A People’s History of the World

by Chris Harman

  In a similar way, he argued for the virtues of ‘free’ labour. Slavery might seem an easy way of making profits. But because it prevented the slaves applying their own initiative to their labour, it was more costly in the long run than free labour. ‘A person who can acquire no property can have no other interest but to eat as much and labour as little as possible,’ Smith argued. 65

  He was extolling the virtues of a pure market system against the feudal and absolutist institutions out of which it was emerging. As Eric Roll explains, his writings ‘represented the interests of a single class … He could have been under no illusion that his main attack was directed against the privileged position of those who were the most formidable obstacles to the further growth of industrial capitalism’. 66

  Smith’s account of the new system was one-sided. British capitalism had not leapfrogged over the rest of Europe simply by peaceful market competition. Slavery had provided some capital. The colonies had provided markets. State expenditures had been high throughout the century and had provided encouragement without which new, profitable and competitive industries would not have emerged. The crutches of colonisation, of slavery and of mercantilism had been necessary for the rise of industrial capitalism, even if it was beginning to feel it no longer needed them.

  Countries without a state able to provide such crutches suffered. This was certainly the case with Ireland, whose native capitalists suffered as Westminster parliaments placed restrictions on their trade. It was increasingly true of India, as the officials of the British East India Company pillaged Bengal without providing anything in return. Once British capitalism had established a dominant position, capitalist classes elsewhere would need state support if infant industries were not to be strangled at birth.

  Writing when industrial capitalism was in its infancy, Adam Smith could not see that pure market systems display an irrationality of their own. The drive of producers to compete with one another leads, not to an automatic adjustment of output to demand, but to massive upsurges in production (‘booms’) followed by massive drops (‘slumps’) as producers fear they cannot sell products profitably. It was to be another 45 years before Smith’s most important successor, David Ricardo, added a chapter to his Principles of Political Economy recognising that the introduction of machinery could worsen the conditions of workers. For Smith to have done this would have been to jump ahead of his time. However, those who want to present Smith’s writings as the final word on capitalism today do not have the same excuse.

  Finally, there was a contradiction in Smith’s argument about labour and value which had important implications. Like almost all Enlightenment thinkers, Smith assumed that people with unequal amounts of property are equal in so far as they confront each other in the market. But some of his arguments began to challenge this and to question the degree to which ‘free’ labour is more free than slave labour.

  Smith’s assertion that labour is the source of all value led him to the conclusion that rent and profit are labour taken from the immediate producer by the landlord or factory owner.

  As soon as land becomes private property, the landlord demands a share of almost all the produce which the labourer can either raise or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land … The produce of almost all other labour is subject to the like deduction of profit. In almost all arts and manufactures the greater part of the workmen stand in need of a master to advance them the materials of their work, and their wages and maintenance until it be completed. He shares in the produce of their labour … and in this share consists his profit. 67

  There is not harmony of interest, but a clash between the interests of the masters and the interests of the workers:

  The interests of the two parties are by no means the same. The workmen desire to get as much as possible, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour. It is not difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute and force the other into compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorises or at least does not prohibit their combinations, while it prohibits those of the workmen … In all disputes, the master can hold out much longer. A landlord, a farmer, a master manufacturer or merchant … could normally live a year or two on the stocks they have already acquired. Many workmen could not subsist a week. 68

  The logic of Smith’s argument was to move beyond a critique of the unproductive hangovers from ‘feudalism’, made from the point of view of the industrial capitalists, to a critique of the capitalists themselves – to see them as unproductive parasites, living off profits which come from the labour of workers. It was a logic transmitted, via the writings of Ricardo (who attacked the landowners from the point of view of industrial capitalism), to the first socialist economists of the 1820s and 1830s and to Karl Marx. The weapons which the greatest political economist of the Enlightenment used to fight the old order were then used to fight the new one.

  Smith shied away from drawing such conclusions. He was able to do so by mixing his notion that value came from labour with another contrary notion. In this, he said the value of a commodity depended on the combined ‘revenues’ from it of landlord, capitalist and worker. Despite the circularity of the argument (revenues depend on value, but value is the sum of the revenues), this was the idea which was to be taken up by Malthus and the great populariser Jean-Baptiste Say and to become the orthodoxy in mainstream economics after the death of Ricardo.

  Nevertheless, Smith was the first to portray the central outlines of the new economic system which was emerging. It was a picture which gave British capitalists some idea of where they were going, and the would-be capitalists of other countries some notion of what to copy. It was published just as a century and a quarter of relative social peace was giving way to a new era of revolutionary upheaval. Its ideas were to shape the attitudes of many of the key actors in the new era.

  Part six

  The world turned

  upside down

  Chronology

  1773: ‘Boston Tea Party’.

  1775: Fighting at Lexington and Bunker Hill.

  1776: American Declaration of Independence.

  1781: British defeat at Yorktown.

  1780s to 1830s: Spread of factory system and mining in Britain.

  1789: Storming of Bastille, beginning of French Revolution.

  1791: Slave revolt in Saint-Domingue.

  1792: French revolutionary war, Battle of Valmy, execution of king.

  1793–94: Jacobins rule France, end of feudal dues, ‘Terror’.

  1794 Fall of Jacobins, ‘Thermidor’.

  1793–98: British take over Saint-Domingue, defeated by ex-slave army.

  1797: British naval mutinies.

  1798: Rising against British rule in Ireland, formation of Orange Order to combat it.

  1799: Combination laws ban trade unions in Britain. Napoleon takes all power in France.

  1801–03: Napoleon tries to reimpose slavery in Haiti, imprisonment and death of Toussaint, Dessalines leads ex-slave army to victory.

  1804: Beethoven’s Eroica symphony.

  1805: Napoleon becomes emperor.

  1807: Hegel’s Phenomenology of Mind .

  1807: Britain bans slave trade.

  1810: First risings against Spanish rule in Mexico and Venezuela.

  1810–16: ‘Luddites’ attack machines in north of England.

  1814–15: Napoleon defeated. Restoration of old monarchs. Waterloo.

  1811–18: Publication of novels by Jane Austen and Walter Scott.

  1819: ‘Peterloo’ massacre of working-class demonstrators.

  1830: Revolution in Paris replaces one monarch by another.

  1830s: Novels by Stendhal and Balzac.

  1830: World’s first passenger
railway.

  1831: Faraday discovers electric induction.

  1832: British middle class gets vote.

  1834: Poor Law Amendment Act establishes workhouses in Britain.

  1838–39: Chartist movement demands vote for workers.

  1839–42: Opium War against China.

  1842: General strike in Lancashire.

  1840s to 1860s: Novels of Dickens, George Eliot, Brontës.

  Mid-1840s: T’ai-p’ing rebels take control of nearly half of China.

  1846–49: Great Irish Famine.

  1847: The Communist Manifesto .

  Spring 1848: Revolutions across Europe, unsuccessful rising in Ireland, last great Chartist demonstration in London.

  June 1848: Crushing of workers’ movement by French bourgeoisie.

  1848–49: Restoration of old monarchies across Europe.

  1850s and 1860s: Spread of industry to Germany and France.

  1843–56: British complete conquest of northern India.

  1857: Indian Mutiny.

  1857–60: Second Opium War, colonial ‘concessions’ in Chinese cities.

  1859: Darwin’s The Origin of Species .

  1859–71: Italy unified under king.

  1861: American Civil War begins. Tsar ends serfdom in Russia.

  1863: Lincoln declares end of slavery.

  1865: Defeat of American South.

  1864: T’ai-p’ing rebels finally crushed by British-led troops.

  1866: Nobel discovers dynamite.

  1867: Meiji revolution from above ends feudal rule of Tokugawa in Japan.

  1867: Marx publishes Capital .

  1870: Franco-Prussian War. Fall of Louis Bonaparte.

  1871: Paris Commune, workers control city, then Republican government attacks city, killing thousands.

  1871: Bismarck establishes German Empire under Prussian monarchy.

  1873: First electrical machine.

  Mid-1870s: Troops withdraw from Southern states of US, rise of ‘Jim Crow’ segregation.

  Chapter 1

  American prologue

  The military band played the tune ‘The World Turned Upside Down’ as British forces departed from Yorktown in 1781. And so it must have seemed to thousands of ‘Tories’ loyal to King George as they left with the troops. All the assumptions they had grown up with about the ‘natural’ order of society had been trampled underfoot by a victorious rebellion. Yet 99 per cent of the rebels had shared those assumptions only eight years before.

  One of the rebellion’s best-known figures, the veteran publicist and politician Benjamin Franklin, had written in the 1760s, ‘Happy are we now under the best of kings’. 1 The thousands of Americans who read his newspaper articles and almanacs agreed with him right up to 1774. In his home colony of Pennsylvania ‘there was no conscious revolutionary tradition’. 2 The Virginian leader Thomas Jefferson was still asserting at the beginning of 1776 that Americans had neither ‘wish nor … interest to separate’ from the monarchy. 3

  How did it come about that in the summer of 1776 representatives of the 13 colonies, assembled at a ‘Continental Congress’, adopted the Declaration of Independence drafted by the same Jefferson, with its assertion that ‘all men are created equal’? It was an overtly revolutionary statement at a time when deference to kings and aristocrats was near-universal in Europe.

  The colonies had been founded in the century and a half before with the backing of the British crown. Ultimate political authority in each lay with a governor appointed in London. But effective power lay with different groups in each colony: with independent farmers in rural New England, and the merchants and artisans in its coastal towns; with rival large landowners in New York state, who treated their tenants in an almost feudal fashion, and with merchants tied to Britain’s Atlantic trade in New York City; with the Penn family (who appointed the governor) and with a handful of wealthy Quaker families in Pennsylvania; and with slave-owning plantation owners in Virginia and North and South Carolina, who excluded poor whites from any say. There were also bitter social clashes within colonies: between landlords and tenants who rose in revolt in New York’s Hudson Valley in 1766; between the Philadelphia elite and western settlers in Pennsylvania; between ‘regulator’ small farmers and ‘Grandee’ plantation owners in the Carolinas. On top of these, there was the continual fear of slave revolts for the Southern plantation owners, such as that which occurred in South Carolina in 1739. Such conflicting interests had scuppered an attempt to establish unity between the colonies in the early 1750s.

  In each colony people thought of themselves as ‘British’, not ‘American’. After all, the colonies had grown and prospered within the orbit of Britain’s ‘Atlantic’ economy. Their combined population had grown steadily until, at three million, it was a third of Britain’s. Their merchants and landowners enjoyed considerable riches, and their farmers and artisans felt better off than their forebears had been on the other side of the Atlantic. It seemed in nobody’s interests to overturn the applecart.

  From a crack to a chasm

  Yet the very fact of economic expansion was pushing the merchants, landowners and manufacturers on each side of the Atlantic to develop different sets of interests and, with them, divergent attitudes. 4 There was a growing fear in London that the colonies might pursue policies detrimental to British commercial interests. There was growing suspicion in the colonies that the British government was neglecting their needs. Until the mid-1770s people like Franklin, who acted as the representative of several of the colonies in London, regarded these fears and suspicions as misunderstandings. But they were not completely fanciful on either side. A clash between the colonies and Britain was inevitable at some point.

  The emerging world market system was not one, as Adam Smith and his followers implied (and still imply today), without an economic role for the state. Trade networks spread across the whole system, but they were concentrated around certain cities where merchants, financiers and manufacturers not only bought and sold but also mixed socially and applied pressure on political authorities. Their interests were served by the growth of rival national states, each with a much tighter political structure than that which had characterised feudalism, and with a national language to go with it. It was inconceivable that Britain’s capitalists would not apply pressure on the gentry who ran its parliament to advance their interests – and it was equally inconceivable that the capitalists of the American colonies would fail to respond with political counter-measures of their own.

  In both economics and politics, particular events often bring much longer-term trends into sharp focus. So it was in the 1760s and 1770s. The Seven Years War of 1756–63 between Britain and France had centred on control of colonies, especially in North America, and of the trade that went with them. Britain defeated France in the West Indies, took control of Bengal and conquered Canada, laying the basis for a world empire. But there was a mighty bill to be paid for doing so.

  A logical move for British ministers was to make the American colonists pay some of the costs of the war. After all, they reasoned, the colonies had gained enormously since a French scheme to take control of the Mississippi Valley and prevent the colonies expanding westwards had been thwarted.

  So Britain imposed a series of taxes on the colonists – a tax on molasses (raw sugar used in making rum) in 1764, a ‘stamp tax’ on a range of transactions in 1765, a Quartering Act which made the colonists pay for the cost of keeping British troops in America, and a tax on imports in 1767.

  Each of these caused enormous resentment. People were short of cash at a time of economic depression, and the taxes threatened to damage certain industries. France was no longer a military threat, and the British government wanted the extra income to lower taxes on big landowners in Britain. Above all, the colonists were having to pay taxes for policies in which they had no say.

  In Britain, colonists argued, the House of Commons could veto any government proposal on finance. Surely the assemblies of the
different colonies should have the same power in the Americas. Otherwise, their fundamental ‘liberties’ were being trampled on. The language of protest was not yet revolutionary. People saw themselves as defending their ‘liberties’ as ‘Britons’. But it led them to unite and mobilise for the first time against Britain.

  The mobilisation occurred at different levels of society. At the top, delegates from the colonies assembled for a Continental Congress and called for a boycott of trade with Britain until the taxes were withdrawn. This approach made any action depend upon the small group of merchants who handled the trade.

  But other forces also mobilised. Groups sprang up in all the colonies in 1765 and 1766 which called themselves the ‘Sons of Liberty’. 5 They were not made up of rich planters, large landowners, or even prosperous merchants, but of men who ‘occupied a place between the elite and the genuine plebeians’ – ‘dissident intellectuals, small intercolonial merchants and artisans’. 6 They were very similar to the ‘middling sort’ who had played such a key role in the New Model Army of the English Revolution. There was a tradition of popular protest and riots in the colonial towns. The Sons of Liberty acted almost as a political party, directing such ‘traditional crowd action toward the British question’ and serving ‘to generate new political consciousness among many ordinary Americans’. 7

  The actions of the crowd went beyond a passive trade boycott. In Boston people demolished a building thought to be an office for selling stamps and attacked the house of a stamp distributor. 8 In New York they tore down the houses of those they saw as traitors and clashed with British soldiers stationed in the city. 9 The anger against the British was intermingled with bitterness against the elite which flaunted its wealth at a time of general hardship. Crowds attacked a theatre frequented by such people. ‘New York’s most radical paper, the New York Journal , dramatised the British issue, but it also carried essay after essay attacking the evils of high rents, rising prices and short employment’. 10