The Disjunction Between Production and Distribution: An Outtake from "Slouching Towards Utopia?: An Economic History of the Long Twentieth Century 1870-2016

Il Quarto Stato


In the world as it stood in 1870–and even more so in 1914—there was a huge disjunction between the growing effective economic power of the human race and the proper distribution of this potential wealth. Science, technology, and organization were clearly wreaking miracles. The rewards, however, were not going to the scientists and the engineers and the workers, but to the landlords and the financiers and to the organizer-entrepreneurs. The sociological contribution of this latter group in creating organizations and setting them in motion was mighty. 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 about what, if anything, ought to be done about it:

First, we have already noted John Stuart Mill’s view: The problem was a Malthusian one—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 foresight…” with 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 human liberation understood in a German-style idealist philosophical mode would inevitably be attained in the broadly prosperous society made possible by technology after that society had been developed by being run on British-style classical-political economy Ricardian-socialist lines and had then been transformed by a French-style political revolutionary overthrow of the old régime. What would produce the revolution? Aroused and self-organized humanity outraged by the enormous disjunction between the tremendous wealth of society and the increasing poverty of the typical worker:

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 right derived from the inheritance of caste—fictionalized descent from the Norman knights who had conquered England for William the Bastard in 1066, or fictionalized descent from 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. But they held the line at what one had gained via one's own hands and one's own talents in the societal system in which one was embedded: that one had a clear right to. 19th Century utilitarians abandoned that: they 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 that one had no rights that contravened that principle. Along with diminishing marginal utility of wealth, that utilitiarian principle entails the sharp rejection 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 in fact 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 that although the privation of the fit poor was useful as spurring them to self improvement and enterprise and the privation of the unfit poor was useful as improving the Race, the luxury and the dissipation of the rich were not useful. Andrew Carnegie was willing to ride to the end of the streetcar line: 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 of the rich, however, 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.

the business class: This is in French in the German original: “bourgeoisie” and “bourgeoisie”. These words are invariably but not too usefully left translated in English editions. Marx and Engels did not have a great German word for the concept. Originally—most prominently in his essay “On the Jewish Question”—Marx followed his then-friends Moses Hess and Heinrich Heine in labeling this as “Jewishness”. (Cf., Heinrich Heine’s denunciation of his own city of Hamburg as a city of hagglers populated entirely by Jews: “baptized and un-baptized Jews (I call all Hamburg’s inhabitants Jews)”.) Jonathan Sperber (2013): Karl Marx: A Nineteenth-Century Life (p. 133). That was unfortunate. Marx and Engels attributed a heroic and Promethean as well as a degrading and destructive historical role to this class.

lap of social labor: Karl Marx and Friedrich Engels (1848): Manifesto of the Communist Party

restricted indulgence, and enforced rigidity of discipline: John Stuart Mill (1871): Principles of Political Economy

Karl Marx’s view: The view of Marx-the-intellectual-thinker, not of Marxism-the-revealed-creed. The best very short summary of what Marx thought and why is—I think—mine: J. Bradford DeLong (2009): Understanding Karl Marx The best biography of Karl-Marx-the-person—a very different animal from Karl-Marx-the-idol—is, I think, Jonathan Sperber (2013): Karl Marx: A Nineteenth Century Life (New York: W.W. Norton: 0871404672)

ever leaner and leaner: Karl Marx (1847): Wage Labour and Capital

expropriators are expropriated: Karl Marx (1867): Capital

Herbert Spencer and his Social Statics: Herbert Spencer (1851): Social Statics: Or, the Conditions Essential to Human Happiness Specified, and the First of Them Developed (London: John Chapman)

insures the survival of the fittest in every department: Andrew Carnegie (1889): “Wealth”, North American Review 391 (June)

the majestic equality of the law: Anatole France (1894): The Red Lily (London: J. Lane)

this the best of all possible worlds Voltaire (1759): Candide, or, All for the Best (Paris: Lambert)

a superior moral justification for selfishness: John Kenneth Galbraith (2002): Interview with Rupert Cornwell: Stop the Madness, Toronto Globe and Mail (July 6) As quoted by Daniel Davies (2003): Hypocrisy as a Virtue

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