Most of us think of economic theories as lining up from left to right, from communism to free-marketism, but there is a whole other school of economics that is on a slant to that line and provides an escape from the limits of conventional economics. During the 1800s that school was so influential in the USA that it was called "The American System" or the "high wage system". Here is something from the right winger economists at the Mises Institute complaining about one of the advocates of that system:
And those political views were clearly stated by Lincoln when he first ran for the Illinois legislature in 1832: "My politics are short and sweet, like the old woman’s dance. I am in favor of a national bank . . . in favor of the internal improvements system and a high protective tariff." These three things -- protectionism, government subsidies to railroad and canal-building companies, and central banking -- were called the "American System" by Henry Clay. Economists have another word for them: "mercantilism."Practically every conventional economist from Marx to Hayek to Paul Krugman and Gary Becker shares this same contempt for the American System. According to them, it's just dumb "mercantilism" and economics theory proves that it can't work. But every single nation that has become wealthy since the dawn of the industrial age has embraced something very much like the American System: China, Korea, Sweden, Taiwan, Germany, and of course the USA. And every nation that has adopted or been forced to adopt the recipes of conventional economics has seen wages fall, manufacturing collapse, and the middle class disappear. That is where we are going in our era of wage cuts where even a decent education is something that middle class people can no longer afford. Sadly for America we have abandoned the American System and we are paying the price.