The Self-Regulating Market and the Fictitious Commodities [ 79 ]
part of a process of buying and selling, therefore labor, land, and
money had to be transformed into commodities in order to keep pro-
duction going. They could, of course, not be really transformed into
commodities, as actually they were not produced for sale on the mar-
ket. But the fiction of their being so produced became the organizing
principle of society. Of the three, one stands out: labor is the technical
term used for human beings, insofar as they are not employers but em-
ployed; it follows that henceforth the organization of labor would
change concurrently with the organization of the market system. But
as the organization of labor is only another word for the forms of life
of the common people, this means that the development of the market
system would be accompanied by a change in the organization of soci-
ety itself. All along the line, human society had become an accessory of
the economic system.
We recall our parallel between the ravages of the enclosures in En-
glish history and the social catastrophe which followed the Industrial
Revolution. Improvements, we said, are, as a rule, bought at the price
of social dislocation. If the rate of dislocation is too great, the commu-
nity must succumb in the process. The Tudors and early Stuarts saved
England from the fate of Spain by regulating the course of change so
that it became bearable and its effects could be canalized into less de-
structive avenues. But nothing saved the common people of England
from the impact of the Industrial Revolution. A blind faith in sponta-
neous progress had taken hold of people's minds, and with the fanati-
cism of sectarians the most enlightened pressed forward for boundless
and unregulated change in society. The effects on the lives of the peo-
ple were awful beyond description. Indeed, human society would have
been annihilated but for protective counter-moves which blunted the
action of this self-destructive mechanism.
Social history in the nineteenth century was thus the result of a
double movement: the extension of the market organization in respect
to genuine commodities was accompanied by its restriction in respect
to fictitious ones. While on the one hand markets spread all over the
face of the globe and the amount of goods involved grew to unbeliev-
able dimensions, on the other hand a network of measures and poli-
cies was integrated into powerful institutions designed to check the
action of the market relative to labor, land, and money. While the or-
ganization of world commodity markets, world capital markets, and
[ 80 ] The Great Transformation
world currency markets under the aegis of the gold standard gave an
unparalleled momentum to the mechanism of markets, a deep-seated
movement sprang into being to resist the pernicious effects of a
market-controlled economy Society protected itself against the perils
inherent in a self-regulating market system—this was the one com-
prehensive feature in the history of the age.
C H A P T E R S E V E N
Speenhamland, 1795
ighteenth-century society unconsciously resisted any attempt at
being made into a mere appendage of the market. No market econ-
omy was conceivable that did not include a market for labor; but to es-
tablish such a market, especially in England's rural civilization, im-
plied no less than the wholesale destruction of the traditional fabric of
society. During the most active period of the Industrial Revolution,
from 1795 to 1834, the creating of a labor market in England was pre-
vented through the Speenhamland Law.
The market for labor was, in effect, the last of the markets to be or-
ganized under the new industrial system, and this final step was taken
only when market economy was set to start, and when the absence of a
market for labor was proving a greater evil even to the common people
themselves than the calamities that were to accompany its introduc-
tion. In the end the free labor market, in spite of the inhuman methods
employed in creating it, proved financially beneficial to all concerned.
Yet it was only now that the crucial problem appeared. The eco-
nomic advantages of a free labor market could not make up for the so-
cial destruction wrought by it. Regulation of a new type had to be in-
troduced under which labor was again protected, only this time from
the working of the market mechanism itself. Though the new protec-
tive institutions, such as trade unions and factory laws, were adapted,
as far as possible, to the requirements of the economic mechanism,
they nevertheless interfered with its self-regulation and, ultimately,
destroyed the system.
In the broad logic of this development the Speenhamland Law oc-
cupied a strategic position.
In England both land and money were mobilized before labor was.
The latter was prevented from forming a national market by strict le-
[81]
£
[ 82 ] The Great Transformation
gal restrictions on its physical mobility, since the laborer was practi-
cally bound to his parish. The Act of Settlement of 1662, which laid
down the rules of so-called parish serfdom, was loosened only in 1795.
This step would have made possible the setting up of a national labor
market had not in the very same year the Speenhamland Law or "al-
lowance system" been introduced. The tendency of this law was to the
opposite; namely, toward a powerful reinforcement of the paternalis-
tic system of labor organization as inherited from the Tudors and Stu-
arts. The justices of Berkshire, meeting at the Pelican Inn, in Speen-
hamland, near Newbury, on May 6,1795, in a time of great distress,
decided that subsidies in aid of wages should be granted in accordance
with a scale dependent upon the price of bread, so that a minimum in-
come should be assured to the poor irrespective of their earnings. The
magistrates' famous recommendation ran: When the gallon loaf of
bread of a definite quality "shall cost 1 shilling, then every poor and in-
dustrious person shall have for his support 3 shillings weekly, either
procured by his own or his family's labour, or an allowance from the
poor rates, and for the support of his wife and every other of his family,
1 shilling 6 pence; when the gallon loaf shall cost 1/6, then 4 shillings
weekly, plus 1/10; on every pence which the bread price raises above 1
shilling he shall have 3 pence for himself and 1 pence for the others."
The figures varied somewhat in various counties, but in most cases the
Speenhamland scale was adopted. This was meant as an emergency
measure and was informally introduced. Although commonly called
a law, the scale itself was never enacted. Yet it became the law of the land
over most of the countryside, and even, in a much diluted form, in a
number of factory towns; actually it introduced no less a social and
economic innovation than the "right to live," and until abolished in
1834, it effectively prevented the establishment of a competitive labor
market. Two years earlier, in 1832, the middle class had forced its way
to power, partly in order to remove this obstacle to the new capitalistic
economy. Indeed, nothing could be more obvious than that the wage
system imperatively demanded the withdrawal of the "right to live" as
proclaimed in Speenhamland—under the new regime of the eco-
nomic man, nobody would work for a wage if he could make a living
by doing nothing (or not much more than nothing).
Another feature of the reversal of the Speenhamland method was
less obvious to most nineteenth-century writers, namely, that the
wage system had to be made universal in the interest also of the wage-
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