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Economics as class war

David Ricardo

Reading the Chomsky-recommended Political Economy and Laissez-Faire: Economics and Ideology in the Ricardian Era (1986), by Rajani Kanth. Classical political economy as class war, against the aristocracy and the poor. (Kind of obvious, actually.)

A useful passage:

[With the Speenhamland “amendment”—in 1795—to the Elizabethan Poor Laws, which, among other things, sanctioned the idea of outdoor relief to the able-bodied, legislators] acknowledged in practice what was imperfectly the latent principle of Poor Law legislation from earlier times: that society is an organic entity whose every segment, including the poor, has a right to the existence that it is the duty of the state and the superior orders to provide. The noblesse, one might say, had to oblige. This was the idea that seemed an abomination to the classical economists and their stringent economic philosophy. And this was a principle that they inveighed against in their resolute opposition to this aspect of the Poor Laws which ultimately resulted in their “reform” in directions more suited to the achievement of classical ends… Their call to laissez-faire in this context meant the denial, in accordance with their vision of society, of the right of the laboring poor to maintenance outside the market-determined context of the social relation of wage labor. The recourse to laissez-faire as a general principle on this issue was intended to repeal the recognition of this right by a paternalistic state. The negative nature of the laissez-faire injunction was a means to achieve many things; but two of the most important issues it helped to undo were the Poor Laws and the Corn Laws. The class context of these two issues makes the meaning clear; if the first needed a rejection of state support to the laboring classes, the second required a denial of the rights of the landed aristocracy to state support. In so denying state action on behalf of two major socio-economic classes, semi-feudal and semi-proletarian, the doctrine of laissez-faire rationalized the ends of bourgeois society and the state—a modification and restructuring of the institutional behavior of these two classes vis-a-vis the capitalist mode of production.
…So the agitation against the Poor Laws is the phase of laissez-faire against the poor, in favor of the capitalist mode of production which requires a free and mobile labor force devoid of access to means of livelihood other than through the wage-labor-capital relation. The agitation against the Corn Laws was laissez-faire against the landed oligarchy, again to favor the new economic system by lowering the rental and wage “deductions” from value. Once these two major objectives of the political economy of laissez-faire, i.e. the neutralization of the aristocracy and the orderly growth of the proletariat, were achieved, the sphere of laissez-faire was to be relaxed. Thus, John Stuart Mill, by 1848, was ready to allow for greater intervention. In fact, the trend is steadily noticeable after the Reform Bill of 1832, that early victory for the political power of capital. Intervention, henceforth, would be increasingly necessary to secure both the unity of capital and the acquiescence of all social orders in the new system.

Malthus did much to stir up educated opinion against the Poor Laws (especially public outdoor relief for the able-bodied). “The provision of sustenance to the poor, he argued, only increased the pressure of population on scarce food supplies by multiplying their numbers; hence, to help them was to hurt them.” In thrall to an abstract and “scientific” ideology, he opposed all kinds of charitable and humane endeavors—and met with success in his proselytizing, since his beliefs accorded with manufacturers’ interests. (In other words, wealthy and powerful people were on his side. He was a useful idiot, like all ideologues are, from one perspective or another.)

Ricardo, too, opposed the Poor Laws on the grounds of their interference with “liberty” and the sacred market, even wanted them totally abolished, a position deemed too extreme by politicians and many economists because of the threat it might pose to social order. But they liked his insistence that taxes and government expenditures should be kept to a minimum because they discouraged capital accumulation, which was the foundation of social progress. (Two hundred years later, economists and politicians are saying the same thing. Behold the barren and formulaic nature of capitalist propaganda.) Benthamite utilitarianism joined economic liberalism in opposition to the Poor Laws, since, given the painful character of labor and man’s “natural” inclination to avoid it except under dire necessity or when tempted by generous rewards, they were supposedly lending support to humans’ natural laziness. As the upper classes had been saying for a long time, poverty was good inasmuch as it stimulated the poor to work; and so it should not be relieved by governmental means. But even if one didn’t accept that poverty was a positive good, it was agreed by all these liberal/capitalist types that relief interfered with incentives to work. (Again, an idea that remains characteristic of the ruling class.) Bentham, of course, was an ardent partisan of capitalism—and of surveillance, total control of workers, forced labor camps for the poor, etc. In many respects he anticipated totalitarianism (and also radical behaviorism, in some ways).

The new Poor Law of 1834, largely written by Nassau Senior, one of the classical economists, was a savage measure—even though Senior himself, and others, thought it didn’t go far enough, for it didn’t unequivocally end outdoor relief. To quote Hobsbawm, “there have been few more inhuman statutes than the Poor Law Act of 1834, which made all relief ‘less eligible’ than the lowest wage outside, confined it to the jail-like workhouse, forcibly separating husbands, wives, and children in order to punish the poor for their destitution, and discourage them from the dangerous temptation of procreating further paupers.” Another historian observes that between 1834 and 1847 “the working class was reminded every day that the only choice for the poor man, when misfortune befell him, was the choice between starvation and disgrace.” Needless to say, the Act was a great triumph for the market economy and the bourgeoisie, for it put the finishing touches on the decades-long creation of a disciplined proletariat.

John Stuart Mill, despite his relative humanity, supported the new Poor Law. On the other hand, by 1848 he took the position, against Ricardo, Senior, and the others, that the poor had a “right to live,” a right to subsistence, and even speculated that “the state might guarantee employment at ample wages to all those who are born.” A very different position from his economist predecessors. But by now it was safer to take such a view, for the Chartist and Owenist revolts had been defeated and a categorically subordinate proletariat had been formed. “Once converted into a proletariat…the working poor had a right to exist and make demands upon the public revenue; and the classical economists, within bounds, were solicitous of this right. They, the laboring poor and not the unproductive poor, were the true wards of society.” Not incidentally, the support of the proletariat was needed now to prevent any rearguard action against industrial capitalism by the landed aristocracy.

Anyway, the broader point is that classical economics was formed, and then transformed, in relation to specific material and political issues of the time (a fact that is almost universally ignored in scholarship). Its main early task was to give ideological support to the construction of a market economy; once that had been achieved, its holy axioms and theorems could be tweaked or revised in support of new policy imperatives.

After the chapter on the repeal of the Corn Laws is a long discussion of the ways in which the classical economists were, and were not, committed to the ideology of laissez-faire. The most interesting part is what’s said about Adam Smith. In recent decades he has been invoked as the great apostle of laissez-faire and a small state, as if he argued that government intervention is by nature wrong, such that almost everything should be left to the market; but this is a caricature of his real position. To understand him, you have to understand the social and political context in which he wrote. His target was the mercantilist state and its protection of monopolies, its overweening regulations, its obstructions to capital accumulation and the production of wealth. “His reservations about the nature of governments are to be seen as specific criticisms directed against the state machine of his own time,” which he saw as corrupt and subservient to the selfish ends of the monied and landed classes. But he was perfectly prepared to admit that regulation could sometimes be good, and he enthusiastically supported public works and government involvement in education, among other things. To quote one of his interpreters,

Adam Smith was no doctrinaire advocate of laissez-faire. He saw a wide and elastic range of activity for government, and he was prepared to extend it even farther if government, by improving its standards of competence, honesty, and public spirit, showed itself entitled to wider responsibilities.

Indeed, one might turn the arguments of contemporary conservatives—in their appropriation of Smith—on their head: much of his suspicion of government was rooted in his knowledge that the class of merchant-manufacturers, which he hated (and which modern conservatives represent), was constantly trying to capture the state for its own “vile” purposes. And was having some success in doing so.

Insofar as Smith’s hostility toward government was general and not limited to the British state of his day, it was rather philosophical, derived from the French and Scottish Enlightenments and their notions of natural law, natural liberty, and so forth. This is quite different from the later classics, such as Ricardo, James Mill, Nassau Senior, and McCulloch. They were not Enlightenment philosophers far removed from politics but active participants in fierce political struggles on behalf of a rising industrial class, which Smith had had no inkling of. They invoked laissez-faire for their own partisan ends, as a tactic. As Kanth says, “for Smith, laissez-faire was a policy directed toward the elimination of mercantilist restrictions on capitalist accumulation, quite beyond the pale of a narrow class reference, whereas in the hands of the later classics it served as a deliberate class tactic in limiting the demands of the landed and laboring orders upon the state. What, for Smith, had been the antidote to the political economy of protectionism in the widest sense, became transmuted later into a mere instrument of class combat.” Smith, in short, was more disinterested than his semi-disciples, and his understanding of “government non-interference” was correspondingly different. More elevated and abstract, so to speak, and not subordinate to particular class ends. But it’s true that he and the later classics shared an appreciation for the market economy and advocated the dismantling of protectionism.

It seems to me that, while there are many differences between the post-Smith classical economists and today’s neoliberal economists, they’re similar in their use of the ideology of laissez-faire when it helps capitalists and repudiation of it when it hurts them. They call for governmental non-interference with the market in the cases when such interference benefits classes other than the capitalist, while calling for, or at least supporting, interference in the cases when it is to the advantage of capitalists. But there was probably more intellectual integrity among the “classics” than among today’s economists, who willfully ignore a colossal body of evidence that contradicts their nostrums.


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