The Circa-1870 Disjunction Between Production and Distribution: A Possible Outtake from "Slouching Towards Utopia?: An Economic History of the Long 20th Century"

Il Quarto Stato

Do I have space for this in the ms.? Or do I need to go into kill-my-darlings mode?

3.1: The ca.-1870 Disjunction Between Production and Distribution

In the world as it stood in 1870 there was seen to be a huge disjunction between the growing effective economic power of the human race and the proper distribution of this potential wealth to create a prosperous and happy society. That science, technology, and organization could wreak miracles had become commonplaces. Best friends Karl Marx and Friedrich Engels probably put it best in 1848:

The business class, during… scarce 100 years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to [hu]man[ity], machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground—what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?…

However, the benefits of greater human power to harvest fruits from nature and organize persons did not trickle down.

There were, broadly speaking, as of 1870 three views about why it did not trickle down and what, if anything, ought to be done about it:

We have already noted John Stuart Mill’s view: The problem was the Malthusian one—that people, especially “the unproductive”, had too much freedom to have children and to draw on the public for support. The solution was to “the increase of mankind shall be under the deliberate guidance of judicious fore sight…. The state... provid[ing] that no person shall be born without its consent…” and to provide unemployed workers’ prisons for those bankrupt and broke: “support… accompanied with… restraints on their freedom... restricted indulgence, and enforced rigidity of discipline…”

Opposed to this was Karl Marx’s view: that the problem late not in human nature but in human societal arrangements. What was needed was to realize the German-style idealist philosophical understanding of human liberation that would be attainable with the broad prosperity from a society run on British-style classical-political economy Ricardian-socialist lines brought into being by a French-style political revolutionary overthrow of the old régime. And, Marx believed, the Logic of History would get us there. First, the market economy run for the interest of a business class that also controlled the levers of normal politics would see the economy become more productive and productive capital grow, and:

extends the division of labour…the application of machinery… the more do… wages shrink…. Small businessmen and… people living upon… interest… [are] precipitated into the… working class.… Thus the forest of outstretched arms begging for work, grows ever thicker and thicker, while the arms themselves grow ever leaner and leaner…

And this would, Marx believed, inevitably trigger a political-societal reaction:

Further socialisation of labour… takes a new form…. One capitalist always kills many. Hand in hand with this… develop… the cooperative… labour process, the conscious technical application of science, the methodical cultivation of the soil, the transformation of the instruments of labour into instruments of labour only usable in common…. Along with the constantly diminishing number of the magnates of capital… grows… misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class… disciplined, united, organised by… capitalist production itself…. Centralisation of capital and socialisation of labour… become incompatible with their capitalist exterior shell. This shell is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated…

There was a third view, however: the view that there was nothing wrong with human society as it stood toward the end of the 19th century. This was the view of, say, Herbert Spencer and his Social Statics—that what appeared to be the defects of society has it then stood were actually necessary forms of social discipline in order to guide the upward evolution of the human race. Andrew Carnegie—by then no longer the hungry child of a penniless handloom weaver but a plutocratic steelmaster—put it in a nutshell in 1889:

What were… luxuries have become… necessaries of life. The laborer has now more comforts than the landlord had…. The landlord has books and pictures rarer, and appointments more artistic, than the King could then obtain. The price we pay for this… is, no doubt, great…. The employer of thousands is forced into the strictest economies… [in] the rates paid to labor… friction between the employer and the employed, between capital and labor, between rich and poor…. The law of competition… is here; we cannot evade it; no substitutes for it have been found; and while the law may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department…

The theorists of the 18th Century Enlightenment had rejected justifications of inequality based on the inheritance of caste—fictionalized descent from the Norman knights who had conquered England for William the Bastard or the Frankish warriors who had conquered Gaul for King Clovis the supposed grandson of Merovech—for the equality of all before the law, and careers open to the talented. 19th Century utilitarians had argued that the distribution of even property should be calculated by a benevolent government so as to produce the maximum sum of utility—achieve the greatest good of the greatest number. And they rejected the idea that property rights and equality under the law were in any sense sacred inasmuch as “the majestic equality of the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread…”

But then the pendulum swung back again. The social darwinists came up with new justifications of inequality, based on privation and poverty as Lamarckian and Darwinian sorting mechanisms that were necessary to drive the upward evolution of the human race. Hence all was for the best in this the best of all possible worlds—and the more it appeared in the surface to be not the best, the more it was.

Few social darwinists indeed were ever willing to take their logic to the end of the streetcar line. Few were willing to conclude, with Andrew Carnegie, that although the privation of the unfit poor was useful, the luxury and the dissipation of the rich were not: once one had demonstrated one’s fitness by becoming rich the only appropriate use of wealth was to give it away to advance the public good rather than to either consume it or bequeath it, for “he who dies rich dies disgraced”. For most the justifications were another cycle in the ideological justification that those who are rich should hold what they have: what John Kenneth Galbraith described as “the search for a superior moral justification for selfishness”.

The contest between these three views—and diluted and blended variants of them—is a principal part of the history of political economy and economic policy. Marx’s belief that History would bring a superior social system and allow the productivity made possible by the advance of knowledge and investment to be distributed to create a truly human world is no longer credible. Mill’s fear that humanity would be unable to organize itself to master its destiny because of resource scarcity proved false with respect to population, but may prove true with respect to energy use and global warming. And there are still many—or at least a few with very loud voices—who hold that if the world of today has a problem, it is that distribution is not unequal enough.