Alexander Hamilton

Alexander Hamilton, born out of wedlock in Charlestown, Nevis, Danish Virgin Islands, was orphaned as a child and 'discovered' as a prodigy by local merchants and clergy. An autodidact, he taught himself law and finance while serving in the Revolutionary War, then worked with seemingly boundless creativity and energy in devising the US Constitution, financial system, and public finance architecture. He has been my hero since age 7, when I too lived in (the northernmost city of) the Caribbean.

Case Studies

III. Theory-Informed Plans & Schemes

Books and Papers Designing, Blueprinting, and Explaining Financially-Engineered Plans Meant to Realize More Just and Productive, Labor-Owned Modes of Production and Distribution in Keeping with the Theoretical Findings Elaborated Under the 'High Theory' and 'Meso Theory' Headings.

Image: Margarete & Rudolf Hilferding, whose pathbreaking work showed how the concentration of capital in big banks paved the way to public management of the economy. These works realize that aim..

The Citizens' Ledger, the Treasury Dollar, & the 'Digital Hilferding' Project

Image: Paul Warburg, immigrant from late 19th century Germany, whose regionally distributed development banks inspired his original design for what became the US Federal Reserve System.

'Spread the Fed'

The Fed was originally conceived, and for its first decades operated, as a network of regional development banks. The discounting practices of the Fed District Banks ensured that there was always enough and never too much new money-issuance to fuel production sufficiently voluminous as to absorb the new money - the optimal means of assuring productive growth without inflation or deflation in the 'real' economy. The version of the Real Bills Doctrine (RBD) that guided these practices was spot on where endogenous money is concerned, but overlooked the danger of foreign-sourced exogenous money such as entered the US after the Great War. The upshot was the boom and bust of the 1920s. Congress's subsequent scrapping of the RBD and concentration of Fed functions in a new, New-York-centered Federal Open Market Committee (FOMC) rectified the error as to exogenous money, but at the expense of forgetting the much more important role generally played by endogenous money. These books and papers design a 'Goldilocks' Fed that retains exogenous money wisdom while recovering productively endogenous money wisdom, restoring the regional Fed District Banks to their original role.

Image: Benjamin Graham, whose pioneering proposals for global commodity price management in the 1930s antedated even those of J.M. Keynes

Extended Open Market Operations for All Systemically Important Prices & Indices (SIPIs)

These papers develop means by which the Fed and other central banks worldwide can act to collar volatility in respect of all Systemically Important Prices and Indices, a category that Hockett developed during the 2008-11 financial crisis. In brief, these are prices that both (a) figure critically in the formation of other prices, while (b) easily falling prey to market-failure-rooted volatility. They accordingly include not only money rental (a.k.a. 'interest') rates, but also prevailing wage and salary rates, housing prices, fuel, food, and other essential commodity prices, and more.

Image: Hockett with Ken Arrow at the World Bank, 2016

Real Arrow Securities for All

Ken Arrow and Maurice Allais famously developed the Theory of Incomplete Markets in the late 1940s, provacatively suggesting that welfare-optimal intertemporal equilibria might be secured by a market sufficiently rich in contingent claims. While the conception of optimality with which they operated was vacuuous, as shown in several of the 'High Theory' papers assembled in the Module of that name at this site, It is nevertheless helpful, indeed a justice gain, to construct markets for trading risks that at present cannot be laid-off. These papers, written while Hockett was completing doctoral work with Yale's Robert Shiller, show how to develop derivative financial instruments for ordinary people rather than big Wall Street investment houses.

Image: Thomas Paine, whose Agrarian Justice, like the Roman Gracchi Brothers before and Henry George's after, pioneered the effort financially to engineer a just distribution of resources for all.

The Income-Compositional Symmetry Principle, Labor-Owned Enterprise, & Financially Engineered Capital-Sharing

These books and papers develop means of financially engineering a just distribution of productive resources and opportunities for all, fostering the emergence of what Hockett calls 'A Republic of Producers.' The guiding principle animating these works is that all citizens' income-compositions should mirror that of the macroeconomy itself, which Hockett calls 'The Income-Compositional Symmetry Principle.' Proceeding along these lines, Hockett shows, is both a requirement of justice as elaborated in his works under the 'High Theory' Heading above, but also the sole means of ensuring perpetual material improvement and the financial-cum-macroeconomic stability that is prerequisite to that continuity.

Image: Friedrich List, who systematized the insights of James Steuart and Alexander Hamilton to devise a full theory of state-facilitated perpetual productive development.

Institutions for Perpetual National Development

These books and papers develop a full set of Hamiltonian development institutions suited to ensuring perpetual productive development through the 21st century and beuond. Together with the asset-spreading programs laid-out in the Submodule above, they pave the way to a high energy economy in which the nation and the citizenry alike can be, in Bob Dylan's words. ever 'busy being born' instead of 'busy dying.'

Image: Hockett debating his eminent domain plan with future FHFA Chair Mark Calabria.

Eminent Domain for Underwater Mortgage Loans

The eminent domain plan for underwater mortgage loans, developed in the wake of the crash of 2008 and subsequently disseminated by the Federal Reserve Bank where Hockett worked, supplied a missing market the absence of which was harming both homeowners and lenders alike. Owing to improvidently drafted securitization contracts, loan servicers and homeowners were prevented from completing even NPV-positive loan writedowns which, owing to high default rates among underwater home loans, would literally benefit creidtors and debtors alike, not to mention neighborhoods, municipalities, and the national and global economies. Hockett's plan levered municipal eminent domain authority to afford means by which creditors could buy back loans, write them down, and avoid any further foreclosures. The plan generated much national attention until late 2014, by which time QE3 had raised home prices 'above water' again.

Image: Lydia Lopokova & her husband, Maynard Keynes, whose ICU plans for what became the IMF were far superior to the US's plan. Hockett's plan for a Digital ICU adapts the Keynes plan to the present.

Global Institutions for National Productive & Monetary Autonomy

Maynard Keynes' plans for the postwar economic order in the mid-1940s aimed to afford maximal monetary and industrial policy autonomy to all nations through capital controls, regular currency readjustments, and a global liquidity provider that would do for the world what the Federal Reserve System does for the US. The US improvidently rejected the Keynes plans, opting instead for inferior alternatives - a blunder for which we and the world are still paying. These books and papers develop updated, 'digital' renditions of the Keynes plans for the present century and beyond. They also argue that the present is a particularly auspicious time for such plans, as the US is now situated to see their wisdom while still possessed of sufficient global influence as to see them through.

Image: Cover Art for Hockett's 'Financing the Green New Deal: A Plan of Action and Renewal

The Green New Deal

The Green New Deal initiative begun in 2018 marked the beginning of a return to ambitious public-private coordination in the cause of rebuilding the American economy along more just, productive, and sustainable lines. Hockett worked with Rep. Ocasio-Cortez and her team from the start on the GND Resolution introduced to Congress in early 2019, then on the initiative's finance plan as well as much follow-up legislation found in the 'Legislation' Module of this site.

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