Friday, October 23, 2015

Karl Polanyi: Speenhamland and the Poor Law

The Austrian Karl Polanyi wrote The Great Transformation: The Political and Economic Origins of Our Time in the Second World War while a refugee from fascist Europe in Britain and the US.

In "Capitalism as a Utopian Movement" we discussed Polanyi's argument that capitalism was an ideological movement.

In "Great Depression Failure of the English System" Polanyi explains why the the "self-regulated market" and the gold standard failed in the years after World War I.

In "History of Exchange Prior to the Modern Market" Polanyi tells us that humans in the pre-market world lived perfectly happily without markets for everything.

In "The Self Regulating Market and Its Fictions" Polanyi talks about the commodification of labor, land, and money as "fictions."

Now Karl Polanyi takes up the question of the English Poor Law, that was enacted at the end of the Elizabethan era in response to the first wave of enclosures at the beginning of the agricultural revolution, and was notably expanded in 1795 by the so-called Speenhamland Law. This law (actually a set of protocols agreed to at a meeting of rural justices) set up an allowance system indexed to the price of bread to guarantee the poor a minimum standard of living. But one result was to lower wage rates into the cellar.

In Polanyi's view the market economy demands that everything have its market price, including labor, and this is a bad thing because it subordinates society to the economy. But if Britain was going to have a market economy it had to have a market in labor. Speenhamland delayed the creation of a labor market in Britain until the support of the poor under the Poor Law was destroyed by the Poor Law reform of 1834, and the workers were probably worse off under Speenhamland than they would have been if there had been no Poor Law.
[T]he absence of a market for labor [proved] a greater evil even to the common people themselves than the calamities that were to accompany its introduction. In the end the free labor market, in spite of the inhuman methods employed in creating it, proved financially beneficial to all concerned.
But the benefits of the market system "could not make up for the social destruction wrought by" the labor market, leading to regulation to protect labor, such as trade unions and factory laws, that "ultimately destroyed the [market] system."

All in all it was a rough time to be poor. Speenhamland was designed "to prevent the proletarianization of the common people", but instead it pauperized them. Then the Poor Law Reform of 1834 suddenly removed support for the poor, and many "of the most needy poor... were left to their fate." But the effect of plunging the working poor into the labor market was the worst, tossing working people from an admittedly threadbare community into an unfeeling market mechanism.

The crisis of community caused by the sudden creation of the labor market led to the discovery of "society," starting with political economy, and for Polanyi, it was only Robert Owen that understood that "human possibilities were limited, not by the laws of the market, but by those of society itself".

Should the rulers have seen all this coming? Not really, because in the next exciting installment we shall see that nobody had a clue about what was happening and what was coming -- this during the greatest social revolution of all time! But they were not short of proposals to deal with the crisis.

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