Quote Analysis 1 - Retallack

8/2/2019 Quote Analysis 1 - Retallack

1/4

Quote Analysis Assignment #1 February 7, 1012

Matthew Retallack

The laws of commerce were the laws of nature and consequently the laws of god.

Karl Polanyi, The Great Transformation, pg 122

The story behind this quotation is straightforward enough. Simply put it marks a change

in the prevailing thought regarding the relationship between markets and society. More

exactly it captures a change in the nature of society, driven by a series of events, toward a

tipping of the scales in favour of economic liberalisation in context of Polanyis double

movement. Moreover, while it speaks to an evolving knowledge in this regard, there is

something more troubling lurking within these words, as we shall see.

By the late eighteenth century the industrial revolution was in full swing with

manufactures in factory towns attracting hopeful labourers, driven in part by the lingering

effects of enclosure and the subsequent loss of common property, but perhaps more

importantly by the prospect of higher wages. Overall trade was on the rise however this

fact was somewhat masked at the factory level by repeated cycles of boom and bust.

Migrant workers often either lost their jobs or found that there werent any and returned

to the countryside. The resultant social dislocation was difficult for all involved. The

lives of peasants and labourers were disrupted by the often fruitless pursuit of a living

wage. Their home parishes were squeezed between requirements laid out by the

Elizabethan Poor Law and their ability to raise monies. These funds came from


2/4

PADM 6112 Policy Institutions and Processes Winter 2012

2

ratepayers, the majority of whom were farmers who were themselves at the mercy of

weather, and the migrations of available labour. All of this activity upset the stability of

traditional hierarchies, and indeed the ruling class was increasingly concerned by the

scent of revolution drifting up from among the ever growing mass of the increasingly

desperate poor.

In the factory town however the industrial machine continued to require more labour,

driven by growth in external trade of goods with other regions. In 1795 the Act of

Settlement, that in effect tied people to their home parish through the availability of

social welfare, was repealed. That same year the Speenhamland Law was crafted to

address the rise of rural pauperism and related concerns. These two legislative actions

were effectively working at cross purposes, with the later effectively repacking the

incentives of the former and undermining the mobility of labour. Moreover while

Speenhamland was successful in addressing dislocation, unforeseen side effects latent

within its design were disastrous and set the stage for the ultimate triumph of the market

system.

In rural areas Speenhamland effectively subsidised wages paid by farmers, who in turn

felt compelled to reduce wages in order to pay the increasing rates levied by the parish in

order to subsidise wages. As wages continued to drop so did productivity, along with the

dignity of those whose toil was worth so little, requiring farmers to hire more (subsidised)

labourers and subsequently pay even higher rates. So the cycle continued. Ultimately the


3/4


3

main effect of Speenhamland was to drive wages below the subsistence level while

depriving industry of the labour it required.

At the same time writers were drawing on these experiences for fodder in advancing new,

and in some cases convenient, theories. Smiths humanist views of economic activity as

subordinate to society were giving way to the weight of contemporary analysis. In the

face of a sobering realisation, in fact an interpretation of the facts as they evolved, it was

becoming accepted that with great wealth came great poverty. Now what seemed to be

almost romantic notions of human solidarity had to be abandoned for the sake of more

earthly, utilitarian objectives of the greatest happiness for the greatest number. A new

science was emerging, its rules were being written in real time, and the word of this

science was that of the market. Perhaps the most important factor of production, labour

had to be opened up to the market. The result was definitive. Speenhamland was repealed

and the Poor Law reformed. There was no more outdoor relief, no aid-in-wages, the

workhouse test was reintroduced and labour market was truly born, and Joseph

Townsends 1776 dissertation about dogs and goats was about to find new currency.

As an alternative interpretation of the events that unfolded, commercial activity increased

as a result of increased trade in goods that, due to industrial production, required less

labour per unit produced. The rise of manufactures and volatility in the market resulted in

a disruption of the division of labour, which might have resolved itself but for the

enactment of ostensibly pro-poor, possibly paternalistic, Speenhamland Law. Thus rather

than the value of labour eventually rising alongside increasing production and trade, as


4/4


4

Adam Smiths theories would suggest, the lack of a labour market prevented this from

happening and the so called iron law of wages was interpolated within observed events.

Poverty came alongside wealth and hunger made men work. It was survival of the fittest

and the laws of nature, as captured by Townsends discussion dogs and goats, were seen

to fit. The laws of commerce were the laws of nature and consequently the laws of god.

While the language of this statement is that of Polanyi, the spirit of relating commerce to

nature is made especially troubling through the characterisation of this as gods design or

will. One is reminded of Descartes veracities dei [Popper, C&R, 9]. Truth is manifest in

nature by the hand of god. However Popper also states that when truth is held to be

manifest it becomes available to explanation. The time is ripe for the voice of authority.

In this case the newly minted laws of commerce became true expressions of the nature of

the economic world, and were therefore authorised to preside over their domain, as do

gods laws preside over the natural world. Economic liberalisation had been propelled

forward by the effects of failed intervention. A historic examination of these failings

would point to flaws inherent in the design of these interventions however at the time the

failure was understood to be in the attempt at intervention itself. Commerce was after all,

as it was then understood, not subject to the laws of society. Determination over labour

was pulled from society and handed over to the market, taking the lives and welfare of

workers along with it, and the market economy gained the status of ruler of its domain,

completing the transformation to an unquestioning market society. Full steam ahead.

Documents

Quote Analysis 1 - Retallack