On this Fourth of July, we celebrate the 243rd anniversary of the signing of the Declaration of Independence. I reread it a few days ago, brushing up on the struggle that gave rise to a new kind of nation, one that lovers of the pursuit of happiness still refer to as “exceptional.”
The Founding Fathers’ defiance of England’s king was a profound act of courage, as it could have ended with a brutal and crushing defeat by an authoritarian ruler. Through wars and sacrifice, somehow, the United States of America has flourished. As monumental as it was, the Declaration of Independence is not the only reason 1776 changed the course of history. Two less-celebrated revolutionary actions also helped bring about the new nation’s future prosperity.
First, it’s worth pausing for another moment on the Declaration’s carefully constructed sentences which reveal the premise upon which our nation was built: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
While the Philadelphia delegates were debating how best to write these words, a powerful industrial revolution was being formed by the introduction of reliable steam power. In 1776, the first Boulton-Watt steam engine was installed in a commercial enterprise in Britain. James Watt’s inventive genius, combined with Matthew Boulton’s manufacturing ability and venture capital, yielded for the first time a reliable power source that would replace horses, oxen, and human muscle in the production of new wealth for ordinary people.
Early on, the steam engine powered pumps in coal mines that brought affordable heat to British cities. Later, when turned on its side and placed on a tram car, the engine gave steam power to rail cars that revolutionized transportation.
There was another revolution taking place in 1776: an intellectual revolution that influenced America’s founding generation and has done the same ever since for hundreds of millions more. Professor Adam Smith, a University of Glasgow moral philosopher, published his book, An Inquiry into the Nature and Causes of the Wealth of Nations.
Smith’s book offered, for the first time, a systematic explanation of how wealth can be created. Tossing away the then-popular notion that nations became rich when they sell more to other nations than they buy from them — a perennially popular idea that still holds much sway 243 years later — Smith put forward a revolutionary idea that gave a totally new meaning to economic life: Free markets can enhance human flourishing wherever markets are allowed to operate.
Wealth, Smith argued, is found in a nation’s productive people and their ability to specialize and trade in what they do best. A nation should provide a laboratory of life that enables each individual to pursue happiness on his own terms. And since all trade among free people is voluntary, then those in pursuit of their own happiness do so by creating happiness for others. This way, when trade occurs, we can be assured that both parties have decided they are better off.
The year 1776 brought three wonderful revolutions that have enabled improvements in human flourishing ever since. This week, we celebrate the most dramatic and courageous of the three, but let’s remember them all.
