individuals harming others by stealing their property, breaking promises and agreements, and interfering with the actions of others. This situation is most often brought about by the initiation of physical force or the use of fraud by one person against another. We can also observe governments using the coercive power of the State to violate the freedom and rights of individuals as expressed in their property, contracts, and commerce. Eventually, if enough people are engaged in predatory and dishonest behaviors, such actions will lead to an unsustainable state of chaos, violence, war, and penury.

To escape or overcome this latter state of affairs, men and women must identify, develop, and institutionalize in a legal-political system certain principles or rules to protect their property, uphold their agreements, and free their actions to produce and trade. Such moral principles are formed inductively by observing certain repeated actions and their consequences for human wellbeing. A well-formulated principle will integrate innumerable instances of certain kinds of actions and their results into a guiding rule of action. The institutionalization of these principles is necessary to promote and protect property, contracts, and commerce, which are necessary for a free, prosperous, and civil society.

The principles associated with the need for property, contracts, and commerce can be summed up as follows: 1) property rights must be protected; 2) contracts must be treated sacrosanct; and 3) commerce must be free. It is also important to note that these three elements of a free society and their related principles stand in a necessary and hierarchical relationship with each other. That is, property begets contracts and contracts beget commerce. They all work together in a self-reinforcing and harmonious system.

Building a Free Society

Why and how did eighteenth-century Americans come to see the need for developing and institutionalizing such principles?

The American Revolution was led by men who experienced and rejected the use of unbridled State power to control the freedoms and rights of ordinary men and women. The British Parliament’s barrage of freedom- and rights-violating laws in the 1760s and 1770s (e.g., the Sugar, Stamp, Declaratory, Townshend, Tea, Coercive, and Prohibitory Acts) provoked a generation of Americans to identify, assert, and defend their freedom and rights against the world’s mightiest military power. American revolutionaries recognized the inherent danger of giving to government arbitrary power to control the freedom and property of individual citizens. They challenged the traditional claim that a ruling elite (or even a majority) had a natural claim to rule and to control the lives, liberties, and rights of their neighbors and fellow citizens.

The summum bonum of their efforts to identify, assert, and defend their freedom and rights was formally expressed in the Declaration of Independence, which announced to the world that the sole purpose of government in a free and just society was to protect the “unalienable rights” that all men were endowed with, and which included life, liberty, and the pursuit happiness. By the Founders’ account, governments were not to be instituted among men for the purpose of regulating, controlling, or plundering their freedom, contracts, and property. Just the opposite: the sole function of government’s purpose was to protect men in their freedom and rights and to otherwise leave them alone.

But what kind of government can be simply and solely limited to the protection of man’s fundamental rights?

The philosophic and political problems confronted by America’s Founding Fathers as they attempted to create a national government for America were many and great. First, they had to decide what to do with the extant constitution and the government it created, namely, the Articles of Confederation and the Continental Congress. Those delegates who attended the Constitutional Convention in 1787 determined almost immediately that the Articles of Confederation was insufficient for America’s future. Amongst its many vices were its weakness and therefore its ineffectiveness. The government created by the Articles had no executive authority, nor did it have the power to tax, both of which were considered necessary for a well-functioning government. On top of that, some state governments were openly violating property rights and rescinding contracts.

Thus, the Framers of the Philadelphia Constitution were stuck on the horns of a dilemma, or with what we might call the Goldilocks’ problem: their challenge was to create a government that was neither too strong, nor too weak. The Founders’ theoretical problem was compounded by their recent historical experiences: they had just fought a bloody war against the arbitrary executive power of a king and against Parliament’s arbitrary power to tax them. The Framers therefore had to correct the disadvantages and weaknesses of the Articles, which had too little power, while at the same recognizing the dangers of a government with too much power. Their challenge was summed up in the words of Thomas Paine: “[G]overnment, even in its best state, is but a necessary evil; in its worst state an intolerable one.” Put differently, the basic theoretical and practical dilemma confronted by the Framers was to design and launch a government that would neither slip into anarchy on the one hand, or tyranny on the other.

The classical-liberal tradition that informed the Founders’ thinking on the role of government in a free society prized above all the protection of freedom and individual rights as the moral foundation of government and its overarching purpose. Such a government would by necessity and logic be one of strictly limited powers—powers limited to preserving freedom and rights. This meant that the government’s coercive force had to be domesticated.

The Constitution of the United States provided the framing blueprint for the government of the new nation. It created political structures and functions (e.g., separation of power, checks and balances, federalism) and various forms and formalities (e.g., republican government and a bill of rights) for the running of the government. In other words, the Constitution defined what Montesquieu called the “nature” of the United States government.

The Framers’ political architecture created a government unlike any other seen in history or known to man. The Constitution created a laissez-faire government (at least relative to all other forms of government hitherto), the purpose of which was to serve as a kind of protection agency and neutral arbiter guarding and adjudicating the fundamental and civil rights of the nation’s citizenry. The Framers’ Constitution created large spheres of freedom for the American people to live their lives as they saw fit, unmolested from State interference.

Still, even the most limited government must have some power to carry out its legitimate purposes and functions (e.g., protection and justice), and therein lay the rub. The explicit powers of the new national government of the United States were clearly defined and strictly limited, but the Constitution also gave to the new government certain implicit powers that were potentially unlimited (e.g., the “general Welfare” and “necessary and proper” clauses). Those Founders who were dedicated to limited government understood that power has a cancerous-like quality to it. Power grows and it destroys whatever is in its way. Those Americans who were most jealous of their rights and liberties—i.e., the so-called Anti-Federalists—demanded therefore that a Bill of Rights be amended to the Constitution to further protect their freedoms and rights in a social context, which was of course done. The Founders’ goal was to constitutionalize power with the ultimate goal of protecting and enlarging the spheres of freedom.

The skeletal structures and forms of America’s original national government resulted in, as we saw in “The Laissez-Faire Constitution,” something approximating a night-watchman government limited in its functions and powers. Government in America’s early republic from 1790 to the Civil War was therefore characterized by low taxes, frugal budgets, and minimal regulation. America’s laissez-faire government was lilliputian in its size and power, certainly when compared to its European counterparts. It mostly left the American people alone to think, speak, assemble, move, create, build, sell, and purchase.

The Framers of the Constitution designed and built this form of government because, at a deeper level, they were attempting to create a certain kind of society—a free society. To better see and understand the kind of nation the Founding generation envisioned and how it was to work, we must look inside their constitutional building and examine its animating or life-giving principles.

The United States Constitution is best known for its structural and mechanical features, such as separation of powers and federalism, which have been studied and written about endlessly, but what is less well known and less appreciated are the animating moral and cultural principles built into the Constitution that informed the kind of society the Framers’ intended to create. The federal government’s legitimate structures, functions, and powers were meant to serve, protect and uphold, among other things, what I am calling the three building blocks of a free society: 1) the security of private property; 2) the sanctity of contracts; and 3) the freedom of production and trade. To change the metaphor, we might view these principles as the operating system of a free society that makes it grow and healthy.

These three principles were institutionalized to one degree or another in the state revolutionary constitutions in the years after 1776, the Philadelphia constitution of 1787, and the Bill of Rights ratified in 1791. They were also promoted or implied by the Founding generation in their private correspondence, in their public essays, and in their official actions as legislators.

America’s Founding Fathers no doubt went further than any other Lawgivers in world history when they institutionalized freedom and rights in their constitutions and governments, but it should be also noted, at least in passing, that their final product was far from perfect—and the Founders knew it. The Constitution and American culture contained certain internal contradictions that would be exploited over time leading to the eventual decline and fall of the Founders’ vision for America. (I have already indicated some of these contradictions here, here, here, and here.)

Operationalizing the Principles of a Free Society

The American Revolution (i.e., the American colonists’ declaration of independence from their King and Great Britain and their subsequent war for independence) was largely about the recognition and protection of the colonists’ property rights. As early as 1764, James Otis, the first great American revolutionary, asked the basic question that ignited the American revolt: “Now  can there be any liberty where property is taken without consent?” The soon-to-follow American Founding (i.e., the drafting and implementation of constitutions and the resulting creation of new governments) was concerned with institutionalizing property rights as one of its primary objects. The revolutionary generation viewed the rights of property as amongst the core natural or fundamental rights along with life, liberty, and the pursuit of happiness. Immediately derivative from the right to private property were two corollary rights, namely, the right of all men to enter into formal agreements with each other and the right of all men to produce, sell, and purchase various goods and services. In simpler terms, America’s Founding Fathers created a new society that recognized the sanctity of contracts and the freedom of commerce.

In the post-Founding era, individuals were now free to acquire, keep, use, and alienate property virtually without limit; they were free to form contracts with each other regardless of social rank or status; and they were free to trade goods and services mostly without regulation. (Local “police powers” minimally regulated property, contracts, and commerce to protect public safety, health, and morals.) Paradoxically, by protecting the rights of individuals to pursue their selfish interests, America’s free society also fostered a culture of trust, which is the moral glue that holds a free society together. (I shall be writing an essay on the role of trust in a free society sometime in the relatively near future.)

This new environment represented a social-legal revolution in American society that gradually rejected the ideals and institutions of the Puritan-monarchical State. Specifically, the Founders spurned the Puritans’ view of society as a closed, homogenous, static unity or as a utopian organism greater than the sum of its parts, held together by the inviolable bonds of tradition, authority, hierarchy, duty, order, deference, and coercion. They also repudiated the European doctrine of mercantilism, which emphasized government regulation of the economy via tariff manipulation, price controls, subsidies, and other forms of favoritism.

America’s Founding Fathers were innovators, even radical innovators. They rejected the legacy of the Old World and its reincarnation in the New World. They rejected the heritage of obedience and servitude passed down to them by their American grandfathers and great grandfathers. They rejected the idea that individuals must bow and sacrifice themselves to a higher social and divine order. And in the place of the old ways, America’s revolutionary Founders built a free, rights-based, open, voluntary, individualistic, mobile, dynamic market society that required new legal and economic mechanisms to encourage production, trade, and credit expansion and which frequently involved negotiations and agreements between strangers. In the words of Federalist essay #14, it is “the glory of the people of America, that whilst they have paid a decent regard to the opinions of former times and other nations, . . . they pursued a new and more noble course. They accomplished a revolution which has no parallel in the annals of human society: They reared the fabrics of governments which have no model on the face of the globe.”

America’s laissez-faire constitution created a culture of freedom, and it launched a new world of free enterprise, free markets, and free trade. The Founders’ Constitution and the legal-political order it produced institutionalized the freedom and right to acquire and trade property and to form contracts. As a result, the ability of individuals to produce goods and services and to freely exchange them on terms chosen exclusively by sellers and buyers was greatly enhanced. The explosive development of American commerce in the early nineteenth century was a direct consequence of the Founders’ vision.

Recovering America’s Founding Principles

In the end, the meaning, application, and use of these principles (i.e., the property principle, the contracts principle, and the commerce principle) have undergone a considerable evolution or transformation over the course of the last 250 years. The sad truth is that most twentieth- and twenty-first century Americans no longer understand, support, or are willing to live their lives, at least not in any meaningful way, according to the animating principles that were once at the heart of America’s original constitutional republic. The rise of the regulatory-welfare State in the third decade of the twentieth century effectively killed the Founders’ republic and the moral-political principles that went with it.

The decline and fall of the American republic did not happen all at once, of course. The process was slow, but it began systematically in the 1930s when the American people sold their rights to the government for a mess of pottage. With every passing year, the sphere of freedom in which Americans think, act, live, and work shrinks and with it the loss of their not so unalienable natural rights. 

Under the Founders’ constitutional regime, the purpose of government was to protect the rights of individuals; under the new regime, the purpose of the State was to promote the “common good,” the “public interest,” or the “general welfare.” In practical terms, the new dispensation meant that individuals were to sacrifice their rights for the “needs” of others, which was and is always defined by those who hold the reigns of cultural and political power. In other words, the rights of the individual have become secondary to the interests of the ruling elite and those they claim to represent. What this has meant in practice is that the wants of the State and the needs of the many have been treated as superior in status to the freedom, rights, and interests of any one individual or group of individuals up to 49% of the population. Thus, the ruling elite may act to control the actions of its citizens to produce and trade so as to redistribute their wealth in the name of equity.

As a result of this transformation, the moral impulse of the Founders’ republic is now long gone. Still, many twenty-first century Americans continue to pledge their allegiance to the Founders’ constitution and its underlying moral principles, but it’s not clear that they fully understand what those principles are and what they mean in practice. Thus, we do well to occasionally remind ourselves of the fact that it was the Founders who established our most basic principles and rules, and who established the boundaries of our civic life.

America’s Founding Fathers created something noble that deserves more than its current neglect or contempt. The society they created and bequeathed to us is worthy of serious study because, if for no other reason, it still attracts the attention of millions of people around the world even when its own people have abandoned its core principles and institutions. That our Constitution and way of life still inspires tens of millions of people around the globe should inspire us to reexamine, if not restore, that which we have abandoned.

*In the weeks ahead, I will publish individual essays on each of our three principles: property, contracts, and commerce.

**A reminder to readers: please know that I do not use footnotes or citations in my Substack essays. I do, however, attempt to identify the author of all quotations. All of the quotations and general references that I use are fully documented in my personal drafts, which will be made public on demand or when I publish these essays in book form.

***Have a great Fourth of July!!!