To the ordinary person, the label “plutocrat” conjures Monopoly’s black-suited banker with mustachio and cigar, puffing his way to success without concern for his struggling neighbors. He has his office, we surely suppose, in a factory belching dark smoke, with exhausted workers engaging in repetitive tasks for a pittance. His worship of wealth and indifference to its victims is antithetical, so critics would claim, to the ideal of equality centering the American republic.

A century ago, the enormous success of entrepreneurs such as John D. Rockefeller assembling Standard Oil and Henry Ford turning out the black Model T might well have fit this caricature. Even caricatures, after all, come from somewhere. Their prowess as businessmen and inventors was offset by the optics of labor conflicts such as the Ludlow Mine massacre and the violent strikebreaking at Ford’s Dearborn factories. Railroad kingpin James J. Hill equally complicated the reputation of entrepreneurs for political chastity. When the Dakota territorial legislature refused to approve his right of way, he led a secessionist movement to create North Dakota and thereby gained a more congenial set of assemblymen.

In the sensibility of the 20th century, the Great Depression added to the worry that capitalism had gone awry, with Dorothea Lange pictures from the Farm Security Administration capturing the distress of migrant families from the Dust Bowl looking for work in California. The New Deal and Great Society programs of Social Security and unemployment insurance, together with the Civil Rights revolution, later mitigated the sense that peonage was still rife in America. But the 1960s still served to romanticize a lukewarm, sentimental socialism in America later ratified by expressions of envy for a maturing European “Third Way.” Pete Seeger and the Weavers picked their way through the banjo and guitar notes of old Wobbly songs to celebrate a bucolic age of labor before bosses became exploiters. And despite the early warnings of Arthur Koestler and George Orwell, it was not until the archives of the Soviet Gulag and KGB were exposed that the perils of a revolutionary workers’ paradise were audibly acknowledged by the American Left.

In the present age, there is more appreciation of what entrepreneurship does for a society, as scores of remarkable drop-outs and undergraduates have created wired businesses worth billions of dollars in word processing, social networking and Internet search engines. This millennial spurt of innovation has yielded a more indulgent view of the rewards due to innovators in a changing economy, not least because of its effect on productivity. The reshaping of commerce, communications and transport has, to be sure, created the daunting challenge of a worldwide labor market, where Malthusian outsourcing seems to have no obvious limit and the sense of unique luck that has accompanied America in its more than two centuries of history has faded a bit. But the power of innovation and entrepreneurship still may help us understand with greater clarity why the Founders of the American Republic, while they worried in undertones about “factions” and their source in property inequality, saw no necessary contradiction between political equality and free enterprise, or indeed, between liberty and wealth.

Looking backward makes the point. The American Revolution was fought, in one view, not so much to shake off British taxes but to gain the right to move west beyond the Appalachian Mountains despite the British imperial prohibition that valued peace with the Indian tribes more than the lure of limitless land. After victory, the constitutional moment of 1787, which followed four months of secret debate in Philadelphia, was protective of the instruments of commerce and acquisition. The new Congress was granted power to regulate interstate and foreign commerce, but this was construed for more than a century as extending only to transactions that involved actual cross-boundary shipments. This construal constrained the power of the Congress to meddle in economic matters, even while the Federal government solicited funds for “internal improvements” such as roads and canals. The sanctity of private contract was celebrated, and beggar-thy-neighbor state judicial decisions thwarted, by Federal court “diversity” jurisdiction over interstate disputes. This displaced any local court that might rule in favor of local parties by applying a “Federal common law” of private contracts.

The obliging nature of private contracts was also championed by a Federal constitutional ban on state “impairment” of contracts. This denied any power over bankruptcy proceedings at the state level. (The early Founders’ personal fever for speculating in land—including Supreme Court Chief Justice John Marshall and Justice James Wilson—makes this intolerance of debt relief all the more remarkable, for it came at a time when debtors in default could be arrested in order to post security for payment. Indeed, Justice Wilson died in disgrace for failing to pay his debts.)

John Marshall’s Supreme Court also actively supported the economic value of corporate charters, with Marshall and Story even supposing that a charter to build the Charles River Bridge silently precluded any second bridge.* And even on the frontier, amid a post-revolutionary world of chaotic land claims where elms, maples and oaks marked the boundaries of property, the Marshall Court acted strictly to enforce formal land titles, voiding state-granted rights to land squatters who made improvements on another person’s property. And as an added antidote to state license, Secretary of the Treasury Alexander Hamilton used the founding moment to assume the states’ elephantine debts from the Revolutionary War, understanding that the debtor wields power over creditors.

Yet property and its protection were different from plutocratic privilege. For the generation of the Founders, the freehold of free men in the abundance of a new continent took pride of place over all other considerations. Blame it on the virgin forest, if you will. But as John Locke taught in the Second Treatise on Government, amidst a plenitude of land any man could wield an axe and fell first-growth timber, claiming the land as his own by mixing labor with vacant soil. It was labor, or what we might call today value-added, that defined property. Veterans of the American Revolutionary War and the War of 1812 were given “land warrants” to locate on unclaimed western land, whether in Kentucky, Tennessee or Ohio. The land rush and the Homestead Acts of the later 19th century extended this Edenic promise of abundance farther across the continent, though the grim realities of subsistence farming were not always immediately apparent. Success in farming was limited by the vagaries of weather and difficulties of transporting goods to market, in the slow progress of canals and later railroads. But the ideal of an agrarian America and yeoman farmers persisted for the duration of the 19th century. Despite skepticism about Federal power, even the American South succumbed to the need for “internal improvements” in transportation. There were no plutocrats in sight, and the term, of antique British origins, was not yet heard in the New World.

There was, of course, the quandary of slavery. This inherited curse represented a constant affront to the self-regard of independent farmers of the North, who saw the large-scale use of servile labor in the harsh climate of the South as unfair competition and a bowdlerization of the dignity of honest work. Even some thinkers in the South imagined slavery’s demise, since the plantation agriculture of Maryland, Virginia and the Carolinas faced a diminishing fertility in the early 19th century. But the Louisiana Purchase and the accession of Texas, together with the invention of the cotton gin, renewed the energy of the slave machine and created conspicuous fortunes among rural patricians. At least in slavery’s setting, patrician wealth bore no relationship to honest work. The maritime families of the North also made handsome livings from the triangle trade in slaves, cotton and rum (as students at various eponymous universities have lately noticed). Here, in what some historians have called the Slavocracy of the South, the potential for a kind of plutocracy, at least, arose.

To be sure, even without slavery, it would be a mistake to exaggerate the degree of political equality envisioned in the 1787 Constitution. Until the Civil War, the Constitution allowed the states to determine the qualifications of voters, including in Federal elections. Property-holding requirements for casting a ballot lasted well into the early 19th century. When a dust-up called Dorr’s Rebellion challenged Rhode Island’s restriction of the franchise to a handful of Providence plantation families in the 1830s, the legitimacy of the autocratic state government came before the U.S. Supreme Court. The Justices ran from the question, ruling that the meaning of the Federal constitutional guarantee of a “republican form of government” was not a question given to judges. Not least, this was an indulgence to Southern opinion that feared republicanism might preclude slavery, as well.

So, too, women were deemed unsuited to the franchise in most states until the end of the 19th century. To some, this followed from the fact that married women could not hold property or contract in their separate names under the common law doctrine of “coverture”; economic dependence on a husband was thought to preclude independent political judgment. The intellectual acumen of noted women in the founding such as Mary Warren and Abigail Adams was apparently not sufficient counterexample.

Nonetheless, the widespread availability of property in an agrarian state allowed most white men to vote, and a more radical vision of democracy took root with the triumph of Jacksonianism in the 1830s. Chief Justice Roger Taney is remembered with suitable derision for the Dred Scott decision that denied free blacks any standing to sue in Federal court, even when they were kidnapped into bondage; yet as a legal populist in a white agrarian society, he also inclined to allow local government to handle problems of insolvency and loosened the restrictions of corporate law.

The Civil War, of course, brought the enormous changes of a conflict won largely because of the industrial plant and railroad logistics of the North. The economic devastation of the war destroyed the South’s plutocratic plantation wealth, yet left most blacks tied to the land in the informal servitude of sharecropping and debtors’ prison. In contrast, the North’s burgeoning industrialization assembled fortunes in the late 19th century of a scale that was hard for any antebellum to imagine, assisted as well by America’s expansion abroad. This new concentration of wealth, seasoned with conspicuous consumption, inspired the Progressives to attack the rise of trusts and cartels, arguing that a vigorous antitrust policy was necessary for the restoration of an open economy. The 16th Amendment in 1913 in turn allowed Congress to tax the private income of individuals, without requiring the political feat of apportionment among the states.

Yet strangely enough, some of the court cases that were later assumed to be plutocratic in motive were, at the time, quite arguably protective of an open economy. The Supreme Court struck down state regulation of working hours in non-hazardous industries as a violation of substantive due process in the famous turn-of-the-century decision of Lochner v. New York. Tutored by the Progressives and the New Deal, Lochner has been dismissed in the past fifty years as an antique Court’s misuse of “freedom of contract” to perpetuate the advantages of capital in a landscape hostile to workers’ rights and trade unions. But an alternate reading could see this case as an attempt to protect smaller businesses against larger firms, since a small business could not muster the same surge capacity in busy seasons without requiring longer hours.

So, too, the sanctity of contract was sometimes used to surprising effect, for example, in challenging the lack of regularity in immigration law. Although immigration law was seen as being immune to the claims of equal protection among nationalities, still the written promise made to a Chinese man that he would be readmitted to the United States after a visit home argued to be binding on the basis of the sanctity of contracts (albiet unsuccessfully) in the historic Chinese Exclusion Cases.

Not surprisingly, the Great Crash of 1929 and the seemingly endless economic depression that ensued appeared to shake the ground of American capitalism, destroying any faith in Say’s Law and its claim that industrial production would necessarily generate sufficient consumer demand. But the Supreme Court still acted to preserve a more classical account of free markets, resisting Franklin Roosevelt’s proposal in the early years of the New Deal to reorganize American industry in the quasi-syndicalist structure of the National Recovery Administration. The “switch in time that saved nine” brought the Supreme Court to accept broader Federal regulation of the economy, but not Roosevelt’s more radical proposals for industrial control, which did not return to the debating floor. In a sense, the classical vision was preserved, but with some buffering. FDR’s Wagner Act assisted labor unions in taking root in large-scale industry, and Congress passed a broad portfolio of social guarantees, such as Social Security and Federal unemployment insurance, in large part on the back of trade union activism. Industrial plutocracy might be conspicuous in the assembly of fortunes on Park Avenue and great country estates on Long Island, but a guaranteed social minimum helped to take the edge off any surge of radical resentment.

The Great Society legislative program of Lyndon Baines Johnson was equally transformative as a more deeply institutionalized form of buffering. It added Medicare and Medicaid to the package of social minima for the elderly and children. And the original promise of Fanny Mae and Freddie Mac was framed to make home ownership available to more citizens in a financially responsible way.

With the end of (what we thought was) the high-growth decade of the 1990s, the burgeoning cost of social programs has now begun to test the limits of Federal solvency in a diminished economy. How much taxation can be sustained without dampening creative entrepreneurship or driving investment capital out of the country in a global economy of mobile capital and offshore banking remains anyone’s guess. The World Bank’s “Washington Consensus” on how to sustain long-term development is looking somewhat less attractive to Washington itself, in the sharp contrast between upward-spiraling plutocratic fortunes and the diminution of the prospects of working Americans. The internationalization of the labor market, vividly focused for Americans today in offshore outsourcing and the sharp questioning of immigration, are part of the renewed American debate about whether a robust democracy can retain its social cohesion and ennobling sense of political equality when so many citizens are out of work and the frontier—any frontier—is closed.

Historically, Americans have not minded the accumulation of great wealth so long as they thought that everyone had a fair chance to chase up the hill after it. The burden of U.S. legal history has been to let the chase go on, out of concern that infringing on the pursuit of property would stifle the motors of entrepreneurship and general economic advance, as well as the vitality of a free life. That is still the premise of the American constitution. But the founding document also aspires to preserve a sociability that distinguishes a republic from a free-for-all. If the social and technological environment surrounding us has undergone qualitative change of a magnitude that throws this definition off its mount, the American republic will have to go back to basics in its self-definition.

^*The version of this article that appeared in the print edition of The American Interest incorrectly stated that Marshall’s Supreme Court “rul[ed] that a charter to build the Charles River Bridge silently precluded any second bridge.” The Charles River Bridge case was initially argued before the Marshall Court, but had to be reargued before the Taney Court after Marshall’s death.