Capitalism and the Historians / Edition 1

by F. A. Hayek

Overview

The views generally held about the rise of the factory system in Britain derive from highly distorted accounts of the social consequences of that system--so say the distinguished economic historians whose papers make up this book. The authors offer documentary evidence to support their conclusion that under capitalism the workers, despite long hours and other hardships of factory life, were better off financially, had more opportunities, and led a better life than had been the case before the Industrial Revolution.

Product Details

ISBN-13:	9780226320724
Publisher:	University of Chicago Press
Publication date:	04/15/1963
Edition description:	New Edition
Pages:	196
Sales rank:	1,021,769
Product dimensions:	5.25(w) x 8.00(h) x 0.60(d)

About the Author

F. A. Hayek (1899-1992), recipient of the Medal of Freedom in 1991 and co-winner of the Nobel Memorial Prize in Economics in 1974, was a pioneer in monetary theory and a leading proponent of classical liberalism in the twentieth century. He taught at the University of London, the University of Chicago, and the University of Freiburg.

Read an Excerpt

CHAPTER 1

The Treatment of Capitalism by Historians

T. S. ASHTON

To occupy a chair of economic history in the University of London means that, instead of being able to give one's vacation to the refreshment of body and spirit or the pursuit of knowledge, one is forced to spend much of it in reading examination scripts produced not only by one's own students but also by several hundred young men and women in all parts of Britain and, indeed, in the uttermost parts of the earth. This situation is unenviable. But at least it enables one to speak with assurance about the ideas held about the economic past by those who, in a short time, will be holding positions of authority in industry, commerce, journalism, politics, and administration and will therefore be influential in forming what we call "public opinion."

It is a truism that men's political and economic ideas depend as much on the experiences of the preceding generation as on the needs of their own. Asked by Lionel Robbins what they considered to be the outstanding problem of today, the majority of a class of students at the School of Economics answered unhesitatingly, "To maintain full employment." After a decade of full, or overfull, employment in England, the shadow of the 1930's hides from large numbers the real problems of postwar England. There is, however, a deeper shadow that obscures reality and darkens counsels. It is cast by the grievances — real or alleged — of workingmen who lived and died a century ago. According to a large number of the scripts which it has been my lot to read, the course of English history since about the year 1760 to the setting-up of the welfare state in 1945 was marked by little but toil and sweat and oppression. Economic forces, it would appear, are by nature malevolent. Every laborsaving device has led to a decline of skill and to an increase of unemployment. Is it not well known that, when prices rise, wages lag behind, and the standard of life of the workers falls? But what if prices fall? Is it not equally well known that this must result in a depression of trade and industry, a fall of wages and unemployment, so that, once more, the standard of life of the workers falls?

Modern youth is prone to melancholy; like Rachel, it refuses to be comforted. Yet I think it is something more than adolescent pessimism that is responsible for this climate of opinion. Students attend lectures and read textbooks, and it is a matter of common prudence to pay some heed to what they have heard and read. A good deal — indeed, far too much — of what appears in the scripts is literal reproduction of the spoken or written word. Much the greater part of the responsibility must lie with the professional economic historian.

The student of English economic history is fortunate in having at his disposal the reports of a long series of Royal Commissions and Committees of Inquiry beginning in the eighteenth century but reaching full stream in the 1830's, 1840's, and 1850's. These reports are one of the glories of the early Victorian age. They signalized a quickening of social conscience, a sensitiveness to distress, that had not been evident in any other period or in any other country. Scores of massive folios provided statistical and verbal evidence that all was not well with large numbers of the people of England and called the attention of legislators and the reading public to the need for reform. The economic historians of the succeeding generations could do no other than draw on their findings; and scholarship, no less than society, benefited. There was, however, loss as well as gain. A picture of the economic system constructed from Blue Books dealing with social grievances, and not with the normal processes of economic development, was bound to be one-sided. It is such a picture of early Victorian society that has become fixed in the minds of popular writers and is reproduced in my scripts. A careful reading of the reports would, indeed, lead to the conclusion that much that was wrong was the result of laws, customs, habits, and forms of organization that belonged to earlier periods and were rapidly becoming obsolete. It would have brought home to the mind that it was not among the factory employees but among the domestic workers, whose traditions and methods were those of the eighteenth century, that earnings were at their lowest. It would have provided evidence that it was not in the large establishments making use of steam power but in the garret or cellar workshops that conditions of employment were at their worst. It would have led to the conclusion that it was not in the growing manufacturing towns or the developing coal fields but in remote villages and the countryside that restrictions on personal freedom and the evils of truck were most marked. But few had the patience to go carefully through these massive volumes. It was so much easier to pick out the more sensational evidences of distress and work them into a dramatic story of exploitation. The result has been that a generation that had the enterprise and industry to assemble the facts, the honesty to reveal them, and the energy to set about the task of reform has been held up to obloquy as the author, not of the Blue Books, but of the evils themselves. Conditions in the mills and the factory town were so bad, it seemed, that there must have been deterioration; and, since the supposed deterioration had taken place at a time when machinery had increased, the machines, and those who owned them, must have been responsible.

At the same time the romantic revival in literature led to an idyllic view of the life of the present. The idea that agriculture is the only natural and healthy activity for human beings has persisted, and indeed spread, as more of us have escaped from the curse of Adam — or, as the tedious phrase goes, "become divorced from the soil." A year ago an examinee remarked profoundly that "in earlier centuries agriculture was widespread in England" but added sorrowfully, "Today it is confined to the rural areas." There was a similar idealization of the condition of the domestic worker, who had taken only the first step in the proceedings for divorce. Bear with me while I read some passages with which Friedrich Engels (who is usually acclaimed a realist) opens his account of The Condition of the Working Classes in England in 1844. It is, of course, based on the writings of the Reverend Philip Gaskell, whose earnestness and honesty are not in doubt, but whose mind had not been confused by any study of history. Engels' book opens with the declaration that "the history of the proletariat in England begins with the invention of the steam-engine and of machinery for working cotton." Before their time, he continues,

the workers vegetated throughout a passably comfortable existence, leading a righteous and peaceful life in all piety and probity; and their material condition was far better than that of their successors. They did not need to overwork; they did no more than they chose to do, and yet earned what they needed. They had leisure for healthful work in garden or field, work which, in itself, was recreation for them, and they could take part beside in the recreation and games of their neighbours, and all these games — bowling, cricket, football, etc. contributed to their physical health and vigour. They were, for the most part, strong, well-built people, in whose physique little or no difference from that of their peasant neighbours was discoverable. Their children grew up in fresh country air, and, if they could help their parents at work, it was only occasionally; while of eight or twelve hours work for them there was no question.

It is difficult to say whether this or the lurid picture of the lives of the grandchildren of these people presented in later pages of the book is more completely at variance with the facts. Engels had no doubt whatsoever as to the cause of the deterioration in the condition of labor. "The proletariat," he repeats, "was called into existence by the introduction of machinery." "The consequences of improvement in machinery under our present social conditions," he asserts, "are, for the working-man, solely injurious, and often in the highest degree oppressive. Every new advance brings with it loss of employment, want and suffering."

Engels has had many disciples, even among those who do not accept the historical materialism of Marx, with which such views are generally connected. Hostility to the machine is associated with hostility to its products and, indeed, to all innovation in consumption. One of the outstanding accomplishments of the new industrial age is to be seen in the greatly increased supply and variety of fabrics offered on the market. Yet the changes in dress are taken as evidence of growing poverty: "The clothing of the working-people in a majority of cases," Engels declares, "is in a very bad condition. The material used for it is not of the best adapted. Wool and linen have almost vanished from the wardrobes of both sexes, and cotton has taken their place. Skirts are made of bleached or coloured cotton goods, and woollen petticoats are rarely to be seen on the wash-line." The truth is that they never had been greatly displayed on the wash line, for woolen goods are liable to shrink. The workers of earlier periods had to make their garments last (second or third hand as many of these were), and soap and water were inimical to the life of clothing. The new, cheap textiles may not have been as hardwearing as broadcloth, but they were more abundant; and the fact that they could be washed without suffering harm had a bearing, if not on their own life, at least on the lives of those who wore them.

The same hostility is shown to innovation in food and drink. Generations of writers have followed William Cobbett in his hatred of tea. One would have thought that the enormous increase in consumption between the beginning of the eighteenth and the middle of the nineteenth century was one element in a rising standard of comfort; but only a few years ago Professor Parkinson asserted that it was "growing poverty" that made tea increasingly essential to the lower classes as ale was put beyond their means." (This, I may add, unfortunately meant that they were forced to consume sugar, and one must suppose that this practice also led to a fall in the standard of living.) Similarly, Dr. Salaman has recently assured us that the introduction of the potato into the diet of the workers at this time was a factor detrimental to health and that it enabled the employers to force down the level of wages — which, it is well known, is always determined by the minimum of food required for subsistence.

Very gradually those who held to these pessimistic views of the effects of industrial change have been forced to yield ground. The painstaking researches of Bowley and Wood have shown that over most of this period, and later, the course of real wages was upward. The proof is not at all easy, for it is clear that there were sections of the working classes of whom it was emphatically not true. In the first half of the nineteenth century the population of England was growing, partly because of natural increase, partly as the result of the influx of Irish. For those endowed with little or no skill, marginal productivity, and hence earnings, remained low. A large part of their incomes was spent on commodities (mainly food, drink, and housing), the cost of which had hardly been affected by technical development. That is why so many of the economists, like McCulloch and Mill, were themselves dubious about the beneficial nature of the industrial system. There were, however, large and growing sections of skilled and better-paid workers whose money incomes were rising and who had a substantial margin to spend on the products of the machine, the costs of which were falling progressively. The controversy really rests on which of the groups was increasing most. Generally it is now agreed that for the majority the gain in real wages was substantial.

But this does not dispose of the controversy. Real earnings might have risen, it was said, but it was the quality of life and not the quantity of goods consumed that mattered. In particular, it was the evil conditions of housing and the insanitary conditions of the towns that were called as evidence that the circumstances of labor had worsened. "Everything which here arouses horror and indignation," wrote Engels of Manchester in 1844, "is of recent origin, belongs to the industrial epoch" — and the reader is left to infer that the equally repulsive features of cities like Dublin and Edinburgh, which were scarcely touched by the new industry, were, somehow or other, also the product of the machine.

This is the legend that has spread round the world and has determined the attitude of millions of men and women to laborsaving devices and to those who own them. Indians and Chinese, Egyptians and Negroes, to whose fellow-countrymen today the dwellings of the English of the mid-nineteenth century would be wealth indeed, solemnly declare, in the scripts I have to read, that the English workers were living in conditions unworthy of beasts. They write with indignation about the inefficiency of the sanitation and the absence of civic amenities — the very nature of which is still unknown to the urban workers of a large part of the earth.

Now, no one who has read the reports of the Committee on the Sanitary Condition of the Working Classes of 1842 or that of the Commission on the Health of Towns of 1844 can doubt that the state of affairs was, from the point of view of modern Western civilization, deplorable. But, equally, no one who has read Dorothy George's account of living conditions in London in the eighteenth century can be sure that they had deteriorated. Dr. George herself believes that they had improved, and Clapham declared that the English towns of the mid-century were "less crowded than the great towns of other countries and not, universally, more insanitary ." The question I wish to raise, however, is that of responsibility. Engels, as we have seen, attributed the evils to the machine; others are no less emphatic in attributing them to the Industrial Revolution, which comes to much the same thing. No historian, as far as I know, has looked at the problem through the eyes of those who had the task of building and maintaining the towns.

There were two main aspects: the supply of houses in relation to the demand and the technical matters of drainage, sanitation, and ventilation. In the early nineteenth century, according to one of these scripts, "the workers were pressed into back-to-back houses, like sardines in a rabbit warren." Many of the houses were certainly unsubstantial and insanitary, and for this it is usual to blame the industrialist who put them up, a man commonly spoken of as the jerry-builder. I had often wondered who this man was. When I was young, the parson of the church I attended once preached a sermon on Jerry, who, he asserted with complete conviction, was at that very moment burning in hell for his crimes. I have searched for records of him, but in vain. It appears from Weekley's Etymological Dictionary of Modern English that "jerry" is a corruption of "jury" — a word of nautical origin applied to any part of a ship contrived for temporary use, as in "jury mast" and "jury rig," and extended to other things, such as "jury leg" for "wooden leg." "Jerry," then, means temporary, or inferior, or makeshift; and no doubt other uses of the word as a makeshift in an emergency will come to the mind. According to Partridge's Dictionary of Slang and Unconventional English, it was first used in Liverpool about 1830. The place and time are significant. Liverpool was the port for the rapidly developing industrial area of southeastern Lancashire; it was the chief gate of entry for the swarms of Irish immigrants. It was probably here that the pressure of population on the supplies of accommodation was most acute. Houses were run up rapidly, and many of them were flimsy structures, the outer walls of which were only 4-1/2 inches in thickness. On December 5, 1822, some of them, along with many buildings elsewhere, were blown down in a great storm that swept over the British Isles; and in February, 1823, the grand jury at Liverpool called the attention of the magistrates "to the dreadful effects of the late storm ... in consequence of the modern insecure mode of building." A year later the same body referred again to "the slight and dangerous mode of erecting dwelling houses now practised in this town and neighbourhood" and asked for steps to be taken "to procure a Legislative enactment, which might empower a proper Officer carefully to survey every building hereafter to be erected, and in case of insecurity to cause the danger to be removed ."

(Continues…)

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Table of Contents

Introduction
History and Politics by F.A. Hayek
Part I
1. The Treatment of Capitalism by Historians by T.S. Ashton
2. The Anticapitalist Bias of American Historians by L.M. Hacker
3. The Treatment of Capitalism by Continental Intellectuals by Bertrand de Jouvenel
Part II
4. The Standard of Life of the Workers in England, 1790-1830 by T.S. Ashton
5. The Factory System of the Early Nineteenth Century by W.H. Hutt