Karl Polyani
from The Great Transformation, Rinehart & Company, Inc, 1944
Chapter 14 MARKET AND MAN
TO SEPARATE LABOR from other activities of life and to subject it to the laws of the market was to annihilate all organic forms of existence and to replace them by a different type of organization, an atomistic and individualisticone. (163)
Such a scheme of destruction was best served by the application of the principle of freedom of contract. In practice this meant that the noncontractual organizations of kinship, neighborhood, profession, and creed were to be liquidated since they claimed the allegiance of the individual and thus restrained his freedom. To represent this principle as one of noninterference, as economic liberals were wont to do, was merely the expression of an ingrained prejudice in favor of a definite kind of interference, namely, such as would destroy noncontractual relations between individuals and prevent their spontaneous re-formation. (163)
This effect of the establishment of a labor market is conspicuously apparent in colonial regions today. The natives are to be forced to make a living by selling their labor. To this end their traditional institutions must be destroyed, and prevented from re-forming, since, as a rule, the individual in primitive society is not threatened by starvation unless the community as a whole is in a like predicament. Under the kraal-land system of the Kaffirs, for instance, "destitution is impossible: whosoever needs assistance receives it unquestioningly." (Mair, L. P., An African People in the Twentieth Century, 1934) “No Kwakiutl ever ran the least risk of going hungry." (Loeb, E. M., The Distribution and Function of Money in Early Society. In Essays in Anthropology, 1936) “There is no starvation in societies living on the subsistence margin." (Herskovits, M. J., The Economic Life of Primitive Peoples, 1940) The principle of freedom from want was equally acknowledged in the Indian village community and,.we might add, under almost every and any type of social organization up to about the beginning of sixteenth century Europe, when the modern ideas on the poor put forth by the humanist Vives were argued before the Sorbonne. It is the absence of the threat of individual starvation which makes primitive society, in a sense, more human than market economy, and at the same time less economic. Ironically, the white man's initial contribution to the black man's world mainly consisted in introducing him to the uses of the scourge of hunger. Thus the colonists may decide to cut the readfruit trees down in order to create an artificial food scarcity or may impose a hut tax on the native to force him to barter away his labor. In either case the effect is similar to that of Tudor enclosures with their wake of vagrant hordes. A League of Nations report mentioned with due horror the recent appearance of that ominous figure of the sixteenth century European scene, the "masterless man," in the African bush. (Thurnwald, R. C., op. cit.) During the late Middle Ages he had been found only in the "interstices" of society. (Brinkmann, C., "Das soziale System des Kapitalismus," Grundriss de Social-okonomik, 1924) Yet he was the forerunner of the nomadic laborer of the nineteenth century. (Toynbee, A., Lectures on the Industrial Revolution, 1887, p. 98) (163, 164)
Now, what the white man may still occasionally practice in remote regions today, namely, the smashing up of social structures in order to extract the element of labor from them, was done in the eighteenth century to white populations by white men for similar purposes. Hobbes' grotesque vision of the State -a human Leviathan whose vast body was made up of an infinite number of human bodies - was dwarfed by the Ricardian construct of the labor market: a flow of human lives the supply of which was regulated by the amount of food put at their disposal. Although it was acknowledged that there existed a customary standard below which no laborer's wages could sink, this limitation also was thought to become effective only if the laborer was reduced to the choice of being left without food or of offering his labor in the market for the price it would fetch. This explains, incidentally, an otherwise inexplicable omission of the classical economists, namely, why only the penalty of starvation, not also the allurement of high wages, was deemed capable of creating a functioning labor market. Here also colonial experience has confirmed theirs. For the higher the wages the smaller the inducement to exertion on the part of the native, who unlike the white man was not compelled by his cultural standards to make as much money as he possibly could. The analogy wp all the more striking as the early laborer, too, abhorred the factory, where he felt degraded and tortured, like the native who often resigned himself to work in our fashion only when threatened with corporal punishment, if not physical mutilation. The Lyons manufacturers of the eighteenth century urged low Nyages primarily for social reasons. (Heckscher, E. F., op. cit., Vol. II, p. 166) Only an overworked and downtrodden laborer, they argued, would forgo to associate with his comrades and escape the condition of personal servitude under which he could be made to do whatever his master required from him. Legal compulsion and parish serfdom as in England, the rigors of an absolutist labor police as on the Continent, indented labor as in the early Americas were the prerequisites of the "willing worker." But the final stage was reached with the application of "nature's penalty," hunger. In order to release it, it was necessary to liquidate organic society, which refused to.permit the individual to starve.(164, 165)
The protection of society, in the first instance, falls to the rulers, who can directly enforce their will. However, it is all too easily assumed by economic liberals that economic rulers tend to be beneficial, while political rulers do not. Adam Smith did not seem to think so when he urged that direct British rule should replace administration through a chartered company in India. Political rulers, he argued, would have parallel interests with the ruled whose wealth would swell their revenue, while the merchant's interests were naturally antagonistic to those of his customers. (165)
By interest.and inclination it fell to the landlords of England to protect the lives of the common people from the onrush of the Industrial Revolution. Speenhamland was a moat erected in defense of the traditional rural organization, when the turmoil of change was sweeping the countryside, and, incidentally, making agriculture a precarious industry. In their natural reluctance to bow to the needs of the manufacturing towns, the squires were the first to make a stand in what proved to be a century's losing fight. Yet their resistance was not in vain; it averted ruin for several generations and allowed time for almost complete readjustment. Over a critical span of forty years it retarded economic progress, and when, in 1834, the Reform Parliament abolished Speenhamland, the landlords shifted their resistance to the factory laws. The Church and the manor were now rousing the people against the mill owner whose predominance would make the cry for cheap food irresistible, and thus, indirectly, threaten to sap rents and tithes. Oastler, for one, was "a Churchman, a Tory, and a Protectionist" (Dicey, A. V., op. cit., p. 226); moreover, he was also a Humanitarian. So were also, with, varying mixtures of these ingredients of Tory socialism, the other great fighters in the factory movement: Sadler, Southey and Lord Shaftesbury. But the premonition of threatening pecuniary losses which prompted the bulk of their followers proved only too well grounded: Manchester exporters were soon clamoring for lower wages involving cheaper grain- the repeal of Speenhamland and the growth of the factories actually prepared the way for the success of the Amti-Com Law agitation, in 1846. Yet, for adventitious reasons, the ruin of agriculture was postponed in England for a whole generation. Meanwhile Disraeli grounded Tory socialism on a protest against the Poor Law Reform Act, and the conservative landlords of England forced radically new techniques of life upon an industrial society. The Ten Hours Bill of 1847, which Karl Marx hailed as the first victory of socialism, was the work of enlightened reactionaries.(166)
The laboring people themselves were hardly a factor in this great movement the effect of which was, figuratively speaking, to allow them to survive the Middle Passage. They had almost as little to say in the determination of their own fate as the black cargo of Hawkins' ships. Yet it was precisely this lack of active participation on the part of the British working class in deciding its own fate that determined the course of English social history and made it, for better or for worse, so different from that of the Continent. (166)
There is a peculiar touch about the undirected excitements, the rumblings and blunders of a nascent class, the true nature of which history has long since revealed. Politically, the British working class was defined by the Parliamentary Reform Act of 1832, which refused them the vote; economically, by the Poor Law Reform Act of 1834, which excluded them from relief and distinguished them from the pauper. For some time to come the industrial working-class-to-be was uncertain whether its salvation did not lie after all in a return to rural existence and conditions of handicraft. In the two decades following Speenhamland its endeavors were focused on the stopping of the free use of machinery either by the enforcement of the apprenticeship clauses of the Statute of Artificers or by direct action as in Luddism. This backward-looking attitude lingered on as an undercurrent all through the Owenite movement till the end of the forties, when the Ten Hours Bill, the eclipse of Chartism, and the beginning of the Golden Age of capitalism obliterated the vision of the past. Up to that time the British working class in statu nascendi was a riddle unto itself; and only if one follows with understanding its half-unconscious stirrings is it possible to gauge the immensity of the loss England suffered through the exclusion of the working class from an equal share in national life. When Owenism and Chartism had burned themselves out, England had become poorer by that substance out of which the Anglo-Saxon ideal of a free society could have been built up for centuries to come. (166, 167)
Even if the Owenite movement had resulted only in inconsiderable local activities, it would have formed a monument to the creative imagination of the race and even if Chartism had never penetrated beyond the confines of that nucleus which conceived of the idea of a national holiday to gain the rights of the people, it would have shown that some of the people were still able to dream their own dreams, and were taking the measure of a society which had forgotten the shape of man. Yet neither the one nor the other was the case. Owenism was not the inspiration of a minute sect, nor was Chartism restricted to a political elite; both movements comprised hundreds of thousands of craftsmen and artisans, laborers and working people, and with their vast following ranked among the biggest social movements in modern history. And yet different as they were and similar only in the measure of their failure, they served to prove how inevitable from the first the necessity was of protecting man against the market. (167)
The Owenite Movement originally was neither political nor working class. It represented the cravings of the common people, smitten by the coming of the factory, to discover a form of existence which would make man master of the machine. Essentially, it aimed at what would appear to us as a by-passing of capitalism. Such a formula would, of course be bound to be somewhat misleading , since the organizing role of capital and the nature of a self-regulating market were still unknown. Yet it expresses perhaps best the spirit of Owen, who emphatically was not an enemy of the machine. In spite of the machine, he believed, man should remain his own employer; the principle of co-operation or "union" would solve the problem of the machine without sacrificing either individual freedom or social solidarity, either man's dignity or his sympathy with his fellows.(167)
The strength of Owenism was that its inspiration was eminently practical, and yet its methods were based on an appreciation of man as a whole. Although the problems were intrinsically those of every day life such as the quality of food, housing, and education, the level of wages, the avoidance of unemployment, support in sickness find the like, the issues involved were as broad as the moral forces they appealed to. The conviction that, if only the right method was found, man's existence could be restored enabled the roots of the movement to penetrate into that deeper layer where personality itself is formed. There rarely was a less intellectualized social movement of a similar scope; the convictions of those engaged in it imbued even their seemingly most trivial activities with meaning, so that no set creed was needed. Indeed their faith was prophetic, since they insisted on methods of reconstruction which transcended market economy. (167, 168)
Owenism was a religion of industry the bearer of which was the working class.( Cole, G. D. H., Robert Owen, 1925, a work on which we have heavily drawn) Its wealth of forms and initiatives was unrivaled. Practically, it was the beginning of the modem trade union movement. Cooperative societies were founded, mainly engaged in retail to their members. These were not, of course, regular consumers' co-operatives, but rather stores backed by enthusiasts determined to devote the profits of the venture to the furtherance of Owenite plans, preferably to the establishment of Villages of Co-operation. "Their activities were quite as much educational and propagandist as commercial; their aim was the creation of the New Society by their associated effort." The "Union Shops" erected by members of trade unions were more in the nature of producers' co-operatives, unemployed artisans could find work there, or, in case of strikes, earn some money in lieu of strike pay. In the Owenite "Labour Exchange" the idea of the co-operative store was developed into an institution sui generis. At the heart of the Exchange or Bazaar there was reliance on the complementary nature of the crafts; by providing for one another's needs, artisans would emancipate themselves, it was thought, from the ups and downs of the market; this was, later, accompanied by the use of labor notes which had a considerable circulation. Such a device might seem fantastic today; but in Owen's time the character not only of wage labor, but also of bank notes, was still unexplored. Socialism was not essentially different from those projects and inventions with which the Benthamite movement was teeming. Not only the rebellious opposition, but also the respectable middle class was still in an experimentative mood. Jeremy Bentham himself invested in Owen's futuristic education scheme in New Lanark, and earned a dividend. The Owenite Societies proper were associations or clubs designed to support plans of Villages of Co-operation such as we described in connection with the relief of the poor; this was the origin of the argricultural producers' co-operative, an idea which had a long and distinguished career. The first national producers' organization with syndicalist aims was the Operative Builders' Union, which attempted to regulate the building trade directly by creating "buildings upon the most extensive scale," introducing a currency of its own, and exhibiting the means of realizing "the great association for the emancipation of the reductive classes." The industrial producers' co-operatives of the nineteenth century date from this venture. It was from the Builders' Union or Guild and its Parliament, that the even more ambitious consolidated Trades Union sprang, which for a short time comprised almost a million workers and artisans in its loose federation of trade unions and co-operative societies. Its idea was industrial revolt by peaceful means, which will appear as no contradiction once we remember that in the messianistic dawn of their movement the mere consciousness of their mission was supposed to make the aspirations of the working people irresistible. The martyrs of Tolpuddle belonged to a rural branch of this organization. Propaganda for factory legislation was carried on by Regeneration Societies; while later on ethical societies were founded the forerunners of the secularist movement. The idea of nonviolent resistance was fully developed in their midst. Like Saint-Simonianism in France, Owenism in England showed all the characteristics of spiritual inspiration; but while Saint-Simon worked for a renaissance of Christianity, Owen was the first opponent of Christianity amongst modern working-class leaders. The consumers' co-operatives of Great Britain which found imitators all over the world were, of course, the most eminently practical offshoot of Owenism. That its impetus was lost - or, rather, was maintained only in the peripheric sphere of the consumers' movement - was the greatest single defeat of spiritual forces in the history of industrial England. Yet a people, which, after the moral debasement of the Speenhamland period, still possessed the resilience required for a creative effort so imaginative and sustained, must have disposed of almost boundless intellectual and emotional vigor. (168, 169)
To Owenism with its claim to man as a whole there still clung something of that medieval inheritance of corporative life which found expression in the Builders' Guild and in the rural scene of its social ideal, the Villages of Co-operation. Although it was the fount of modern socialism, its proposals were not based on the property issue, which is the legal aspect only of capitalism. In hitting on the new phenomenon of industry, as Saint-Simon had done, it recognized the challenge of the machine. But the characteristic trait in Owenism was that it insisted on the social approach: it refused to accept the division of society into an economic and political sphere, and, in effect, rejected political action on that account. The acceptance of a separate economic sphere would have implied the recognition of the principle of gain and profit as the organizing force in society. This Owen refused to do. His genius recognized that the incorporation of the machine was possible only in a new society. The industrial aspect of things was to him in no way restricted to the economic (this would have implied a marketing view of society which he rejected). New Lanark had taught him that in a worker's life wages was only one among many factors such as natural and home surroundings, quality and prices of commodities, stability of employment, and security of tenure. (The factories of New Lanark like some other firms before them kept their employees on the payroll even when there was no work for them to do.) But much more than that was comprised in the adjustment. The education of children and adults, provision for entertainment, dance, and music, and the general assumption of high moral and personal standards of old and young created the atmosphere in which a new status was attained by the industrial population as a whole. Thousands of persons from all over Europe (and even America) visited New Lanark as if it were a reservation of the future in which had been accomplished the impossible feat of running a successful factory business with a human population. Yet Owen's firm paid considerably lower wages than those current in some neighboring towns. The profits of New Lanark sprang mainly from the high productivity of labor on shorter hours, due to excellent organization and rested men, advantages which outweighed the increase in real wages involved in the generous provisions for a decent life. But the latter alone explain the sentiments of all but adulation with which his workers clung to Owen. Out of experiences such as these he extracted the social, that is, wider- than- economic approach to the problem of industry. (169, 170)
It was another tribute to his insight that in spite of this comprehensive outlook he grasped the incisive nature of the concrete physical facts dominating the laborer's existence. His religious sense revolted against the practical transcendentalism of a Hannah More and her Cheap Repository Tracts. One of them commended the example of a Lancashire colliery girl. She was taken down the pit, at the age of nine, to act as drawer with her brother, who was two years younger." (More, H., The Lancashire Colliery Girl, May,1795; cf. Hammond, J. L.and B., The Town Labourer, 1917, P. 230) She cheerfully followed him [her father] down into the coal-pit, burying herself in the bowels of the earth, and there at a tender age, without excusing herself on account of her sex, she joined in the same work with the miners, a race of men rough indeed, but highly useful to the community." The father was killed by an accident down the pit in the sight of his children. She then applied for employment as a servant, but there was a prejudice against her because she had been a Collier, and her application failed. Fortunately, by that comforting dispensation by which afflictions are turned into blessings, her bearing and patience attracted notice, inquiries were made at the colliery, and she received such a glowing character that she was taken into employment. "This story," the tract concluded, "may teach the poor that they can seldom be in any condition of life so low as to prevent their rising to some degree of independence if they choose to exert themselves, and there can be no situation whatever so mean as to forbid the practice of many noble virtues." The sisters More preferred to work among starving laborers, but refused so much as to be interested in their physical sufferings. They were inclined to solve the physical problem of industrialism by simply conferring status and function on the workers out of the plenitude of their magnanimity. Hannah More insisted that her heroine's father was a highly useful member of the community; the rank of his daughter was recognized by the acknowledgments of her employers. Hannah More believed that no more was needed for a functioning society. (Cf. Drucker, P. F., The End of Economic Man, 1939, p. 93, on the English Evangelicals; and The Future of Industrial Man, 1942, pp 21 and 194 on status and function.) Owen turned away from a Christianity which renounced the task of mastering the world of man, and which preferred to extol the imaginary status and function of Hannah More's wretched heroine, instead of facing the awful revelation that transcended the New Testament, of man's condition in a complex society. Nobody can doubt the sincerity which inspired Hannah More's conviction that the more readily the poor acquiesced in their condition of degradation, the more easily they would turn to the heavenly solaces on which alone she relied both for their salvation and for the smooth functioning of a market society in which she firmly believed. But these empty husks of Christianity on which the inner life of the most generous of the upper classes was vegetating contrasted but poorly with the creative faith of that religion of industry in the spirit of which the common people of England were endeavoring to redeem society. However, capitalism had still a future in store. (171, 172)
The Chartist Movement appealed to a set of impulses so different that its emergence after the practical failure of Owenism and its premature initiatives might have been almost predicted. It was a purely political effort which made a bid for influence on government through constitutional channels; its attempt to put pressure on the government was on the traditional lines of the Reform Movement which had secured the vote to the middle classes. The Six Points of the Charter demanded an effective popular suffrage. The uncompromising rigidity with which such an extension of the vote was rejected by the Reformed Parliament for a third of a century, the use of force in view of the mass support that was manifest for the Charter, the abhorrence in which the liberals of the 1840's held the idea of popular government all prove that the concept of democracy was foreign to the English middle classes. Only when the working class had accepted the principles of a capitalist economy and the trade unions had made the smooth running of industry their chief concern did the middle classes concede the vote to the better situated workers; that is, long after the Chartist Movement had subsided and it had become certain that the workers would not try to use the franchise in the service of any ideas of their own. From the point of view of the spreading of the market forms of existence this may have been justified, since it helped to overcome the obstacles presented by the surviving organic and traditional forms of life among the laboring people. As to the entirely different task of restoring the common people, whose lives had been uprooted in the Industrial Revolution, and inducting them into the fold of a common national culture, it was left undone. Their investment with the vote at a time when irreparable damage had already been inflicted upon their capacity for sharing in leadership, could not retrieve the position. The ruling classes had committed the error of extending the principle of uncompromising class rule to a type of civilization which demanded the cultural and educational unity of the commonwealth if it should be safe from degenerative influences. (172)
The Chartist Movement was political and thus easier to comprehend than Owenism. Yet it is doubtful whether the emotional intensity, or even the extent of that movement can be realized without some imaginative reference to the times. The years 1789 and 1830 had made revolution a regular institution in Europe; in 1848, the date of the Paris rising was actually forecast in Berlin and London with a precision more usual in regard to the opening of a fair than to a social upheaval, and "follow-up" revolutions broke out promptly in Berlin, Vienna, Budapest, and some towns of Italy. In London also there was high tension, for everybody, including the Chartists themselves, expected violent action to compel Parliament to grant the vote to the people. (Less than 15 per cent of adult males were entitled to vote.) Never in all the history of England was there a comparable concentration of force put in readiness for the defense of law and order than on April 12, 1848; hundreds of thousands of citizens were prepared in the capacity of special constables to turn their arms against the Chartists on that day. The Paris Revolution came too late to carry a popular movement in England to victory. By that time the spirit of revolt roused by the Poor Law Reform Act as well as by the sufferings of the Hungry Forties was waning; the wave of rising, trade was boosting employment, and capitalism began to deliver the goods. The Chartists dispersed peacefully. Their case was not even considered by Parliament until a later date, when their application was defeated by a five-to-one majority in the House of Commons. In vain had millions of signatures been collected. In vain had the Chartists behaved as law-abiding citizens. Their Movement was ridiculed out of existence by the victors. Thus ended the greatest political effort of the people of England to constitute that country a popular democracy. A year or two later Chartism was all but forgotten. (172, 173)
The Induitrial Revolution reached the Continent half a century later. There the working class had not been forced off the land by an enclosure movement; rather, the allurements of higher wages and urban life made the semiservile agricultural laborer desert the manor and migrate to the town, where he consorted with the traditional lower middle class, and had a chance of acquiring an urban tone. Far from feeling debased, he felt elevated by his new environment. Doubtless housing conditions were abominable, alcoholism and prostitution were rampant among the lower strata of town laborers as late as the beginning of the twentieth century. Yet there was no comparison between the moral and cultural catastrophe of the English cottager or copyholder of decent ancestry, who found himself hopelessly sinking in the social and physical mire of the slums of some factory neighborhood and the Slovakian or, for that matter, Pomeranian agricultural laborer changing almost overnight from a stable-dwelling peon into an industrial worker in a modern metropolis. An Irish or Welsh day laborer or Western Highlander might have had a similar experience when slouching through the alleys of early Manchester or Liverpool, but the English yeoman's son or the evicted cottager certainly did not feel his status raised. Yet not only had the recently emancipated peasant lout of the Continent a fair chance of rising into the lower middle classes of craftsmen and traders with their ancient cultural traditions, but even the bourgeoisie, which socially towered above him, was politically in the same boat being almost as removed from the ranks of the actual ruling class as he was himself. Against feudal aristocracy and Roman episcopacy the forces of the rising middle and working classes were closely allied. The intelligentsia, particularly the university students, cemented the union between these two classes in their common attack on absolutism and privilege. In England the middle classes, whether squires and merchants as in the seventeenth century, or farmers and tradesmen as in the nineteenth, were strong enough to vindicate their rights alone, and not even in their near- revolutionary effort in 1832 did they look to the laborers for support. Moreover, the English aristocracy unfailingly assimilated the wealthiest of the newcomers and broadened the top ranks of the social hierarchy, while on the Continent the still semifeudal aristocracy did not intermarry with the sons and daughters of the bourgeoisie, and the absence of the institution of primogeniture hermetically insulated them from the other classes. Every successful step towards equal rights and liberties thus benefited Continental middle and working classes alike. Since 1830, if not since 1789, it was part of the Continental tradition that the working class would help to fight the battles of the bourgeoisie against feudalism, if only - as the saying ran - to be cheated by the middle class of the fruits of victory. But whether the working class won or lost, its experience was enhanced, and its aims raised to a political level. This was what was meant by becoming class conscious. Marxian ideologies crystallized the outlook of the urban worker, who had been taught by circumstances to use his industrial and political strength as a weapon of high policy. While the British workers developed an incomparable experience in the personal and social problems of unionism, including the tactics and strategy of industrial action, and left national politics to their betters, the Central European worker became a political socialist, used to handle problems of statecraft - primarily, it is true, those which concerned his own interests, such as factory laws and social legislation. (173 - 175)
If there was a time-lag of some half a century between the industrialization of Great Britain and that of the Continent, there was a very much greater lag between the establishment of national unity. Italy and Germany arrived only during the second half of the nineteenth century at that stage of unification which England and achieved centuries before, and smaller Eastern Europe states reached even later. In this process of state building the working classes played a vital part, which further enhanced their political experience. In the industrial age such a process could not fail to comprise social policy. Bismarck made a bid for unification of the Second Reich through the introduction of an epochal scheme of social legislation. Italian unity was speeded up by the nationalization of the railways. In the Austro-Hungarian monarchy, that congeries of races and peoples, the Crown itself repeatedly appealed to the laboring classes for support in the work of centralization and imperial unity. In this wider sphere also, through their influence on legislation, the socialist parties and trade unions found many openings for serving the interests of the industrial worker. (175)
Materialistic preconceptions have blurred the outlines of the working-class problem. British writers have found it difficult to comprehend the terrible impression that early capitalistic conditions in Lancashire made on Continental observers. They pointed to the even lower standard of life of many Central European artisans in the textile industries, whose conditions of work were often perhaps just as bad as those of their English comrades. Yet such a comparison obscured the salient point, which was precisely the rise in the social and political status of the laborer on the Continent in contrast to a fall in that status in England. The Continental laborer had not passed through the degrading pauperization of Speenhamland nor was there any parallel in his experience to the scorching fires of the New Poor Law. From the status of a villein he changed - or rather rose - to that of a factory worker, and very soon to that of an enfranchised and unionized worker. Thus he escaped the cultural catastrophe which followed in the wake of the Industrial Revolution in England. Moreover, the Continent was industrialized at a time when adjustment to the new productive techniques had already become possible, thanks, almost exclusively, to the imitation of English methods of social protection. (Knowles, L., The Industrial and Commercial Revolution in Great Britain During the 19th Century, 1926) (175)
The Continental worker needed protection not so much against the impact of the Industrial Revolution - in the social sense there never was such a thing on the Continent - as against the normal action of factory and labor market conditions. He achieved it mainly by the help of legislation, while his British comrades relied more on voluntarry association - trade unions - and their power to monopolize labor. Social insurance came, relatively, very much sooner on the Continent than in England. The difference was readily explained by the Continental's political bent, and by the comparatively early extension of the vote to the working masses on the Continent. While economically the difference between compulsory and voluntary methods of protection legislation versus unionism can be easily overrated, politically its consequences were great. On the Continent trade unions were a creation of the political party of the working class; in England the political party was a creation of the trade unions. While on the Continent unionism became more or less socialist, in England even political socialism remained essentially trade unionist. Universal suffrage, therefore, which in England tended to increase national unity, had sometimes the opposite effect on the Continent. There, rather than in England, did Pitt's and Peel's, Tocqueville's and Macaulay's misgivings come true that popular government would involve a danger to the economic system. (176)
Economically, English and Continental methods of social protection led to almost identical results. They achieved what had been intended: the disruption of the market for that factor of production known as labor power. Such a market could serve its purpose only if wages fell, parallel with prices. In human terms such a postulate implied for the worker extreme instability of earnings, utter absence of professional standards, abject readiness to be shoved and pushed about indiscriminately, complete dependence on the whims of the market. Mises justly argued that if workers "did not act as trade unionists, but reduced their demands and changed their locations and occupations according to the requirements of the labor market, they could eventually find work." This sums up the position under a system based on the postulate of the commodity character of labor. It is not for the commodity to decide where it should be offered for sale, to what purpose it should be used, at what price it should be allowed to change hands, and in what manner it should be consumed or destroyed. "It has occurred to no one," this consistent liberal wrote, "that lack of wages would be a better term than lack of employment, for what the unemployed person misses is not work but the remuneration of work." Mises was right, though he should not have claimed originality; 150 years prior to him Bishop Whately said: "When a man begs for work he asks not for work but for wages." Yet, it is true that technically speaking "unemployment in the capitalist countries is due to the fact that the policy both of the government and of the trade unions aims at maintaining a level of wages which is out of harmony with the existing productivity of labor." For how could there be unemployment, Mises asked, but for the fact that the workers are "not willing to work at the wages they could get in the labor market for the particular work they were able and willing to perform?" This makes clear what the employers' demand for mobility of labor and flexibility of wages really means: precisely that which we circumscribed above as a market in which human labor is a commodity. (176, 177)
The natural aim of all social protection was to destroy such an institution and make its existence impossible. Actually, the labor market was allowed to retain its main function only on condition that wages and conditions of work, standards and regulations should be such as would safeguard the human character of the alleged commodity, labor. To argue that social legislation, factory laws, unemployment insurance, and, above all, trade unions have not interfered with the mobility of labor and the flexibility of wages, as is sometimes done, is to imply that those institutions halve entirely failed in their purpose, which was exactly that of interfering with the laws of supply and demand in respect to human labor, and removing it from the orbit of the market. (177)