On this Fourth of July, we gather with our friends and family to celebrate our great country by doing what makes us Americans: shooting fireworks, grilling out, enjoying time on the water, and watching baseball. While we enjoy a hotdog and a cold drink, hopefully we reflect on our nation’s history and the moments that helped transform our country into what it is today. Here at the Knee Center, we are proud to be carrying the economic principles of the Founding forward. As we gather to celebrate the milestone of our nation’s 250th birthday, let's thank them for their commitment to economic freedom.
On July 4, 1776, the founders formally adopted the Declaration of Independence. In that short, but powerful, statement, they rejected the monarchy, called for self-government, and emphasized that any free society had to be built on the right to life, liberty, and the pursuit of happiness. The promise of this document also created the foundation to establish the largest free-enterprise economy in the history of the world.[1]
The Founders, and especially Jefferson, were influenced by the Enlightenment—especially the intellectual movement as it manifested in England and Scotland. John Locke’s conception of natural rights played a prominent role in Jefferson’s own thinking about the consent of the governed, religious toleration, and the role of government in a free society. The Declaration of Independence is a political document that justifies the American colonies, soon to be states, separation from Great Britain. As such, it contains a long list of grievances against King George III.
If one reads the document closely, however, a radical conception of individual liberty and economic freedom shines through. For instance, the most famous sentence ever written demands government respect individual liberty: “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.” According to Jefferson, each of us has a right to self-ownership and the right to use our abilities to try and secure our liberty and happiness. It’s unlikely that Jefferson would have supported the burdensome regulatory restrictions we see today—especially onerous licensing requirements that deprive individuals of the ability to secure work to promote their well-being.
Two of the grievances listed in the Declaration also stand out. The colonists complained that the Crown had cut “off our Trade with all parts of the world.” They objected to Britain’s consistent attempts to prevent the colonists from trading with other nations after 1763. The colonists rejected the existing mercantilist system and instead embraced a proto-capitalist economy with fewer restrictions and more freedom of exchange. The Founders also objected to the Crown “imposing Taxes on us without our Consent.” They held the view that any taxation on citizens had to be approved by the people themselves or their representatives. “No taxation without representation” would become a rallying cry during the Revolution.
After the Americans gained their Independence, they set about establishing their own society and economy. To do so, they turned to the insights from the father of economics: Adam Smith. 1776 was a good year for liberty. Jefferson penned the Declaration, and Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations. Most of the founding generation had also read Smith’s The Theory of Moral Sentiments prior to the revolution. As the Founders began drafting the Constitution, Smith’s Wealth of Nations served as a foundational framework for America’s economic and political system with ideas on free markets, limited government intervention, along with free trade. Although the Constitution was primarily a political document, it also established the foundations for an economy based on free enterprise. Most importantly it removed all internal tariffs making the United States the world’s largest free trade zone. It also rejected the economic privileges of the old world along with the protectionist and corporatist measures that had defined mercantilism.
Americans should be proud of their revolution and the ideas that sparked it. The successful revolution and ratification of the Constitution led to tremendous economic growth with the annual growth rate increasing from half a percentage point per year to almost three percent annually. The compound effect of increased growth has massively improved living standards over the years. Furthermore, the burden of proof for the restriction of individual and economic liberty was placed on those who advocated for more regulations. As James Madison stated in Federalist No. 54 “government is instituted no less for the protection of property than of the persons of individuals.” So, on America’s 250th birthday, let’s embrace the Founders’ commitment to individual liberty. After all, it was these radical ideas that made the American experiment unique and what ultimately made America great.
Much of this blog is based on the forthcoming economic/social studies curriculum that Witcher has been a part of. Scott Niederjohn, Mark Schug, Marcus Witcher, and William Wood, Celebrating America 250: The Economic Thought of the Founders (Forthcoming, 2026).
https://www.northwood.edu/news/conceived-in-liberty-economic-greatness-in-the-founding-of-america/
Troy Carneal is a Legislative Analyst at the Knee Regulatory Research Center at West Virginia University.
Marcus Witcher is the Manager of Undergraduate Programs at the Knee Regulatory Research Center at West Virginia University and a Teaching Assistant Professor in the Department of General Business.
[1] https://www.northwood.edu/news/conceived-in-liberty-economic-greatness-in-the-founding-of-america/