by Karl Polanyi
Robert Owen, in 1819, republished Bellers’s more than 120-year-old plan for the setting up of Colleges of Industry. Sporadic destitution had now grown into a torrent of misery. His own Villages of Union differed from Bellers’s mainly by being much larger, comprising 1,200 persons on as many acres of land. The committee calling for subscriptions to this highly experimental plan to solve the problem of unemployment included no less an authority than David Ricardo. But no subscribers appeared. Somewhat later, the Frenchman Charles Fourier was ridiculed for expecting day by day the sleeping-partner to turn up who would invest in his Phalanstère plan, which was based on ideas very similar to those sponsored by one of the greatest English experts on finance. And had not Robert Owen’s firm in New Lanark—with Jeremy Bentham as a sleeping-partner—become world famous through the financial success of its philanthropic schemes? There was yet no standard view of poverty nor an accepted way of making profits out of the poor.
Owen took over from Bellers the labor-notes idea and applied it in his National Equitable Labour Exchange in 1832; it failed. The closely related principle of the economic self-sufficiency of the laboring class—also an idea of Bellers—was at the back of the famous Trades-Union movement in the next two years. The Trades-Union was a general association of all trades, crafts, and arts, not excluding small masters, with the vague purpose of constituting them the body of society, in one peaceful manifestation. Who would have thought that this was the embryo of all violent One Big Union attempts for a hundred years to come? Syndicalism, capitalism, socialism, and anarchism were indeed almost indistinguishable in their plans for the poor. Proudhon’s Bank of Exchange, the first practical exploit of philosophical anarchism, in 1848, was, essentially, an outgrowth of Owen’s experiment. Marx, the state-socialist, sharply assailed Proudhon’s ideas and henceforth it was the state that would be called upon to supply the capital for collectivist schemes of this type, of which Louis Blanc’s and Lassalle’s went down to history.
The economic reason why no money could be made out of the paupers should have been no mystery. It was given almost 150 years before by Daniel Defoe, whose pamphlet, published in 1704, stalled the discussion started by Bellers and Locke. Defoe insisted that if the poor were relieved, they would not work for wages; and that if they were put to manufacturing goods in public institutions, they would merely create more unemployment in private manufactures. His pamphlet bore the satanistic title: Giving Alms No Charity and Employing the Poor a Grievance to the Nation, and was followed by Doctor Mandeville’s more famous doggerel about the sophisticated bees whose community was prosperous only because it encouraged vanity and envy, vice and waste. But while the whimsical doctor indulged in a shallow moral paradox, the pamphleteer had hit upon basic elements of the new political economy. His essay was soon forgotten outside the circles of “inferior politics,” as problems of policing were called in the eighteenth century, while Mandeville’s cheap brilliance exercised minds of the quality of a Berkeley, Hume, and Smith. Evidently, in the first half of the eighteenth century, mobile wealth was still a moral issue, while poverty was not yet one. The Puritan classes were shocked by the feudal forms of conspicuous waste which their conscience condemned as luxury and vice, while they had reluctantly to agree with Mandeville’s bees that but for those evils commerce and trade would quickly decay. Later these wealthy merchants were to be reassured about the morality of business: the new cotton mills did not cater any more for idle ostentation but for drab daily needs, and subtle forms of waste developed which pretended to be less conspicuous while managing to be even more wasteful than the old. Defoe’s jibe at the perils of relieving the poor was not topical enough to penetrate consciences preoccupied with the moral dangers of wealth; the Industrial Revolution was still to come. And yet, as far as it went, Defoe’s paradox was a forecast of the perplexities to come: “Giving alms no charity”—for in taking away the edge of hunger one hindered production and merely created famine; “employing the poor, a grievance to the nation”—for by creating public employment one merely increased the glut of the goods on the market and hastened the ruin of private traders. Between John Bellers, the Quaker, and Daniel Defoe, the enthusiast of business, between saint and cynic, somewhere around the turn of the seventeenth century, the issues were raised to which more than two centuries of work and thought, hope and suffering were to provide the laborious solutions.
But at the time of Speenhamland the true nature of pauperism was still hidden from the minds of men. There was complete agreement on the desirability of a large population, as large as possible, since the power of the state consisted in men. There was also mostly agreement on the advantages of cheap labor, since only if labor was cheap could manufactures flourish. Moreover, but for the poor, who would man the ships and go to the wars? Yet, there was doubt whether pauperism was not an evil after all. And in any case, why should not paupers be as profitably employed for public profit as they obviously were for private profit? No convincing answer to these questions could be given. Defoe had chanced upon the truth which seventy years later Adam Smith may or may not have comprehended; the undeveloped condition of the market system concealed its inherent weaknesses. Neither the new wealth nor the new poverty was yet quite comprehensible.
That the question was in its chrysalid stage was shown by the amazing congruence of the projects reflecting minds as different as those of the Quaker Bellers, the atheist Owen, and the utilitarian Bentham. Owen, a socialist, was an ardent believer in the equality of man and his inborn rights; while Bentham despised equalitarianism, ridiculed the rights of man, and bent heavily toward laissez-faire. Yet Owen’s “parallelograms” resembled Bentham’s Industry-Houses so closely that one might imagine he was solely inspired by them until his indebtedness to Bellers is remembered. All three men were convinced that an appropriate organization of the labor of the unemployed must produce a surplus, which Bellers, the humanitarian, hoped to use primarily for the relief of other sufferers; Bentham, the utilitarian liberal, wanted to turn over to the shareholders; Owen, the socialist, wished to return to the unemployed themselves. But while their differences merely revealed the almost imperceptible signs of future rifts, their common illusions disclosed the same radical misunderstanding of the nature of pauperism in the nascent market economy. More important than all other differences between them, there had been meanwhile a continuous growth in the number of the poor: in 1696, when Bellers wrote, total rates approximated 400,000 pounds; in 1796, when Bentham struck out against Pitt’s Bill, they must have passed the 2 million mark; by 1818, Robert Owen’s innings, they were nearing 8 million. In the 120 years that elapsed between Bellers and Owen the population may have trebled, but rates increased twentyfold. Pauperism had become a portent. But its meaning was still anybody’s guess.
* M’Farlane, J., Enquiries Concerning the Poor, 1782. Cf. also Postlethwayt’s editorial remark in the Universal Dictionary of 1757 on the Dutch Poor Law of October 7, 1531.
* Bentham, J., Pauper Management. First published, 1797.
C H A P T E R T E N
Political Economy and
the Discovery of Society
When the significance of poverty was realized, the stage was set for the nineteenth century. The watershed lay somewhere around 1780. In Adam Smith’s great work poor relief was no problem as yet; only a decade later it was raised as a broad issue in Townsend’s Dissertation on the Poor Laws and never ceased to occupy men’s minds for another century and a half.
The change of atmosphere from Adam Smith to Townsend was, indeed, striking. The former marked the close of an age which opened with the inventors of the state, Thomas More and Machiavelli, Luther and Calvin; the latter belonged to that nineteenth century in which Ricardo and Hegel discovered from opposite angles the existence of a society that was not subject to the laws of the state, but, on the contrary, subjected the state to its own laws. Adam Smith, it was true, treated material wealth as a separate field of study; to have done so with a great sense o
f realism made him the founder of a new science, economics. For all that, wealth was to him merely an aspect of the life of the community, to the purposes of which it remained subordinate; it was an appurtenance of the nations struggling for survival in history and could not be dissociated from them. In his view, one set of conditions which governed the wealth of nations derived from the improving, stationary, or declining state of the country as a whole; another set derived from the paramountcy of safety and security as well as the needs of the balance of power; still another was given by the policy of the government as it favored town or countryside, industry or agriculture; hence it was only within a given political framework that he deemed it possible to formulate the question of wealth, by which he for one meant the material welfare of “the great body of the people.” There is no intimation in his work that the economic interests of the capitalists laid down the law to society; no intimation that they were the secular spokesmen of the divine providence which governed the economic world as a separate entity. The economic sphere, with him, is not yet subject to laws of its own that provide us with a standard of good and evil.
Smith wished to regard the wealth of the nations as a function of their national life, physical and moral; that is why his naval policy fitted in so well with Cromwell’s Navigation Laws and his notions of human society harmonized with John Locke’s system of natural rights. In his view nothing indicates the presence of an economic sphere in society that might become the source of moral law and political obligation. Self-interest merely prompts us to do what, intrinsically, will also benefit others, as the butcher’s self-interest will ultimately supply us with a dinner. A broad optimism pervades Smith’s thinking since the laws governing the economic part of the universe are consonant with man’s destiny as are those that govern the rest. No hidden hand tries to impose upon us the rites of cannibalism in the name of self-interest. The dignity of man is that of a moral being, who is, as such, a member of the civic order of family, state, and “the great Society of mankind.” Reason and humanity set a limit to piecework; emulation and gain must give way to them. Natural is that which is in accordance with the principles embodied in the mind of man; and the natural order is that which is in accordance with those principles. Nature in the physical sense was consciously excluded by Smith from the problem of wealth. “Whatever be the soil, climate or extent of territory of any particular nation, the abundance or scantiness of its annual supply, must, in that particular situation, depend upon two circumstances,” namely, the skill of labor and the proportion between the useful and the idle members in society. Not the natural, but only the human factors enter. This exclusion of the biological and geographical factor in the very beginning of his book was deliberate. The fallacies of the Physiocrats served him as a warning; their predilection for agriculture tempted them to confuse physical nature with man’s nature, and induced them to argue that the soil alone was truly creative. Nothing was further from the mind of Smith than such a glorification of Physis. Political economy should be a human science; it should deal with that which was natural to man, not to Nature.
Townsend’s Dissertation, ten years afterward, centered on the theorem of the goats and the dogs. The scene is Robinson Crusoe’s island in the Pacific Ocean, off the coast of Chile. On this island Juan Fernandez landed a few goats to provide meat in case of future visits. The goats had multiplied at a biblical rate and became a convenient store of food for the privateers, mostly English, who were molesting Spanish trade. In order to destroy them, the Spanish authorities landed a dog and a bitch, which also, in the course of time, greatly multiplied, and diminished the number of goats on which they fed. “Then a new kind of balance was restored,” wrote Townsend. “The weakest of both species were among the first to pay the debt of nature; the most active and vigorous preserved their lives.” To which he added: “It is the quantity of food which regulates the number of the human species.”
We note that a search* in the sources failed to authenticate the story. Juan Fernandez duly landed the goats; but the legendary dogs were described by William Funnell as beautiful cats, and neither dogs nor cats are known to have multiplied; also the goats were inhabiting inaccessible rocks, while the beaches—on this all reports agree—were teeming with fat seals which would have been a much more engaging prey for the wild dogs. However, the paradigm is not dependent upon empirical support. Lack of antiquarian authenticity can detract nothing from the fact that Malthus and Darwin owed their inspiration to this source—Malthus learned of it from Condorcet, Darwin from Malthus. Yet neither Darwin’s theory of natural selection, nor Malthus’s population laws might have exerted any appreciable influence on modern society but for the following maxims which Townsend deduced from his goats and dogs and wished to have applied to the reform of the Poor Law: “Hunger will tame the fiercest animals, it will teach decency and civility, obedience and subjection, to the most perverse. In general it is only hunger which can spur and goad them [the poor] on to labour; yet our laws have said they shall never hunger. The laws, it must be confessed, have likewise said, they shall be compelled to work. But then legal constraint is attended with much trouble, violence and noise; creates ill will, and never can be productive of good and acceptable service: whereas hunger is not only peaceable, silent, unremitting pressure, but, as the most natural motive to industry and labour, it calls forth the most powerful exertions; and, when satisfied by the free bounty of another, lays lasting and sure foundations for goodwill and gratitude. The slave must be compelled to work but the free man should be left to his own judgment, and discretion; should be protected in the full enjoyment of his own, be it much or little; and punished when he invades his neighbour’s property.”
Here was a new starting point for political science. By approaching human community from the animal side, Townsend bypassed the supposedly unavoidable question as to the foundations of government; and in doing so introduced a new concept of law into human affairs, that of the laws of Nature. Hobbes’s geometrical bias, as well as Hume’s and Hartley’s, Quesnay’s and Helvetius’s hankering after Newtonian laws in society had been merely metaphorical: they were burning to discover a law as universal in society as gravitation was in Nature, but they thought of it as a human law—for instance, a mental force such as fear with Hobbes, association in Hartley’s psychology, self-interest with Quesnay, or the quest for utility with Helvetius. There was no squeamishness about it: Quesnay like Plato occasionally took the breeder’s view of man and Adam Smith did certainly not ignore the connection between real wages and long-run supply of labor. However, Aristotle had taught that only gods or beasts could live outside society, and man was neither. To Christian thought also the chasm between man and beast was constitutive; no excursions into the realm of physiological facts could confuse theology about the spiritual roots of the human commonwealth. If, to Hobbes, man was as wolf to man, it was because outside of society men behaved like wolves, not because there was any biological factor which men and wolves had in common. Ultimately, this was so because no human community had yet been conceived of which was not identical with law and government. But on the island of Juan Fernandez there was neither government nor law; and yet there was balance between goats and dogs. That balance was maintained by the difficulty the dogs found in devouring the goats which fled into the rocky part of the island, and the inconveniences the goats had to face when moving to safety from the dogs. No government was needed to maintain this balance; it was restored by the pangs of hunger on the one hand, the scarcity of food on the other. Hobbes had argued the need for a despot because men were like beasts; Townsend insisted that they were actually beasts and that, precisely for that reason, only a minimum of government was required. From this novel point of view, a free society could be regarded as consisting of two races: property-owners and laborers. The number of the latter was limited by the amount of food; and as long as property was safe, hunger would drive them to work. No magistrate was necessary, for hunger was a better disciplinari
an than the magistrate. To appeal to him, Townsend pungently remarked, would be “an appeal from the stronger to the weaker authority.”
The new foundations closely fitted the society that was emerging. Since the middle of the eighteenth century, national markets had been developing; the price of grain was no longer local, but regional; this presupposed the almost general use of money and a wide marketability of goods. Market prices and incomes, including rents and wages, showed considerable stability. The Physiocrats were the first to note these regularities, which they could not even theoretically fit into a whole since feudal incomes were still prevalent in France, and labor was often semi-servile, so that neither rents nor wages were, as a rule, determined in the market. But the English countryside in Adam Smith’s time had become part and parcel of a commercial society; the rent due to the landlord as well as the wages of the agricultural laborer began to show a dependence on prices. Only exceptionally were wages or prices fixed by the authorities. And yet in this curious new order the old classes of society continued to exist more or less in their former hierarchy, notwithstanding the disappearance of their legal privileges and disabilities. Though no law constrained the laborer to serve the farmer, nor the farmer to keep the landlord in plenty, laborers and farmers acted as if such compulsion existed. By what law was the laborer ordained to obey a master, to whom he was bound by no legal bond? What force kept the classes of society apart as if they were different kinds of human beings? And what maintained balance and order in this human collective which neither invoked nor even tolerated the intervention of political government?