Episode 104: Mathew Frith

Introducing the American protectionist tradition

0:00Welcome to Smith and Mark's Walk into a Bar, a History of Economics podcast. I'm one of your hosts, Jennifer Jun, joined today by my colleagues, Ginla Akdere and Francois Alisson. Hi, Ginla. Hello, Jen. How are you? Fine. It's a nice summer days. I mean, it's just one of those summer days, and I'm happy that summer hasn't ended yet. So I just want to share my happiness with you about it. How are you?

0:41I'm doing well. The school year has just started, and summer is winding down, so I'm very happy about that. It's been too hot here.

0:51And Francois. Hi, Francois. How are you?

0:54Hello, Jennifer. I'm going fine here, in the middle of exams, and everything should be, yeah, should be fine here. Yeah, well, good luck surviving that season. We're looking very forward to this month's guest. Today we have with us Dr. Matthew Frith, who is a lecturer in business at the University of New England in Armadale, Australia. Matt just came out with a new book. So he's the author of America's Neglected Protectionist Tradition, The Economics That Forged a Nation, published by Anthem Press Justice Month.

1:31And at the end of this episode, we'll give you some, we'll give you a little discount code if you're interested in purchasing it. So hang on with us till then. And hi, Matthew. How are you doing? Hi, Jennifer. I'm doing very well. And thank you for inviting me on to the podcast. And yeah, doing quite well. The book came out just recently, so I'm very stoked about that. Yes, congratulations. Thank you very much. So we're going to ask you a bunch of questions today about this book that you've just put out, and I've got the first one, so here I go.

Defining American protectionism and tariffs

2:05So as a kind of a starter question, for those in the audience who might not be familiar with the topic, what is protectionism? And what is American protectionism in particular? Like, what makes it American? Well, protectionism is basically the idea that you should use government policy to protect domestic producers from foreign imports. Now, protectionism can take a number of different forms. And one of the things I attempt to demonstrate in my book is that there is something distinctive about American protectionist thought, which distinguishes it from other forms of protectionism.

2:39Now, of course, the term American protectionism obviously denotes a geographic and national component because the school of thought emerged in the United States with Alexander Hamilton and his contemporaries. However, I also think that their approach is reflective of the American psyche in a way. For example, the American protectionists emphasize the importance of human ingenuity, entrepreneurship, individuality and social mobility. And the purpose of their protectionism was to foster all of those things. So there does seem to be something distinctively American there.

3:13Now, often when trying to compare a cap, sorry, capture what a school of thought consists of, it can sometimes help to contrast it with what it isn't. So you can contrast American protectionism with the likes of mercantilism or with the likes of strategic industrial policy. So unlike mercantilism, and look, I realize that there is debate over exactly what mercantilism consists of and even if it exists at all. But let's just go with the conventional understanding.

3:43What the mercantilists were all about were accumulating trade surpluses, using statecraft and economic warfare to bolster state power. And they very often held to a zero-sum view of wealth. Now, that isn't really at all the focus of the American protectionists. For instance, they were very much dynamic thinkers who emphasized growing economic wealth through human ingenuity and invention. So they didn't subscribe to a zero-sum view of economic wealth. And in fact, when you look at their theories of distribution, the American protectionists might surprise some people are actually far more positive sum in their thinking than many of the classical economists like David Ricardo or Thomas Malthus.

4:25And the other thing is that these guys didn't preoccupy themselves all that much with the trade bounce. Their focus was more on the home market. They weren't looking so much at the external trade bounce with the rest of the world. So I think it is kind of a category error to conflate their views with mercantilism. And likewise, they can also be distinguished with what we might consider strategic industrial policy. So the likes of active government interference and planning in industry.

4:57So picking winners, channeling funds into particular industries, granting monopoly privileges, subsidies, and those sorts of things.

5:06So at the time, the American protectionists themselves referred to what we might call industrial policy as paternalism. And they would always emphasize that there is a big difference between protectionism and paternalism. And in short, the distinction was that protectionism was about creating conditions and opportunities for individuals and entrepreneurs to do for themselves, whereas paternalism was the government actively directing the industrial affairs of the nation. So it might actually surprise the listeners to hear that the American protectionists were actually staunchly opposed to subsidies.

5:43Now, of course, I should clarify that Hamilton is somewhat of an exception because he did support the limited and temporary use of subsidies. But he was also very explicit that they should only be used for really the most infant of infant industries, and they should be quickly dispensed with once the industry gets going. However, virtually every American protectionist after Hamilton rejected subsidies outright, and they favored the exclusive use of protective tariffs. And there's also several reasons for this, one of the key reasons is that they saw subsidies as discriminating between industries and between producers within particular industries.

6:21And it was usually the most influential and politically connected firms that would receive the subsidy. So this created barriers to new entrants and smaller producers, which impeded social mobility, and social mobility was a big concern for the protectionist. So when you compare a subsidy for a tariff, for example, a tariff more or less applies equally to all producers in the industry. Every firm is free to take advantage of the tariff, and each firm is still subject to free competition in the domestic market.

6:53So they can't simply live off the subsidy. Sorry, they can't simply live off a tariff in the same way that they live off a subsidy. And finally, the other thing is a subsidy also depletes revenue. So you must tax other areas of the economy in order to administer a subsidy, whereas a tariff, in addition to protecting industry, raises revenue. And this means that you can use this tariff revenue to basically forego domestic taxation. And you can also use it to finance infrastructure, which was the other key policy plank that the protectionist espoused.

7:24Yeah, so and in fact, it was actually this distinction between protectionism and paternalism, which is one of the things which led to hostilities between the American protectionists and the likes of the German historical school, even though some sources tend to lump the two schools together sometimes. So the American protectionists were actually quite critical of the Germans for being two activists within the domestic economy. So even though the American protectionists saw a very significant role for government, and I'm not trying to downplay that, of course, they did see a significant role for government.

8:00They were essentially still firm believers in limited government in the sense that government's role should be limited in scope. Okay, thank you.

Inspirations and intellectual history

8:11Mathieu, I would like to know what inspired your book project. And especially I'm interested in what challenge arises when trying to reconstruct a coherent intellectual tradition, where the existing literature might tend to see only a collection of scattered ideas.

8:32Thanks for the question. Well, in terms of what inspired the book, my background was actually originally in development economics. That was what I majored in in my undergraduate studies. And during my undergraduate undergrad, you had a number of books released at the time which questioned the standard narrative around nations developing under free trade. For instance, you had the likes of Heijun Chang's Kicking Away the Ladder, which showed that many nations, including the United States, developed under tariff protection.

9:03However, most of these works never attempted to uncover, or at least uncover in any real depth, the motivation and reasoning behind these protectionist policies. It was more or less just economic history. And I think that raises an important issue in itself, because simply noting a correlation between protectionism and development is one thing, but you need some kind of causal mechanism to explain exactly why nations seem to develop under protectionism.

9:33So I was more interested in exploring the intellectual foundations behind U.S. protectionism, so looking at exactly why the Americans thought protectionism made sense. And sure enough, when I began digging below the surface, I uncovered a massive number of American protectionist thinkers, and they articulated a system which identifies those causal mechanisms. And not only that, but their ideas also extended well beyond trade policy as well, so they had really a complete framework for understanding the economy.

10:06Now, in terms of the challenges of reconstructing a coherent tradition, it is true that conventionally the secondary literature has tended to view them more as scattered thinkers rather than a coherent tradition. But the more I read the primary sources themselves, the more it became apparent that they were a coherent tradition operating with a common set of assumptions and axioms. In fact, the book project was not originally intended to be a systematic reconstruction.

10:38It first started off as an intellectual history of the school. That's now a future project, which I hope to get back to. But in any event, the more I read all of the primary sources, the more I was struck by the level of coherence and consistency among the different economists who made up the schools. So that's when I actually shifted to this writing more of a systematic reconstruction. So I just simply didn't find the conventional interpretation to be all that convincing, really.

11:08And the other thing is, as much as the secondary literature might suggest that they weren't a school of thought, but rather a loose set of ideas, this simply ignores how the protectionists themselves saw themselves. So they were self-consciously operating as a school. As early as 1821, Matthew Carey was referring to the school as the Hamiltonian School of Political Economy. Then you had thinkers such as Henry Carey, Cheyenne Smith, and Francis Bowen using the term American school.

11:40So this is all to say that they were self-consciously operating as a school of thought in their own right, at least from the 1920s onwards. And the final point I might just note is it's not as if I'm going back and retrofitting these different thinkers together into a tradition that never existed. If you look at the primary sources, the protectionists themselves give you what amounts to a statement of the canon. So if you go to the front page of the book, for example, I provide quotes from Robert Ellis Thompson and George B. Dixwell, who are members of the school.

12:16And they're effectively laying out what they consider to be the school's canon, stretching from Hamilton and Cox through the likes of Raymond, Ray, the Careys, through to the late 19th century protectionists. And they also weren't isolated statements. You can find similar canonical statements in other thinkers such as Stephen Caldwell. And look, if anyone's sceptical, you know, I welcome scrutiny of the book. So I invite anyone to actually read the book and it draws heavily on the primary literature. And you can basically observe for yourself if you observe the level of consistency for yourself,

12:51because I think that's quite apparent when you actually read what these guys were writing about. Thank you. Indeed, you define a school of thought with roots in the past and in recent time.

Neglect and historical context

13:05How is the story of the American protectionist school bound up with the fact that it was neglected?

13:13So I should clarify that I'm really only documenting the late 18th and 19th century American protectionists. And I cut off around the turn of the 20th century. That was sort of when the major thinkers started to die off for the school. So I don't cover or provide a commentary on the recent resurgence of protectionist policies in the United States, though I do make the case that this school of thought is worth studying as a source of insight for contemporary policy and theory. So I'm really focusing on that particular school of thought, which began with Hamilton,

13:47his treasury assistant, Tench Cox, and another lesser known figure by the name of William Barton. And what you got was that there were these followers of Hamilton, Cox and Barton. And they picked up their ideas and they progressively systematized them into an entire framework for understanding the economy. And it went through roughly four generations. So you had the generation following Hamilton, Cox included the likes of Matthew Carey, Daniel Raymond, Friedrich List, John Ray, Alexander Everett, and so forth.

14:18Then you had the third generation, which included the likes of Henry Charles Carey, who was probably the most important economist in the tradition since Hamilton. And you also had the likes of Horace Greeley, Pashine Smith, Francis Bowen, and various others in this generation as well. Now, your question mentioned the neglect of the school. By far, the most neglected generation is the post-Carrie generation. There's such limited scholarship on this last generation that you'd be forgiven for thinking that the school essentially died out with Henry Carey.

14:54And what's more is that this is actually the largest of the different generations. So some of the key figures in this last generation included the likes of Robert Ellis Thompson, William Elder, Ben Buren-Denzelow, and L.S.H. Roberts. And in fact, L.S.H. Roberts provides a good illustration of the sheer neglect of the school. So Roberts was the U.S. treasurer during the McKinley administration. He published a 400-page treatise on political economy in addition to various other works.

15:28Now, I would expect a figure such as this to feature at least somewhere in the secondary literature, but he simply doesn't. And Roberts isn't an isolated example. There's numerous other figures just like him.

15:41Now, in terms of exactly why they are neglected, this is a very complex question, and there probably isn't just one cause. But I guess my working theory in terms of the primary cause is that by the second half of the 19th century, you had the emergence of the American Progressive School, associated with the likes of Richard T. Eli. And academic economics then became a battleground between progressive and basically the classical and proto-neoclassical schools.

16:13Now, it is true that some American protectionists held positions in academia, but by and large, they operated outside of formal academic institutions through the likes of think tanks, industrial associations, and even through the Republican Party. So you had a situation where they seemed to have fallen by the wayside in the contest of ideas because academic economics at the time, in the late 19th century, really consisted of progressives and free market sorts basically battling it out.

16:44And this situation where the American protectionists were operating largely outside the halls of academia meant that the school was basically starved of fresh fruits. All the new economic graduates being churned out of academia were being taught either progressive or neoclassical ideas. So they weren't being acquainted with the ideas of the American protectionists. And you could see from that how a tradition can basically be forgotten and neglected.

17:13And the other thing is that the school is really outside the standard canon of economics. So they're not the kinds of thinkers that would necessarily attract attention from historians of economic thought. And even when they did get some attention, a lot of the attention tended to be dismissive in nature. So kind of the standard interpretation was originally made by Charles Franklin Dunbar, who was he was commissioned to write the kind of the first history of U.S. economic thought.

17:43And he basically dismissed these guys as unoriginal and a derivative of classical economics. And to a large extent, other secondary sources have tended to pick up and recycle that assessment originally made by Dunbar. And look, I'm not trying to disparage the field as a whole. There are some very good works on the school. You have, of course, Joseph Dorfman. He wrote a monumental work on American, the history of American economic thought. And he does talk about many of these guys.

18:15And more recently, you have the likes of Steve Mearden and Christopher Calvo, who've done solid scholarship. But overall, the attention has been very limited, especially when you compare it to other schools of economic thought. Very clear. Thank you.

Scholars and statesmen of the school

18:31Who are the members of American Protection School then? Is it a school significant only for economics and constituted only by economists? Or are there contributors from other social sciences also? Well, I identified nearly 70 figures who made up the school. So it was a surprisingly large and diverse school of thought. And actually, as companion material for the book, I provide a collection of biographical sketches for each of these thinkers, which is free to download.

19:04Now, in terms of who exactly made up the school, the bulk of them were economists and statesmen. So in terms of statesmen, you, of course, have the likes of Hamilton, Henry Clay, Daniel Webster, and later the likes of William McKinley and Thomas Brackett Reid, who was the Speaker of the House. So a lot might not actually realise it, that William McKinley actually wrote a book documenting tariff legislation, and he also wrote various articles on protection. With that said, the bulk of the members of the school were overwhelmingly economists, though many of those economists did have other professions and traits.

19:41So many of them were lawyers, journalists, you had publishers. Some of them were industrialists. But in terms of contributions from those in other social science, there was a small handful. You had some geographers. The best example of this was a geographer and mapmaker by the name of John Mellish. And it was actually Mellish's treatise that convinced Thomas Jefferson to drop his aversion to manufacturing.

20:10And the next guy is probably the most scandalous of those in the school. There was also a political scientist in the school by the name of Oren Skinner, a very colourful chap. So I had to reconstruct his biography from newspaper clippings. And it appears that Skinner defrauded several banks across the United States and was eventually arrested in London for using a forged letter of credit. And he ended up spending the rest of his life in prison. So he was probably the most scandalous figure in the school.

20:41The others seem to be of a much higher moral character than Skinner.

20:46Before we get into some questions about the substantial content of the book itself, I want to go back to something you said in your response, or something that seemed to be indicating your response to Francois' question earlier.

Challenging mainstream trade theory

20:59One of the things that you do is, this work is presented as a reaction to a Whiggish interpretation of history. And I wanted to know how you envisioned that. Yeah, so in terms of the framing of the book, it is positioned against the weak theory of history. So for the listeners, the weak theory of history, particularly when applied to intellectual history or history of economic thought, is basically this idea that there will be this progressive refinement of thought over time.

21:31So over time, more correct understandings will emerge and the errors of the past will be discarded. So the implication is that through this process, present-day knowledge should be superior to the ideas of the past. But at least in my view, it isn't entirely clear that this is how knowledge actually accumulates. There are various sociological, institutional, and rhetorical reasons for why superior theories might be dismissed or ignored in their own time.

22:01And also why inferior theories might elbow aside sounder theories. So I think it is important for historians of economic thought to actually go back and look at past thinkers to see what value they might have for modern economic thinking. And look, I'm not the first to make this kind of argument against the weak theory. But in light of the argument, I think that the American protectionists are an example of where relevant economic theories have been unfairly dismissed or ignored simply because they're at odds with the academic mainstream. Now, of course, the fact that the weak theory of history, at least in my view, isn't all that convincing, this doesn't necessarily mean that we should uncritically accept the ideas of the past.

22:43What I'm basically saying is we can't simply take it for granted that more recent and more commonly accepted theories are necessarily the most correct theories. And as historians of economic thought, we have a role in exploring past ideas. And if they are sound, recovering past ideas. So I don't think historians of economic thought should simply be doing it out of mere kind of academic curiosity. I think we should study the economic history of economic thought to become better economists.

23:15So not to be too controversial, but I'm basically of the view that the theory of comparative advantage, which is in many ways still the dominant theory of international trade, if you include its modern elaborations, that it was basically discredited by the American protectionists and that they offered far more realistic alternatives. Yet other than the infant industry argument, no modern mainstream texts on international trade theory present or at least attempt to contend with the ideas put forth by the American protectionists.

23:47And it doesn't seem to me as if their ideas were discredited or refuted. It seems that they were just simply ignored and don't continue to be ignored and don't get a look in. So how do we know that the theories being taught in, say, mainstream economic texts are actually the best theories? At the very least, we should be contending with the best arguments. Even if you are coming from a free trade orientation, you should be contending with the best arguments for protectionism. But very often protectionism is kind of simply dismissed as economically literacy or kind of a low hanging fruit such as zero sum thinking and those sorts of things is presented as protectionism or say protectionism is just purely political arguments.

24:33When really it's only really the infant industry argument that you seem that you find modern economists actually contending with. But these protectionists actually had far more theories than just the infant industry argument.

Assumptions distinguishing protectionist thought

24:49You have mentioned some economists' names and we understand that the building blocks of the school theoretical framework are found in classical Marxist and modern schools of economic thought. And what about ideas? Could you be more specific about the sources of ideas dominant in the American protectionist groups?

25:12So the argument that the building blocks of American protectionist thought are found in classical economics, that's more of the conventional narrative in the secondary literature. And there is even one secondary source which tries to make the case that the protectionists were an American counterpart to Marxism. And I find that to be a particularly strange interpretation. But in any event, what you broadly get in the secondary literature is this view that the American protectionists were basically fundamentally classical, but they were simply adapting classical economics to divergent policy conclusions concerning international trade.

25:48So my book actually argues against this interpretation. I make the case instead that the protectionists arrived at divergent policy conclusions precisely because they were operating under a different set of assumptions to the classicals, and this caused them to develop a distinct theory of the economy. Now, in terms of what those assumptions are, I can't give you all of them because the readers need a reason to buy the book, but I can give you a sense of some of the main ones. So the most important one is really their conception of the individual, and this is really foundational to their thought.

26:24What you find when you look at the classical economists is there's this downplaying of natural differences among individuals. You can see this in the opening chapter of Adam Smith's Wealth of Nations, where Smith basically denies that the difference between the likes of the philosopher and the common street porter is the result of nature. Smith instead argues that those differences are the result of the division of labor, and this downplaying of individual differences is even more pronounced in David Ricardo, where individuals are reduced to basically an abstract and uniform unit of production.

26:57So a unit of labor is simply a unit of labor. So this stands in complete contrast with the American protectionists. They instead argued that there's an immense variety and diversity of natural talents, aptitudes, disposition, and tastes that exist among individuals. And this runs throughout the entire school. It's found in the report on manufacturers. It's a centerpiece of Henry Carey's economic thought, and it features throughout the writings of all the post-Carrie protectionists. In fact, Henry Carey even stresses that individuality and individual differences are the defining feature of mankind.

27:33Now, this conception of the individual would go on to shape virtually every aspect of their system of thought. And as I can elaborate on later, it also underpins one of their chief arguments against free trade. Now, another distinction between the classicals and the protectionists relates to their treatment of land and capital, and by extension, capitalists and landlords. So what you find in the report of manufacturers, for example, is that Hamilton is contending with the arguments made by the physiocrats in favor of agriculture.

28:07And one of those arguments is that agriculture, unlike manufacturing, produces a neat surplus or rent. But in response to this, Hamilton counters that the distinction between rent and profit is merely verbal in nature, with rent simply representing a profit paid to the landlord, and that land simply represents the landlord's capital. And this treatment of land as capital features throughout the rest of the school. Daniel Raymond picks up the concept from Hamilton. It's also a hallmark of Carey's writings and the post-Carrie protectionists as well.

28:38Now, it was progressively refined and developed over time, but they're building off foundations originally established by Hamilton.

28:49But to take it back to the original question, this is a completely different understanding of land to that found in the English classical school. And what you actually find, and it might surprise some readers, is that this different conception of land leads to the American protectionists being far more consistent, I'd argue, than the class schools on the matter of private property rights. Whereas the class schools, particularly Ricardo, John Stuart Mill, and even Henry George, if you include him as a classical, they tended to have a bit of an issue with landlords.

29:20And they were approving, sometimes implicitly, sometimes explicitly, of taxes on land. But the American protectionists, because they treated land as basically a form of capital, they were opposed to land taxes and rent controls. And it was basically because they saw these to be violations of the property rights of capitalists. So that's just a small sample of some of the underlying assumptions that distinguish the American protectionists from the class schools, Marxists, and even contemporary mainstream economics.

29:51But there are plenty of others that I outline in my book.

29:55We can continue the discussion about the content of the book, because one of the chapters attracted my attention.

The reproduction cost theory of value

30:05It is the chapter on the theory of value. And I found your discussion of the theory of value, as developed by American protectionist thinkers, particularly fascinating. Rather than grounding value in quantities of labor, they emphasize the cost of reproduction. Could you elaborate on this distinction and explain why it is so important within the broader framework? Yeah, well, in many ways, I actually think the name reproduction cost theory of value is somewhat of an unfortunate term, because it's really a utility resistance theory of value, rather than simply a cost of production theory.

30:46So the basic idea is that there are wants that need to be gratified, but there's normally some kind of resistance imposed by nature when trying to obtain a good or service. So in order for a good to possess value, it must have both utility and there must also be resistance to be overcome. Now, there are certain goods which have significant utility, such as the air we breathe. But because there's no resistance imposed by nature, it doesn't possess an exchange of value.

31:16And that's a good thing from the perspective of the American protectionist, because you're satisfying won'ts without any cost involved. So basically, if you have a situation where a good has high utility and high resistance, it will have a high exchange value as a result. Now, the American protectionist tended to characterize economic progress as man obtaining greater command of the forces of nature and overcoming the resistance that nature imposes. And in order to overcome that resistance, man must use his intellect and ingenuity so he can increase his productivity.

31:51He can invent new technologies. He can introduce labor saving machines and so forth. All these things will help man harness the forces of nature and it will lower the resistance imposed by nature. And this is basically what they meant by cost of reproduction. By overcoming the resistance imposed by nature, you're increasing your productivity and you're lowering the cost of reproducing commodities, which means assuming that utility remains constant, exchange value will fall over time. Now, the reason why this is important is that it feeds into their conception of national wealth.

32:28So their insight is that value and wealth are not always commensurate. In fact, very often wealth and value are actually characterized as the inverse of one another by the American protectionists. So if your society is becoming more productive, this means that you'll have a gradual reduction in the reproduction costs of goods over time. So with economic progress, you should actually witness a perpetual fall in value. And this is a good thing because you're getting more or the same amount of utility with less resistance involved.

33:02And in fact, they even use this reproduction cost theory of value to solve the diamond water paradox prior to the marginal revolution. And it is actually very different to how the marginalists solved it. So if anyone's interested in that, they can check out the chapter on value. I actually did want to ask a little bit more about about value.

Comparing value theories and social mobility

33:24So this this this came up earlier in our conversation about the relationship between protectionism to other theories or its contrast to other theories. And so I want to ask that question in a more targeted version, specifically about value. Could you explain how this way of thinking about value differs from Riccardia and Marxist value theory? Well, for one thing, there is the utility component. Now, even though Riccardia and Marx argued that utility was necessary for something to have value, it was more of a passive condition that had to be met rather than something actively contributing to value.

34:05Now, even though the protectionists tended to place more emphasis on the productivity side of the economy, they still saw utility as playing an active role in price formation. And you can actually see the role of utility most explicitly when you look at their analysis of land pricing, for example, where it's actually utility, which is the dominant force rather than reproduction costs. But even on the cost or resistance side, there is still a significant difference between the American protectionists and the Ricardo Marx tradition.

34:39And this is largely due to the fact that the protectionists rejected the notion of an invariable standard of value or natural price. So even Daniel Raymond, who was writing prior to the introduction of the reproduction cost theory of value, he referred to the notion of an invariable standard of value as a palpable absurdity. But the key issue is really this. If you want to assume an invariable standard of value or natural price, at least as the protectionists argued, you really must assume constant returns to scale or constant productivity.

35:15But the American protectionists rejected this notion. They were all about productivity growth. So instead, their emphasis was on falling reproduction costs through the application of technology and so forth. So their emphasis was on increasing returns to scale and increasing productivity. And because of this, you'll have a perpetual decline in reproduction costs over time. And this would lead to higher national wealth. It wouldn't actually gravitate towards some natural price. It would be a perpetual decline due to the application of technology.

35:46So I'd argue that there's actually far more dynamism in the American protectionist theory of value than what you find in Ricardo and Marx. Now, the other thing that really contrasts this area of value with Marx in particular is that the American protectionists saw that with economic development, the tendency for declining reproduction costs not only applied to consumer goods, but also to capital goods as well. And this is important because it feeds into the American protectionist analysis of distribution and social mobility.

36:20So if capital goods are experiencing declining costs of reproduction, it means that over time, there's actually a greater propensity and greater opportunity for workers to purchase capital goods and become capitalists themselves. So rather than seeing an immiseration of the working class as predicted by Marx, the American protectionists saw that there would be greater opportunities for upward social mobility. So you actually find that the implications of the reproduction costs theory of value are actually the very opposite of the implications found in the Marxian labor theory of value.

36:53Thank you for this answer.

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50:22public policy. Thank you for this.

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