by Karl Polanyi
The paradigm of the goats and the dogs seemed to offer an answer. The biological nature of man appeared as the given foundation of a society that was not of a political order. Thus it came to pass that economists presently relinquished Adam Smith’s humanistic foundations, and incorporated those of Townsend. Malthus’s population law and the law of diminishing returns as handled by Ricardo made the fertility of man and soil constitutive elements of the new realm the existence of which had been uncovered. Economic society had emerged as distinct from the political state.
The circumstances under which the existence of this human aggregate—a complex society—became apparent were of the utmost importance for the history of nineteenth-century thought. Since the emerging society was no other than the market system, human society was now in danger of being shifted to foundations utterly foreign to the moral world of which the body politic hitherto had formed part. The apparently insoluble problem of pauperism was forcing Malthus and Ricardo to endorse Townsend’s lapse into naturalism.
Burke approached the issue of pauperism squarely from the angle of public security. Conditions in the West Indies convinced him of the danger of nurturing a large slave population without any adequate provision for the safety of the white masters, especially as the Negroes were often allowed to go armed. Similar considerations, he thought, applied to the increase of the number of the unemployed at home, seeing that the government had no police force at its disposal. Although an out-and-out defender of patriarchal traditions, he was a passionate adherent of economic liberalism, in which he saw also the answer to the administrative problem of pauperism. Local authorities were gladly taking advantage of the unexpected demand of the cotton mills for destitute children whose apprenticing was left to the care of the parish. Many hundreds were indentured with manufacturers, often in distant parts of the country. Altogether the new towns developed a healthy appetite for paupers; factories were even prepared to pay for the use of the poor. Adults were assigned to any employer who would take them for their keep; just as they would be billeted out in turn among the farmers of the parish, in one or another form of the roundsman system. Farming out was cheaper than the running of “jails without guilt,” as workhouses were sometimes called. From the administrative angle this meant that the “more persistent and more minutely detailed authority of the employer”* took the place of the government’s and the parish’s enforcement of work.
Clearly, a question of statesmanship was involved. Why should the poor be made a public charge and their maintenance put on the parish, if ultimately the parish discharged its obligation by farming out the able-bodied to the capitalist entrepreneurs, who were so eager to fill their mills with them that they would even spend money to obtain their services? Did this not clearly indicate that there was also a less expensive way of compelling the poor to earn their keep than the parish way? The solution lay in the abolishment of the Elizabethan legislation without replacing it by any other. No assessment of wages, no relief for the able-bodied unemployed, but no minimum wages either, nor a safeguarding of the right to live. Labor should be dealt with as that which it was, a commodity which must find its price in the market. The laws of commerce were the laws of nature and consequently the laws of God. What else was this than an appeal from the weaker magistrate to the stronger, from the justice of the peace to the all-powerful pangs of hunger? To the politician and administrator laissez-faire was simply a principle of the ensurance of law and order, at minimum cost. Let the market be given charge of the poor, and things will look after themselves.
It was precisely on this point that Bentham, the rationalist, agreed with Burke, the traditionalist. The calculus of pain and pleasure required that no avoidable pain should be inflicted. If hunger would do the job, no other penalty was needed. To the question, “What can the law do relative to subsistence?” Bentham answered, “Nothing, directly.”* Poverty was Nature surviving in society; its physical sanction was hunger. “The force of the physical sanction being sufficient, the employment of the political sanction would be superfluous.”† All that was needed was the “scientific and economical” treatment of the poor.‡ Bentham was strongly opposed to Pitt’s Poor Law Bill, which would have amounted to an enactment of Speenhamland, as it permitted both outdoor relief and aid-in-wages. Yet Bentham, unlike his pupils, was at this time no rigid economic liberal, nor was he a democrat. His Industry-Houses were a nightmare of minute utilitarian administration enforced by all the chicanery of scientific management. He maintained that there always would be a need for them as the community could not quite disinterest itself in the fate of the indigent. Bentham believed that poverty was part of plenty. “In the highest stage of social prosperity,” he said, “the great mass of the citizens will most probably possess few other resources than their daily labour, and consequently will always be near to indigence.…” Hence he recommended that “a regular contribution should be established for the wants of indigence,” though thereby “in theory want is decreased and thus industry hit,” as he regretfully added, since from the utilitarian point of view the task of the government was to increase want in order to make the physical sanction of hunger effective.*
The acceptance of near-indigency of the mass of the citizens as the price to be paid for the highest stage of prosperity was accompanied by very different human attitudes. Townsend righted his emotional balance by indulging in prejudice and sentimentalism. The improvidence of the poor was a law of nature, for servile, sordid, and ignoble work would otherwise not be done. Also what would become of the fatherland unless we could rely on the poor? “For what is it but distress and poverty which can prevail upon the lower classes of the people to encounter all the horrors which await them on the tempestuous ocean or on the field of battle?” But this display of a rugged patriotism still left room for more tender sentiments. Poor relief should, of course, be abolished outright. The Poor Laws “proceed from principles which border on absurdity, as professing to accomplish that which, in the very nature and constitution of the world, is impracticable.” But once the indigent were left to the mercy of the well-to-do, who can doubt that “the only difficulty” is to restrain the impetuosity of the latter’s benevolence? And are the sentiments of charity not far nobler than those that flow from hard-and-fast legal obligations? “Can in nature anything be more beautiful than the mild complacency of benevolence?” he cried out, contrasting it with the cold heartlessness of “a parish pay-table,” which knew not those scenes of an “artless expression of unfeigned gratitude for unexpected favours.…” “When the poor are obliged to cultivate the friendship of the rich, the rich will never want inclination to relieve the distress of the poor.…” No one who has read this touching portrayal of the intimate life of the Two Nations can doubt that, unconsciously, it was from the island of the goats and dogs that Victorian England drew its sentimental education.
Edmund Burke was a man of different stature. Where men like Townsend failed in a small way, he failed in a great way. His genius exalted brutal fact into tragedy, and invested sentimentality with the halo of mysticism. “When we affect to pity as poor those who must labour or the world cannot exist, we are trifling with the condition of mankind.” This was undoubtedly better than coarse indifference, empty lamentations, or the cant of sympathetic uplift. But the virility of this realistic attitude was impaired by the subtle complacency with which he spotlighted the scenes of aristocratic pageantry. The result was to out-Herod Herod, but to underestimate the chances of timely reform. It is a fair guess that had Burke lived, the Parliamentary Reform Bill of 1832, which put an end to the ancien régime, would have been passed only at the cost of an avoidable bloody revolution. And yet, Burke might have countered, once the masses were fated by the laws of political economy to toil in misery, what else was the idea of equality but a cruel bait to goad mankind into self-destruction?
Bentham possessed neither the sleek complacency of a Townsend nor the all too precipitate historicism of a Burke. Rather, to this belie
ver in reason and reform the newly discovered realm of social law appeared as the coveted no man’s land of utilitarian experimentation. Like Burke, he refused to defer to zoological determinism, and he too rejected the ascendency of economics over politics proper. Though author of the Essay on Usury, and of a Manual of Political Economy, he was an amateur at that science and even failed to provide the one great contribution which utilitarianism might have been expected to make to economics, namely, the discovery that value derived from utility. Instead, he was induced by associationist psychology to give rein to his boundless imaginative faculties as a social engineer. Laissez-faire meant to Bentham only another device in social mechanics. Social not technical invention was the intellectual mainspring of the Industrial Revolution. The decisive contribution of the natural sciences to engineering was not made until a full century later, when the Industrial Revolution was long over. To the practical bridge or canal builder, the designer of machines or engines, knowledge of the general laws of nature was utterly useless before the new applied sciences in mechanics and chemistry were developed. Telford, founder and lifelong president of the Institution of Civil Engineers, refused membership in that body to applicants who had studied physics and, according to Sir David Brewster, never made himself acquainted with the elements of geometry. The triumphs of natural science had been theoretical in the true sense, and could not compare in practical importance with those of the social sciences of the day. It was to these latter that the prestige of science as against routine and tradition was due, and unbelievable though it may seem to our generation, the standing of natural science greatly gained by its connection with the humane sciences. The discovery of economics was an astounding revelation which hastened greatly the transformation of society and the establishment of a market system, while the decisive machines had been the inventions of uneducated artisans some of whom could hardly read or write. It was thus both just and appropriate that not the natural but the social sciences should rank as the intellectual parents of the mechanical revolution which subjected the powers of nature to man.
Bentham himself was convinced that he had discovered a new social science, that of morals and legislation. It was to be founded on the principle of utility, which allowed of exact calculation with the help of associationist psychology. Science, precisely because it became effective within the circumference of human affairs, meant in eighteenth-century England invariably a practical art based on empirical knowledge. The need for such a pragmatic attitude was indeed overwhelming. As no statistics were available it was often not possible to say whether population was on the increase or decrease, what the trend of the balance of foreign trade was, or which class of the population was gaining on the other. It was frequently a mere matter of guesswork whether the wealth of the country was waxing or waning, where the poor came from, what the situation of credit, banking, or profits was. An empirical instead of a purely speculative or antiquarian approach to matters such as these was what was in the first place meant by “science”; and as practical interests were naturally paramount, it fell to science to suggest how to regulate and organize the vast realm of the new phenomena. We have seen how puzzled the Saints were by the nature of poverty, and how ingeniously they experimented with the forms of self-help; how the notion of profits was hailed as a cure-all for the most diverse ills; how none could say whether pauperism was a good or a bad sign; how bewildered scientific workhouse managements were to find themselves unable to make money out of the poor; how Owen made his fortune by running his factories on the lines of a conscious philanthropy; and how a number of other experiments which seemed to involve the same technique of enlightened self-help failed pitifully, thus causing dire perplexity to their philanthropic authors. Had we extended our purview from pauperism to credit, specie, monopolies, savings, insurance, investing, public finance or, for that matter, prisons, education, and lotteries we might have easily adduced as many new types of ventures in respect to each of them.
With Bentham’s death, approximately, this period comes to an end*; since the 1840s projectors in business were simply promoters of definite ventures, not any more the alleged discoverers of new applications of the universal principles of mutuality, trust, risk, and other elements of human enterprise. Henceforth businessmen imagined they knew what forms their activities should take; they rarely inquired into the nature of money before founding a bank. Social engineers were now usually found only amongst cranks or frauds, and then often confined behind iron bars. The spate of industrial and banking systems which from Paterson and John Law to the Pereires had flooded stock exchanges with the projects of religious, social, and academic sectarians had now become a mere trickle. With those engaged in the routine of business, analytical ideas were at a discount. The exploration of society, at least so it was thought, was concluded; no white spots were left on the human map. A man of Bentham’s stamp had become impossible for a century. Once the market organization of industrial life had become dominant, all other institutional fields were subordinated to this pattern; the genius for social artifacts was homeless.
Bentham’s Panopticon was not only a “mill to grind rogues honest, and idle men industrious”‡; it would also pay dividends like the Bank of England. He sponsored proposals as different as an improved system for patents; limited liability companies; a decennial census of population; the establishment of a Ministry of Health; interest-bearing notes to make savings general; a frigidarium for vegetables and fruit; armament factories on new technical principles, eventually run by convict labor, or alternatively, by the assisted poor; a Chrestomathic Day School to teach utilitarianism to the upper middle classes; a general register of real property; a system of public account keeping; reforms of public instruction; uniform registration; freedom from usury; the relinquishment of colonies; the use of contraceptives to keep the poor rate down; the junction of the Atlantic and the Pacific by means of a joint stock company; and others. Some of these projects harbored literally shoals of minor improvements as, for instance, that on Industry-Houses which were a congeries of innovations for the betterment and the exploitation of man based on the achievements of associationist psychology. While Townsend and Burke linked laissezfaire with legislative quietism, Bentham saw in it no obstacle to broadsides of reform.
Before we proceed to the answer which Malthus, in 1798, gave to Godwin and with which classical economics properly begins, let us remember the times. Godwin’s Political Justice was written to counter Burke’s Reflections on the French Revolution (1790). It appeared just before the wave of repression started with the suspension of habeas corpus (1794) and the persecution of the democratic Correspondence Societies. By this time England was at war with France and the terreur made the word “democracy” synonymous with social revolution. Yet the democratic movement in England, which was inaugurated with Dr. Price’s “Old Jewry” sermon (1789) and reached its literary height in Paine’s The Rights of Man (1791), was restricted to the political field; the discontent of the laboring poor found no echo in it; the question of the Poor Law was barely mentioned in the pamphlets which raised the cry for universal suffrage and annual parliaments. Yet actually, it was in the sphere of the Poor Law that the squires’ decisive countermove came, in the form of Speenhamland. The parish retired behind an artificial morass under the cover of which it outlived Waterloo by twenty years. But while the evil consequences of the panicky acts of political repression of the 1790s might have been soon overcome, had they stood alone, the degenerative process started by Speenhamland left its indelible mark on the country. The forty years’ prolongation of squirearchy which it produced was bought at the price of the sacrifice of the virility of the common people. “When the owning classes complained of the poor rate becoming heavier and heavier,” says Mantoux, “they overlooked the fact that it really amounted to an insurance against revolution, while the working class, when they accepted the scanty allowance doled out to them, did not realize that it was partly obtained by a reduction of their own legitima
te earnings. For the inevitable result of ‘allowances’ was to keep wages down to the lowest level, and even to force them below the limit corresponding to the irreducible needs of the wage-earners. The farmer or the manufacturer relied on the parish to make up the difference between the sum he paid the men and the sum on which the men could live. For why should they incur an expense which could so easily be foisted on to the body of the ratepayers? On the other hand, those in receipt of the parish relief were willing to work for a lower wage, and thus made competition quite impossible to those who received no parish help. The paradoxical result arrived at was that the so-called ‘poor-rate’ meant an economy for the employers, and a loss for the industrious workman who expected nothing from public charity. Thus the pitiless interplay of interests had turned a charitable law into a bond of iron.”*
It was this bond, we submit, on which the new law of wages and of population rested. Malthus himself, like Burke and Bentham, was violently opposed to Speenhamland and advocated complete repeal of the Poor Law. Neither of them had foreseen that Speenhamland would force the wages of the laborer down to subsistence level and below; on the contrary, they expected that it would force wages up, or at least maintain them artificially, which, but for the Anti-Combination Laws, might well have been the case. This false anticipation helps to explain why the low level of rural wages was not traced by them to Speenhamland, which was its actual cause, but was regarded as incontrovertible proof of the working of the so-called iron law of wages. To this foundation of the new economic science we must now turn.