Against the Market: Comments on David McNally's Marxist Critique of Political Economy (6)

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Ron Allen

Nov 20, 2003, 8:48:17 PM11/20/03
In chapter one, Origins of Capitalism and the
Market, under the heading, Creating the Market in
Labour: from Feudalism to Capitalism, David
McNally, in his book, Against the Market:
Political Economy, Market Socialism and the
Marxist Critique, writes:

“Since the early 1950s, orthodox liberal
historiography has maintained that, rather than
being the great loss for the poor depicted by
populist and socialist historians, enclosure
actually contributed to major improvements in the
conditions of the bulk of the rural population.
Instead of dispossessing small tenants and
depopulating villages, enclosure is said to have
stimulated demand for agricultural labour, the
effects of which can be measured in population
increases in enclosed villages. (J.D. Chambers,
‘Enclosure and the Labour Supply’, Economic
History Review, 2nd series, 5, 1953, pp. 319-43.)
This line of argument was seen as reinforcing the
earlier view of Clapham, according to whom growth
of an agrarian proletariat in the period 1688-1832
was slow and relatively insignificant. Modern
liberal historiography has thus sought to portray
the emergence of agrarian capitalism, and the
associated phenomena of consolidation and
enclosure, as gradual, peaceful processes, which
were beneficial to all major groups in English
society. (Chambers and Mingay provide the classic
account of this position.) These arguments
deserve critical examination in any discussion of

“Enclosure involved ‘the emancipation from the
rules of communal cultivation of part or all of
the lands used for purposes of tillage or
pasture’. (Tawney, p. 217. For background on
common fields, see Joan Thirsk, ‘The Common
Fields’ and ‘Origin of the Common Fields’, in her
Rural Economy of England, London: Hambledon Press,
1984.) It thus represented a social
transformation of the organization of agricultural
production involving the destruction of communal
practices. This is why the ‘spatial rearrangement’
involved when peasants traded and reorganized
small plots should not be included in the term.
And for this reason it is to the enclosure wave of
the Tudor period that we look for the origins of
the social revolution which reshaped English

“A wave of enclosure swept parts of England during
the second half of the fifteenth century. By 1500
almost half the country was enclosed, with the
remainder consisting of open fields. After the
1520s, the rate of enclosure slowed, only to pick
up again in the seventeenth century. (J.R. Wordie,
‘The Chronology of English Enclosure, 1500-1914’,
Economic History Review, 2nd series, 1983, pp.
492-4.) Tudor enclosures were concentrated in the
Midlands, and often involved massive dislocation
and depopulation as a result of the shift from
arable farming to sheep and cattle grazing.
Indeed, as much as 80 per cent of all enclosure
during the period 1485-1607 took place in the
Midlands, resulting in perhaps 20 per cent of the
land in that region being enclosed. (Joan Thirsk,
Tudor Enclosures, London: Routledge and Kegan
Paul, 1959, pp. 20-21; Martin, pp. 134-8. See also
John T. Swain, Industry Before the Industrial
Revolution: North-East Lancashire c. 1500-1640,
Manchester: Manchester University Press, 1986.)

“Contrary to interpretations that emphasize
parliamentary enclosure after 1760, it is now
clear that the greatest wave took place during the
seventeenth century and the first half of the
eighteenth. Nearly 30 per cent of England was
enclosed in the years between 1600 and 1760.
Indeed, on the eve of the parliamentary enclosure
movement, England was already 75 per cent
enclosed. (Wordie, pp. 486, 495.) This is not to
minimize the great burst of activity between 1760
and 1830 in which some 6 million acres of land
were enclosed by Act of Parliament; it is to
insist, however, that the resort to Parliament
characterized only the last phase in a centuries-
long process when enclosure by other means had run
its course.

“Parliamentary enclosure has rightly been
described as a ‘massive violence exercised by the
upper classes against the lower’. (Barrington
Moore Jr., Social Origins of Dictatorship and
Democracy, Boston: Beacon Press, 1966, p. 29.) It
was a concentrated use of state power to
expropriate land and dispossess small producers;
and it was a crucial phase in the capitalist
transformation of English society. But those
historians, including some early socialist
writers, who laid almost exclusive emphasis on
parliamentary enclosure often underestimated the
degree to which it was merely the violent
completion of a process which had started two
centuries earlier. The latter was Marx's view.
‘The prelude to revolution that laid the
foundation of the capitalist mode of production’,
he wrote, ‘was played out in the last third of the
fifteenth century and the first few decades of the
sixteenth. A mass of “free” and unattached
proletarians was hurled onto the labour-market by
dissolution of the bands of feudal retainers.’
And as crucial moments in this continuing process,
Marx identified ‘the spoilation [spoliation?] of
the Church’s property, the fraudulent alienation
of the state domains, the theft of the common
lands, the usurpation of feudal and clan property
and its transformation into modern private
property’. Parliamentary enclosure was thus for
Marx one of many acts of ‘ruthless terrorism’ by
the ruling class which ‘conquered the field for
capitalist agriculture, incorporated the soil into
capital, and created for the urban industries the
necessary supply of free and rightless
proletarians’. (Marx, Capital, 1, pp. 878, 895.)

“The Marxist case should not rest, therefore, on
the impact of parliamentary enclosure alone.
Nevertheless, even in this area three fatal flaws
can be identified in the liberal account. The
first concerns the effect of parliamentary
enclosure on the labour market. One important
recent study has shown that, during the main
period of parliamentary enclosure, population rose
in both enclosed and unenclosed villages, and that
the rate of growth was no faster in the former.
Enclosure cannot therefore be said to have had a
uniquely stimulative effect on population growth.
The same study also demonstrates that there was a
‘positive association’ between enclosure and
migration out of villages. Finally, a definite
correlation has been established between the
extent of enclosure and reliance on poor rates.
(N.F.R. Crafts, ‘Enclosure and Labor Supply
Revisited’, Explorations in Economic History 15,
1978, pp. 176-7,180. K.D.M. Snell, Annals of the
Labouring Poor: Social Change and Agrarian England
1660-1990, Cambridge: Cambridge University Press,
1985, pp. 197-206. See also Hoskins, pp. 269-73.)
The heart of the modern liberal account has thus
been refuted; indeed, the older socialist picture
now seems remarkably accurate -- parliamentary
enclosure resulted in outmigration and a higher
level of pauperization.

“The second flaw in the liberal position centres
on the claim that there was no dramatic trend
towards the elimination of small farmers during
the period of parliamentary enclosure. Mingay has
written, for example, that ‘modern understanding
of the slow pace of the “agricultural revolution”
and of the effects of parliamentary enclosures
does not, in general, support the old view that a
major decline of small farmers occurred between
1760 and 1830’. (Mingay, Enclosure, p. 31.) Once
again, the focus should not be placed exclusively
on enclosure by Act of Parliament. After all,
Mingay recognizes that the number of smallholders
did decline significantly during the hundred years
prior to the great wave of parliamentary
enclosures (1650-1750). (Ibid., pp. 27-32.) Thus,
debate merely over the effects of parliamentary
enclosure unnec-essarily restricts the frame of
reference. Yet, Mingay's treatment of even this
last phase of enclosure tends to substitute
static, numerical considerations for a full social
analysis by minimizing the qualitative changes
which parliamentary enclosure wrought on the small
tenant. This can be seen by scrutinizing the way
in which the orthodox liberal account uses the
notion of the ‘small farmer’ during this period.

“As Mingay has noted in another context, ‘the very
small farmers -- occupiers of perhaps 25 acres and
less -- could hardly survive without some
additional form of income; the land itself, unless
used for specialized production or amply
supplemented by common, would hardly yield
sufficient to pay the rent and keep the family.’
(Mingay, ‘Size of Farms’, pp. 472-3.) He goes on
to point out that only in rare circumstances could
such small occupiers engage in specialized farming
for the market. Yet the other means of support --
farming ‘amply supplemented by common’ -- is
precisely that which was being destroyed by
parliamentary enclosure, to the tune of six
million acres via enclosure Act (about one-quarter
of the cultivated area of England) and another 8
million acres by ‘agreement’. (R.A. Butlin, ‘The
Enclosure of Open Fields and Extinction of Common
Rights in England, circa 1600-1750: a review’ in,
Change in the Countryside: Essays on Rural England
1500-1900, eds H.S.A. Fox and R.A. Butlin, London:
Institute of British Geographers, 1779, p. 75.)The
impact of enclosure on small tenants, whose lands
were inadequate to procure subsistence, can only
have been dramatic, forcing them into growing
reliance on wage-labour -- as proponents of
enclosure said it should.

"Before turning to look at that impact, let us
further pursue the situation of the small tenant.
For, while it is true that many clung to the land,
it is also true that the rural poor came to hold
ever smaller tracts. J.R. Wordie has documented
this trend on the Levenson-Gower estates during
the period 1714-1832. He shows that over these
years the number of farms in the 20-200 acre range
fell sharply. At the same time, the acreage of
large farms grew. Most important, the great
majority of those holding 20 acres or less had
fewer than 5 acres; indeed, a majority held less
than a single acre. Yet, according to the analysis
put forth by Mingay, these were all ‘small
farmers’. In reality, the majority were
proletarians who held on to small plots as a
supplement to their wages. Behind the alleged
‘survival of the small farmer’, one thus discovers
the growing proletarianization of the rural poor.
(J.R. Wordie, ‘Social Change on the Levenson-Gower
Estates, 1714-1832’, Economic History Review, 2nd
series, 27, 1974, pp. 596-601. See also Clay, 1,
p. 97; and Peter Kriedte, Peasants, Landlords and
Merchant Capitalists: Europe and the World
Economy, 1500-1800, Leamington Spa: Berg, 1983, p.

“This brings us to the third flaw in the liberal
account: its systematic underestimation of the
size of the agrarian proletariat. By insisting
that every owner of land be treated as a
non-labourer -- indeed, as an ‘entrepreneur’ --
liberal economic historians have obscured the
marked growth of a rural proletariat during the
rise of agrarian capitalism. This can best be seen
in the way Clapham continually underestimated the
size of the agrarian proletariat in both 1688 and
1831, an underestimation which has entered into
the modern liberal orthodoxy. (J.H. Clapham, ‘The
Growth of an Agrarian Proletariat 1688-1832: A
Statistical Note’, Cambridge Historical Journal 1,
1923, pp. 92-5. These figures are reproduced by
Chambers and Mingay, p. 103, and, ironically, by
Maurice Dobb, Studies in the Development of
Capitalism, rev. edn, New York: International,
1963, p. 230.) Clapham took as his starting point
Gregory King's figures on the social structure of
England in 1688. He then lumped freeholders of the
‘better sort’ together with ‘lesser’ freeholders
and tenant farmers to construct an ‘entrepreneur
class’. Then, on the basis of estimates of the
number of rural labourers, he concluded that the
ratio of wage-labourers to employers of labour
(‘entrepreneurs’) in rural England was 1.74:1.

"It is not difficult to detect a central error in
this argument. Once we realize that most ‘lesser
freehold’ families would not have employed any
wage-labourers, and that a large proportion of the
members of many of these families would have been
engaged in wage-labour themselves, it is clear
that the actual ratio would be much higher. If we
simply eliminate the families of ‘lesser
freeholders’ from the equation, we then get a
ratio for rural labourers per rural employer of
about 3:1, rather than Clapham's 1.74:1. In
reality, the actual ratio would almost certainly
have been higher, given that many ‘lesser
freeholder’ families would have had a member or
members engaged in wage labour on the land or in
local industry.

“We get a similar result with the figures Clapham
derived for the early nineteenth century based on
the census of 1831. According to the census, there
were some 686,000 ‘labouring families’ in
agriculture. In addition, there were 144,600
‘entrepreneur families’ employ-ing labour, and
130,500 ‘entrepreneur families’ employing no
labour. According to Clapham, this gives us a
ratio of agrarian capitalists to agrarian
proletarians of 2.5:1. But eliminate the 130,500
‘entre-preneur families' employing no labour from
the equation -- since these should hardly qualify
as agrarian capitalists -- and we get a ratio of
4.7:1, nearly twice Clapham's ratio. (John
Saville, ‘Primitive Accumulation and Early
Industrialization in Britain’, Socialist Register
1969, pp. 256-7.)

“King's figures, properly scrutinized, thus
indicate that the degree of proletarianization in
English agriculture was much higher than the
orthodox liberal account suggests, about twice as
high at both points in time. Indeed, the degree of
proletarianization was already greater by 1688
than what Clapham claimed for Britain 150 years
later. Moreover, the actual ratio would almost
certainly have been higher, given that a growing
proportion of small occupiers would have been
entering the labour market over this period.
Finally, use of such aggregate figures tends to
ignore the growing preponderance of large farms as
employers of labour. Using sample figures from the
1851 Census, for example, John Saville has shown
that farms which employed ten labourers or more
accounted for 42.3 per cent of all employment of
rural wage-labour. (Ibid., p. 258.)

“Table 1.2 Proportion of English Peasants Employed
as Wage-labourers, 1096-1688

Date % of peasants employed as
wage labourers

1086 6
1279 10
1381 2
1540-59 11
1550-67 12
1600-10 35
1620-40 40
1688 56

Source: Lachmann, From Manor to Market, p. 17.

“Despite the efforts of liberal historians to
minimize the pace and the extent of the social
revolution in the English countryside, it is clear
that a fundamental transformation was at work.
‘The domestic economy of the whole village was
radically altered’, wrote Hoskins about the
Midlands peasant. (Hoskins, p. 269.) And at the
heart of that radical alteration was the
transformation of the more or less self-sufficient
peasant into a wage-labourer, the dimensions of
which are indicated in Table 1.2. (Lachmann, p.

“These figures are consistent with numerous
studies which suggest that labourers made up
between one quarter and one third of the
population of Tudor and early Stuart England, and
constituted about one half the population by the
time of the Civil War . (Alan Everitt, ‘Farm
Labourers’ in, The Agrarian History of England and
Wales. Volume 4:1500-1650, ed. H.P.R. Finberg,
Cambridge: Cambridge University Press, 1967, p.
398. See also David Hey, an English Rural
Community: Myddle under the Tudors and the
Stuarts, Bristol:Leicester University Press, 1974,
p. 178. See also Cornwall, pp. 200-10. I will
explore below the slightly ambiguous status of
‘servants’ in husbandry and the proletarianization
they experienced.)”

Ron Allen:
The history of early capitalism is the history of
government being used as an instrument of plunder,
just as capitalist governments are used today as
an instrument of plunder. Enclosure was used in
capitalism's beginnings; eminent domain is being
used today. Big corporations are using eminent
domain as a means of getting government to take
away the modest properties of ordinary people.

Those who are ignorant of history are not only
doomed to repeat the mistakes of the past, but
also to preserve the mistakes of the past.
Enclosures were a moral outrage; eminent domain is
being used today as a method of taking property in
land from everyday small home-owners, and small


David Horowitz says that 100,000,000 people were
killed by liberals, progressives, communists, etc.
during the second half of the 20th century.
During that period of time, David Horowitz was one
of those progressive communists."
-- Ron Allen

Ron Allen

Nov 22, 2003, 3:59:11 PM11/22/03
Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique.
Author: David McNally.
Chapter 1: Origins of Capitalism and the Market.
Section: Creating the Market in Labour: from
Feudalism to Capitalism.
Pages 17-24.

“The emergence of an agrarian proletariat was
crucial to the creation of large capitalist farms
and developing rural industries. This was so for
two reasons. First, small tenants had to be
dispossessed of land in order to bring about
consolidation of large farms. Second, these
dispossessed producers were then subjected to the
pressure to accept wage-labour on large farms
and/or in local industries as one means of
procuring an adequate subsistence. Contrary to
much modern historiography, it was here that
parliamentary enclosure was often decisive, as
contemporaries were generally aware. To be sure,
proletarianization was not the creature of
enclosure. Indeed, the transformation of rural
poor into wage-labourers proceeded even in regions
largely unaffected by parliamentary enclosure, as
a result of heavier exactions by lords, peasant
indebtedness and the increased pressure of
specialization for the market. In this sense, the
enclosures of 1760-1830, which concentrated on
common lands, were simply ‘a special case of a
general situation: the growing inability of tiny
marginal cultivators to hold out in a system of
industrialised manufactures and capitalist
agriculture’. (Eric Hobsbawm and George Rudé,
Captain Swing: A Social History of the Great
English Agricultural Rising of 1830, New York: W.
W. Norton, 1975, p. 36. See also J.M. Neeson, ‘The
Opponents of Enclosure in Eighteenth-Century
Northamptonshire, Past and Present 105, 1984, p.
138.) But this ‘special case’ was often an
inextricable part of the general process; and
frequently it sealed the fate of the small tenants
or cottagers by making them irreversibly reliant
on wage-labour for their subsistence.

“Many rural wage-labourers in Tudor and Stuart
England continued to maintain a garden or small
farm and exercise common rights. In many
villages, a clear majority of the working
population combined farming with wage-labour; a
large proportion of the rural poor had more than
one industrial by-employment. Joan Thirsk has
estimated, for example, that as many as one half
of all small farmers in seventeenth-century
England engaged in one or more industrial
employment. (Joan Thirsk, ‘Seventeenth Century
Agriculture’, in her Rural Economy, p. 211.)
Probably one quarter of the farming population of
England spent some of their working hours in the
woollen industries during this period.

“And it was not just the rural poor who combined
wage-labour with farming. This was characteristic
also of relatively skilled labourers, such as
carpenters, masons, coopers, wheelwrights and
ploughwrights. (Donald Woodward, ‘Wage Rates and
Living Standards in Pre-Industrial England’, Past
and Present 91, 1981, pp. 39, 41; Everitt, pp.
425, 427.) What we are dealing with throughout
this period, then, is a sort of semi-proletariat,
a group that lacked enough land to maintain
economic self-sufficiency, but that could at the
same time use its own production (either for
consumption or for the market) as a substantial
supplement to wages. As Marx put it, the
agricultural proletariat of this time was
composed on the one hand of peasants, and on the
other hand, of ‘an independent, special class of
wage--labourer’. The latter, however, ‘were also
in practice peasants, farming independently for
themselves ... Moreover, like the other peasants,
they enjoyed the right to exploit the common land,
which gave pasture to their cattle, and furnished
them with timber, fire-wood, turf, etc.’ (Marx,
Capital, 1, p. 871.)

“So long as the degree of capitalist development
was such that agrarian and rural industrial
employers did not need a substantially larger
class of full-time wage-labourers, this
arrangement was satisfactory for economic
purposes. But as agrarian and industrial
capitalism developed in the eighteenth century,
the elements of economic self-sufficiency
which wage-labourers retained became a hindrance,
pulling them periodically out of the labour market
and providing them with elements of both material
and psychological independence. Thus, as the
economic demand for a growing full-time
proletariat increased, so did the pressure to
expropriate completely the land or access to land
of the semi-proletariat. (On the timing of this
development, see Kriedte, p. 142. As will become
clear below, while believing that Kriedte's
observation here is useful, I reject his general
theoretical framework.) This is what made the
battle over common lands so important, as these
generally constituted the most important insurance
against outright proletarianization and the
poverty that came with it.

“It should come as no surprise that the standard
of living was generally much higher in those areas
where labourers managed to combine industrial work
with farming; in regions where agriculture was
separated from rural industries, on the other
hand, labourers were usually poor. Moreover, it is
clear that ‘important though the labourer's
individual smallholding was, the vital factor in
his fortunes was his rights of common.’ (Everitt,
pp. 429, 403. See also Hey, p. 165.) Access to
commons meant that labourers could graze animals,
gather wood, stones and gravel, dig coal, hunt and
fish. These rights often made the difference
between subsistence and abject poverty. Arthur
Young estimated, for example, that the value of a
cow in terms of milk and butter equaled the wages
of a fully employed labourer. ( As cited by Snell,
p. 177.) Yet cows usually could not be kept once
grazing rights on the commons were lost. For this
reason one historian accurately notes that ‘the
labourer's rights of common formed part of a
carefully integrated economy, whose balance could
rarely be altered without serious consequences for
the commoners themselves’ Moreover, ‘poor though
they seem, those rights alone added a few simple
graces to an otherwise bare existence, and bred in
the labourer a sense of hope and independence’.
(Everitt, pp. 405, 406.) It was precisely these
elements of material and spiritual independence
that many of the most outspoken advocates of
enclosure sought to destroy.

“Eighteenth-century proponents of enclosure were
remarkably forthright in this respect. Common
rights and access to common lands, they argued,
allowed a degree of social and economic
independence, and thereby produced a lazy,
dissolute mass of rural poor who eschewed honest
labour and church attendance, and whose idleness
resulted in drunkenness, riotous behaviour and
moral laxity. Denying such people common lands and
common rights would force them to conform to the
harsh discipline imposed by the market in labour.
‘The use of common lands by labourers operates
upon the mind as a sort of independence’, wrote Mr
Bishton in the Report on Shropshire, prepared for
the Board of Agriculture in 1794. Enclosure of the
commons would put an end to this state of mind.
Once deprived of commons, he argued, ‘the
labourers will work every day in the year, their
children will be put out to labour early’ and
‘that subordination of the lower ranks which in
the present times is so much wanted, would be
thereby considerably secured’. (As cited by J.L.
Hammond and Barbara Hammond, The Village Labourer,
London: Longman, 1978, p. 9.)

“The argument for enclosure as a means to
destroying ‘independence’ was echoed throughout
the next half-century. As the Poor Law
Commissioners of 1834 stated in their Report, ‘we
can do little or nothing to prevent pauperism; the
farmers will have it: they prefer that the
labourers should be slaves; they object to their
having gardens saying, “The more they work for
themselves, the less they work for us.” ’ (As
cited in ibid., p. 196.) Similar statements were
made to the 1844 Select Committee on Enclosures.
‘They will not seek for labour until they are
compelled to do it’, a witness from Newbury in
Berkshire told the Committee. Describing one
parish, he claimed that only as a result of a
recent enclosure did the poor now constitute ‘a
respectable class looking up to the wealthier
classes for labour’. Indeed, ‘respectability’ was
defined regularly in terms of objective dependence
on one’s betters. Another witness told the
Committee: ‘I think there is no comparison
whatever between the moral state of persons who
gain their livelihood by day-labour and those who
occupy a cottage and garden, and perhaps a small
encroachment in the neighbourhood of a common, and
who live as cottiers, not as labourers.’ (As cited
by Snell, pp. 171, 172.)

“The moral inferiority of the former was linked
invariably to the slower pace of independent
farming and the alternative to wage-labour this
provided. ‘In sauntering after his cattle’, wrote
one agriculturalist, ‘he acquires a habit of
indolence. Quarter, half and occasionally whole
days are imperceptibly lost. Day labour becomes
disgusting; the aversion increases by indulgence;
and at length the sale of a half-fed calf, or hog,
furnishes the means of adding intem-perance to
idleness.’(Cited in ibid., p. 172.) Advocates of
enclosure thus made much more than a narrowly
economic case for enclosure of the commons; their
argument was fully social, emphasizing that
elimination of the means to economic independence
was essential to creating a disciplined labour
force. The campaign for enclosure of common lands
was presented as a great moral crusade designed to
eliminate idleness, intemperance and riotous
behaviour, and to render the poor sober and

“Indeed, by the time of the 1834 Poor Law
Commission, the discourse of ‘independence’ had
been radically redefined. Now that the bulk of
enclosure had taken place, it was poor relief that
represented the labourer's main buffer from the
market. Rather than attacking the ‘independence’
made possible by rights to common, the Poor Law
Report attacked ‘dependence’ on poor relief, and
advocated a new form of ‘independence’ - utter
reliance of the labourer upon the wages he or she
could procure through the market. (I am indebted
to Colin Barker for pointing out the importance of
this shift in the moral rhetoric of poverty in
ruling circles. I would also like to register my
debt to his insightful, but regrettably
unpublished manuscript, ‘State-building and
Poverty: the Poor Law Report of 1834’.)

“Liberal historians have often recognized that the
emergence of a modern working class is vital to
capitalist development. ‘A malleable and trained
workforce was central to an industrializing
country’, one has written. (E. L. Jones,
‘Agricultural Origins of Industry’, Past and
Present 40, 1968, p. 71.) But they have shown
little inclination to investigate the actual
processes of proletarianization. Contemporaries
were not so reluctant. Advocates of enclosure, as
we have seen, regularly stressed that a
disciplined class of wage-labourers could not be
created without enclosure of common lands. As one
put it, enclosure was necessary in order to break
through ‘acquired habits of idleness and
dissipation and a dislike to honest labour’. (As
cited by Hammond and Hammond, p. 50.) Thus, while
far from singularly responsible for reducing the
poor to dependence upon wage-labour, enclosure can
reasonably be said to have ‘hurried the process
whereby rural labour became wage dependent’. (E.L.
Jones, ‘Editor's Introduction’ in Agriculture and
Economic Growth in England 1650-1815, ed. E.L.
Jones, London: Methuen, 1967, p. 23.)

“By eliminating their most important source of
self-provisioning, enclosure removed a crucial
buffer between the labourers and the labour
market. And there can be no doubt that this
contributed to the impoverishment of many. By the
late eighteenth century, between one quarter and
one half of village populations relied upon poor
relief. It is especially significant that we find
a strong correlation between the extent of
enclosure and per capita poor relief. (Snell, pp.
28, 28, n14, 195-206.) As Chambers and Mingay put
it in a remarkably frank comment on the
contemporary debate over rural poverty: ‘whatever
the merits of the controversy, both sides
recognized that poverty was increasing in the
countryside. Even the protagonists of enclosure
were obliged to admit this unpalatable fact.’
(Chambers and Mingay, p. 101.)

“Here, then, we encounter an important insight
into the liberal concept of economic rationality.
What is ‘rational’ is not what provides the
greatest degree of comfort and security to the
labourers – as we have seen, access to commons
greatly augmented both. ‘Rational’ was that which
enabled the employer to minimize costs through a
steady supply of labourers desperate for wage-
work. Yet, ‘cost-minimization’, as the economics
textbooks call it, involved efforts to subject
workers more thoroughly to the market, and this as
a rule impoverished a good many of them. For this
reason, marketization and proletarianization had
to be presented as parts of a great moral crusade
which would subject labourers to a ‘rational’
order, which they instinctively resisted.

“In terms of agrarian social history, enclosure
was at the heart of the process of
proletarianization. But alongside enclosure went
two other processes which centrally contributed to
throwing labourers on the mercy of the labour
market: the decline of ‘service’ and of various
allowances and perquisites which provided a
supplement to the labourers’ wage; and the growing
attack on the traditional poor law.

“Service in husbandry remains one of the least
studied phenomena in English agrarian history. Yet
it is hard to underestimate its significance.
Between 1574 and 1821 about 6o per cent of youths
between 15 and 24 were servants. Almost one half
of all farm households hired servants. Moreover,
servants constituted between one third and one
half of the hired labour force in English
agriculture during this period. (Ann Kussmaul,
Servants in Husbandry in Early Modern England,
Cambridge: Cambridge University Press, 1981, pp.
3, 4, 11.) Service in husbandry was traditionally
an annual affair. Servants were hired for a year,
lived in their masters' homes, and were paid
largely in the form of room and board. For the
servant, one year’s residence in a parish was the
legal basis for a ‘settlement’ and a claim for
support under the poor law in the event of
economic distress. For farmers, service provided a
guaranteed labour force at an established cost,
and was thus an insurance against labour shortage
or rising costs for day labourers. (Ibid., pp.
100-101; Hobsbawm and Rudé, pp. 44-6.)

“The extinction of farm service was concentrated
during the fifty years from 1780 to 1830. A number
of phenomena were at work here. The growth of
large farms specializing in one or a handful of
agricultural products meant that demand for labour
was more sporadic; hiring of servants on an annual
contract made less and less economic sense,
especially in a period of labour surplus.
(Kussmaul, pp. 81-2, 116, 128-9; Snell, p. 74.)
Similarly, during a phase of rising food prices,
farmers preferred to pay wages than to have to
absorb subsistence costs for servants. In
addition, parishes which were confronted with
rising poor rates, as a result of relative
overpopulation, wished to avoid further increases
in rates by reducing or eliminating annual service
contracts which gave their holders legal

“This does not mean, however, that annual service
was simply replaced by day labour. On the
contrary, there was a tendency for the terms of
service to become shorter; indeed, some farmers
offered 51-week contracts in order to avoid parish
settlements. Contracts were often substantially
shorter. In practice, weekly contracts tended to
become daily since farmers paid nothing for days
when labour could not be performed. The decline of
service thus took the form, not of an overnight
elimination, but of a process in which service
shaded ‘imperceptibly into forms of weekly or day
labour’. (Snell, p. 81-2. See also Hobsbawm and
Rudé, p. 44.)

“By 1830 farm service was a thing of the past in
the south of England. Alongside its decline went
the demise of payments in kind, a long-standing
set of practices according to which labourers
received a share of farm produce in the form of
milk or grain; were allowed to graze livestock;
received clothing or gloves; or could acquire a
rent-free cottage and land. (Everitt, pp. 437-8.)
For the farm servant, the decline of payments in
kind, like the decline of service, ‘reduced him,
except at harvest when every hand was needed, to
nothing but a precarious cash-wage, which might or
might not cover his modest subsistence costs’.
(Hobsbawm and Rudé, p. 44.) Moreover, as we have
already indicated, the decline of service was
linked to attacks on the old poor law since annual
service was often the means by which young people
in early modern England established a legal parish

“The Elizabethan Poor Law, based on laws from 1597
and 1601, was in reality a patchwork of local
arrangements by which the village poor were to be
subsidized by their parish in times of distress.
There was enormous variation in the forms of
support provided, given the lack of central
administration which characterized a system
controlled by local gentry. According to the Act
of Settlement (1662), however, the poor were the
responsibility of their official parish of
settlement. For the large farmer, the poor law
system had important advantages: first, it
guaranteed a local supply of labour by tying the
poor to a specific locale; second, the whole of
the property-owning population paid poor rates,
effectively subsidizing the labour costs of the
largest employers of farm labour. (Anthony
Brundage, The Making of the New Poor Law: The
politics of inquiry, enactment and implementation,
1832-39, London: Hutchinson, 1978, ch. 1; J.R.
Poynter, Society and Pauperism: English Ideas on
Poor Relief, 1795-1834, London: Routledge and
Kegan Paul, 1969, ch. 1.) As well as a buttress
Against hunger and social strife, then, the poor
law was an effective method of subsidizing wages
and guaranteeing a workforce to capitalist

“In The Wealth of Nations, Adam Smith railed
against the restrictions on personal mobility
created by the Act of Settlement. ‘There is scarce
a poor man in England of forty years of age’, he
argued, `who has not in some part of his life felt
himself most cruelly oppressed by this ill-
contrived law of settlements.’ (Adam Smith, The
Wealth of Nations, 2 vols, eds R.H. Campbell and
A.S. Skinner, Oxford: Oxford University Press,
1976, 1, p. 157.) But, whatever truth there was to
this, the poor themselves saw much else in the
system of parish relief. For, restrictive though
it may have been, the poor law was also a ‘right’
for the poor - a guarantee of subsistence. And an
important guarantee it was. Estimates suggest that
in the late eighteenth and early-nineteenth
centuries between one quarter and one half of
village populations depended on parish relief. It
has been further suggested that in 1830 the
average English farm labourer relied on poor
relief for at least 15 per cent of his income, and
in some regions the percentage would have been
much higher. From the 1790s, expenditure on relief
rose steadily, more than doubling to 4.2 million
pounds in the ten years up to 1803, surpassing
five million pounds in 1815, and soaring to nearly
eight million pounds by 1818. (R.A. Soloway,
Prelates and People: Ecclesiastical Social Thought
in England 1783-1852, London, 1969, pp. 81, 126.)
Moreover, much more than unemployment relief and
pensions had been included in traditional relief
practices. Keith Snell notes that: ‘Besides
unemployment relief and pensions, parish payments
were made for shoes, pattens or boots, clothes of
all sorts, furniture (especially bedding), rents,
fuel (coals), childbed linen and other lying-in
expenses (such as payments to the midwife), flour,
meat, marriage costs, burial shrouds, laying-out
expenses, gravedigging and other burial costs,
pensions and cleaning costs for elderly paupers,
payments to neighbours for nursing, smallpox
inoculation, or even spectacles.’ (Snell, p. 105.)
Thus, however disquieting the restraints imposed
by the laws of settlement, the poor had a vested
interest in their maintenance. Indeed,
certificates acknowledging legal settlement were
treated as a form of property, and were passed
from father to son. The ‘moral economy’ of the
poor included, then, a sense of various rights
to subsistence comprising common rights, the
notion of a just price for grain and bread, and
the right of settlement and a claim on the parish.
(The classic discussion of ‘moral economy’ is E.P.
Thompson, ‘The Moral Economy of the English Crowd
in the Eighteenth Century’, Past and Present 50,
1971. Snell, pp. 72, 99, extends Thompson's
concept in several important respects.)

“From the 1780s onwards, the traditional poor law
came under the same sort of attack as had common
lands. Increasing numbers of writers denounced
parish relief as yet another method by which the
poor were relieved of the necessity of honest
labour and by which wage rates were artificially
elevated, since no poor person would be expected
to work for less than they could draw from the
parish. A series of writers – Thomas Alcock,
Joseph Townsend, Arthur Young, Edmund Burke,
Thomas Robert Malthus – launched sustained attacks
on these customary rights in the name of markets,
morals and political economy. The ensuing debate
constitutes one of the main themes of the present
study. Before turning to that debate over property
and political economy, however, we must complete
our survey of the rise of capitalism and the
formation of the working class.”


Ron Allen:
The historical appearance of a modern working
class – the proletariat – was necessary and
essential to the historical development of modern
capitalism. The historical process of
proletarianization was necessary and fundamental
to the historical process of capitalization. The
small landowners were dispossessed. Land was
consolidated and concentrated, aggregated and
accumulated -- amassed by a fortunate and
favored few. The dispossessed producers were
subjected to the pressures of having to accept
wage-labor as a means of procuring some adequate
measure of subsistence. The dispossessed
proletariat have been made irreversibly reliant on
wage-labor for their minimal subsistence.
Relatively independent small producers have been
turned into increasingly dependent producers --
eventually the class of labor becomes utterly
reliant on wages procured through the market.
Proletarianization and poverty came with the
expropriation of lands, with the enclosure of
lands, with the privatization of what had been
public lands -- what had been common property.

The dispossessed proletariat lacked enough land to
maintain for themselves material economic self-
sufficiency, and genuine personal economic
security. Self-sufficiency provides people with
material and psychological independence, with real
and perceived independence. Enclosure procedures
destroyed the material and mental independence of
those who were dispossessed – shattered their
sense of hope and of spiritual autonomy. In other
words, enclosures secured the subordination of the
lower ranks, because enclosures devastated the
relative independence of those in the lower ranks.
There would no longer be a right of access to the
commons, for the grazing of animals, for the
gathering of wood, or for hunting and fishing.
Denying people of common lands, and of common
rights, forced them to conform to the severe,
brutal and austere discipline (impersonal
limitations and unresponsive regulations) which
the market in labor imposes on producers. The
market is impersonal and unresponsive to the needs
of producers. The desperation and hopelessness
producers know and feel subjects them to the
sudden whims of the market. And the early
advocates of enclosure believed the discipline
commanded by the market would also impose a moral
discipline on the class of producers. The
producers were seen by the advocates of enclosure
as a class of idle and lazy sluggards! Day labor
was believed to improve the moral state of
producers, by eradicating the habit of indolence!
A slower paced life was seen as a morally inferior
existence. Of course, only the idle workers were
made naughty by laziness, while the idle wealthy
were not made bad by their life of laziness. By
enclosures, the poor were turned into a
respectable class, looking up to the wealthier
classes for employment -- as if looking up were a
respectable place to be in. Of course, the
respectability of workers as a class meant the
dependence of workers on their betters, dependence
on the wealthy class who were judged as better
people than the working class. The employer class
to this day knows that, “The more they work for
themselves, the less they work for us.” And the
advocates of capitalism know that, “They will not
seek for labor until they are compelled to do it.”
The free market in human labor is held to be a
place of human freedom. Producers are compelled,
because of poverty, to seek a wage job. And yet,
the poverty of every producer is the outcome of
historical steps that were undertaken by
governments and proprietors, including enclosures
and other forms of land and property
expropriation. Remember the history of taking
land from the American Indians.

The history of land enclosures is a significant
factor in the history of early capitalism, in the
history of capitalism’s evolution from feudalism
to our modern-day commercial way of life.
Capitalism has overturned one right -- a common
right. Capitalism has overthrown the right to
subsistence, the guarantee of subsistence. And,
the so-called “free” market must be seen through
this repudiation of a right to the means of
support. What kind of freedom is there for those
who are denied a fundamental promise of material

And, how can markets be free if they are not fair?
There can be no freedom unless there is also
fairness. Unlike market-free exchange, free-
market exchange can be unfair, because such
exchange is rooted in a profiteering purpose, a
private and selfish ambition. Capitalism has
deserted considerations of just price, and has
discarded the desirability of aspiring to the kind
of freedom that fairness can make possible.


“The right to be heard does not automatically
include the right to be taken seriously.”

-- Hubert Humphrey, speech, Madison, Wis., August
23 1965

Ron Allen

Nov 27, 2003, 10:26:48 AM11/27/03
Book Title:

Against the Market: Political Economy, Market
Socialism and the Marxist Critique.
David McNally
Chapter 1. Origins of Capitalism and the Market.
Section: From Petty Production to the Factory

David McNally:
“Thus far our discussion has focused on social
transformations in agricultural production. Yet
the processes I have described were closely
connected with changes affecting manufacturing,
for industrial development during the rise of
capitalism was intimately associated with changes
on the land. Agrarian historians have come to
identify two main kinds of rural community in
early modern England. The first is the traditional
open-field arable community tightly organized
round the church and manor house. The second is
the more enclosed community found in the grazing
and woodland areas, communities which tended to be
much less subject to gentry control. (This view
has been advanced perhaps most strongly by Joan
Thirsk, ‘The Farming Regions of England’, in The
Agrarian History of England and Wales, vol. 4, ed.

H.P.R. Finberg, Cambridge: Cambridge University

Press, 1967. For arguments designed to qualify
this picture, see Rab Houston and K.D.M. Snell,
‘Proto-Industrialization? Cottage Industry, Social
Change, and Industrial Revolu-tion, Historical
Journal 27, 1984, p. 477; and Maxine Berg, Pat
Hudson and Michael Sonenscher, ‘Manufacture in
Town and Country before the Factory’, in
Manufacture in Town and Country Before the
Factory, eds Maxine Berg, Pat Hudson and Michael
Sonenscher, Cambridge: Cambridge University Press,
1983, pp. 20-23.) The latter areas, especially
those with substantial common lands, experienced
significant population growth throughout the Tudor
and Stuart period, as the landless poor moved in
search of industrial work and land on which to
erect a cottage and keep a garden and a few
animals. It was in such regions – characterized by
a dense population, smallholdings, access to
commons, and a pastoral agriculture which demanded
little hired labour - that rural industries grew.

“Since pastoral agriculture did not generate a
large demand for hired labour, many of the semi-
proletarianized poor resorted to industrial by-
employments: spinning, weaving, nailing, etc. The
majority of these small producers, while not hired
wage-labourers, were nevertheless subordinated to
larger master-manufacturers and/or merchants who
provided access to markets and materials. Only
those who successfully accumulated and moved into
marketing themselves were in a position to escape
this subordination to larger capitalists. Often,
retention of a small farm, and the extra revenues
and/or food production it provided, made such a
transition possible.

“Rural England in the early modern period thus
exhibited two main patterns of economic
development: one based on large-scale arable
farming; the other involving regions which
combined pastoral agriculture with growing rural
industries. The result was ‘the division of the
country into cereal surplus areas and areas of
pastoralism with rural domestic industry’. (Jones,
‘Agricultural Origins’, p. 61. See also John T.
Swain, p. 205; and David Hey, The Rural
Metalworkers of the Sheffield Region,
Hertfordshire: Leicester University Press, 1872,
p. 21.) It is for this reason that historians
speak of ‘two Englands’ in 1600: one characterized
by open field arable husbandry organized around
the traditional village community; the other
developing in pasture woodland areas where a
growing population subsisted on tiny holdings and
provided a ready labour force for cloth-making,
mining, metal-working and scores of other domestic
industries. (David Underdown, Revel, Riot and
Rebellion: Popular Politics and Culture in England
1603-1660, Oxford: Oxford University Press, 1987,
p. 18.) Yet, the phrase ‘two Englands’ is too
sharp, implying differentiation, but not
symbiosis. It is important to recognize that this
division exemplified the kind of regional and
sectoral specialization characteristic of an
economy being reshaped by the market forces of
emergent capitalism.

“As one historian has noted, ‘England's trade - in
wool, leather, grain, hops, minerals - grew
directly out of her land and farms’. (Charles
Wilson, England's Apprenticeship 1603-1763, 2nd
edn, London, 1984, p. 36.) For this reason, it is
an error to see industrial development in the
Tudor and Stuart period as something divorced from
agriculture. Moreover, it is crucial to recognize
that rural society still provided the most
important market for manufactures. While tens of
thousands of lords and wealthy merchants consumed
a range of luxury goods, the mass market was
generated by the demand from agricultural
households for a small number of essential
commodities: nails and knives; small tools and
implements; fittings for houses and farm
buildings; wooden or earthenware cooking and
eating vessels; footware and textiles. Most
manufacturing in early modern England involved
production of commodities such as these, although
a number of areas specialized in exports. Not only
did the mass market for manufactures originate in
agricultural households; into the eighteenth
century, domestic manufacture by farming
households continued to make up the principal form
of industrial production. And much of this
industrial output originated in apparently
'agricultural' communities. So widespread was
industrial work in such communities that about
half of those who farmed the land in early modern
England appear also to have engaged in at least
one form of industrial work. It is in these
communities of ‘peasant-workers’ or ‘farmer-
craftsmen’ that we discover some of the major
roots of ‘industry before the industrial
revolution’. (Joan Thirsk, ‘Seventeenth-Century
Agriculture and Social Change’, in her The Rural
Economy of England, London: Hambledon Press, 1984;
Hey, Rural Metalworkers, p. 12.)

“The Sheffield region was famous for its
metalworking. With a parish population of roughly
5,000 in the 1670s, the area had 600 smithies. The
majority of metal craftsmen lived in rural or
semi-rural communities, had only one or two
domestic hearths and continued to combine
agricultural pursuits with industrial production.
The same basic pattern can be detected in cloth
production in north-east Lancashire. Here the
‘farmer-craftsman’ dominated the scene,
alternating pastoral farming with seasonal
clothmaking. This system of domestic production by
small clothiers who also engaged in agriculture
characterized much of industrial Lancashire and
Yorkshire. (On Sheffield see Hey, Rural
Metalworkers, pp. 10-13; for north-east
Lancashire, consult Swain, pp. 110-12, 120-21,
192. The Yorkshire and Lancashire clothing
industries are discussed by Alfred P. Wadsworth
and Julia De Lacy Mann, The Cotton Trade and
Industrial Lancashire, New York: Augustus M.
Kelley, 1968, pp. 4, 25, 55-6; Herbert Heaton, The
Yorkshire Woollen and Worsted Industries, 2nd edn,
Oxford: Clarendon Press, 1965, pp. 89, 92-3, 97;
S.D. Chapman, ‘James Longsdon (1745-1821), Farmer
and Fustian Manufacture’, Textile History 1, 1970,
pp. 266-70; idem, ‘Industrial Capital Before the
Industrial Revolution, in Textile History and
Economic History, ed. K.G. Ponting, Manchester:
Manchester University Press, 1973, pp. 114, 128-9;
idem, ‘The Textile Factory Before Arkwright’,
Business History Review 48, 1974, p. 455.) So
interrelated were agriculture and industry that
historians of the Huddersfield woollen industry
have used the term ‘yeoman-clothier’ to
characterize the dominant figure in the industry
during the period 1500-1700. Herbert Heaton in
fact found that the word ‘yeoman’ was often a
synonym for ‘clothier’ in Yorkshire throughout
this same period. Similarly, J.W. Gough has shown
that labourers who devoted most of their
productive energies to mining also described
themselves as husbandmen or yeomen. (W.B. Crump
and Gertrude Ghorbal, History of the Huddersfield
Woollen Industry, Huddersfield: Alfred Jubb and
Son, 1935, p. 31; Heaton, p. 92.)

“Industrial growth in the early capitalist period
did not proceed by way of the separation of
agriculture and industry and the rise of the
factory. For a quite important period, industrial
production was dominated by a domestic system
inextricably connected with agriculture. Thus, a
study of the personal estates of seventy-nine
building craftsmen in Lincolnshire - carpenters,
masons and thatchers - found that over 50 per cent
of them had agricultural possessions. (Donald

Woodward, ‘Wage Rates and Living Standards in Pre-

Industrial England’, Past and Present 91, 1981, p.
39. See also Alan Everitt, ‘Farm Labourers’, in
The Agrarian History of England and Wales, Vol. 4:

1500-1650, ed. H.P.R. Finberg, Cambridge:

Cambridge University Press, 1967, pp. 425-9; and
W.H.B. Court, The Rise of Midland Industries
1600-1838, 1938; London: Oxford University Press,
1953, p. 42.) It is for this reason that early
industrialization did not immediately translate
into urbanization; on the contrary, it most often
involved the growth of rural industries. This is
readily apparent in the case of the industrial
Midlands of the early modern period which
comprised ‘a countryside in course of becoming
industrialized; more and more a strung-out web of
iron-working villages, market-towns next door to
collieries, heaths and wastes gradually and very
slowly being covered by the cottages of nailers
and other persons carrying on industrial
occupations in rural surroundings.’ (Court, p.

“Yet from these early shoots, an economy based on
urban industrial production would blossom. Like
yeoman farming, petty manufacturing would
experience the impact of primitive accumulation
and give birth to more fully capitalist forms of
production. (The notion of ‘more fully capitalist
forms of production’ pivots on Marx's important
distinction between the formal subsumption and the
real subsumption of labour-power to capital - a
point to which I shall return. See Karl Marx,
‘Results of the Immediate Process of Production’,
in Capital, 1, pp. 1019-38.)

“While there is no exact point of transition
between petty commodity production and capitalist
production which can be marked with precision, the
essential features of this process can be clearly
delineated. In essence, they involve the
metamorphosis of peasant craftsmen or yeoman
manufacturers into merchants and employers, who
subordinate the labour of a growing number of
small producers, and who market their own output
(and that of others). These processes can be
illustrated in the cases of some of the industries
we have already discussed.

“In the Sheffield metalworking industry it is
clear that ‘the new industrial leaders of the
second half of the eighteenth century emerged from
a peasant-craftsman background’. (Hey, p. 49. On
this general point, see also François Crouzet, The
First Industrialists, Cambridge: Cambridge
University Press, 1985, pp. 132, 137.) The
leading ironmasters, the Walkers, Booths,
Doncasters, Marshes, Shores, Broadbents
and Roebucks, all came from small nail-making and
cutler families and went on to become founders of
the region's main ironworks. The influence of
these rising families of small producers extended
beyond single industries and regions. It was Dr
John Roebuck who sponsored the young James Watt
and established the famous Carron Ironworks in
Scotland. Moreover, these manufacturers often had
an impact which extended from industry to
transportation, marketing and Banking. ‘It was
men such as these who were instrumental in getting
the Don Navigation Act passed, in establishing the
first banks in Sheffield, and in opening up new
avenues of trade. They played a fundamental part
in launching the Industrial Revolution in the
Sheffield region.’ (Hey, p. 52.) One observes a
similar pattern in the metalworking industries
of the Midlands. Families such as the Turtons,
Lowes, Simcoxes and Jessons rose to prominence on
the basis of the nail industry of West Bromwich.
By the end of the eighteenth century, iron forges
and furnaces, rod mills and blade mills were to
found ‘along every suitable piece of the Tame and
its tributaries’. These metalworking families too
came from the ranks of yeoman producers. (Court,
pp. 112-13; Wilson, pp. 300-301.) The same picture
emerges in the Huddersfield woollen industry where
a whole layer of new gentry families rose from the
ranks of the yeomanry during the sixteenth
century. (Crump and Ghorbal, pp. 43-6.)

“Like wool, the cotton industry was organized
along quite different lines from one region to the
next. The West Riding of Yorkshire tended to be
dominated by small independent producers; much of
Lancashire experienced 'putting-out' by large
merchants. Yet in both cases, many substantial
capitalists emerged from small manufacturing
backgrounds. The West Riding woollen industry
provides one of the clearest examples of this
phenomenon. It is estimated that there were
4,000-5,000 clothiers in the region in 1765. The
bulk of these were small producers employing
little labour from outside the home. As early as
the 1740s and 1750s, however, a number of the
larger clothiers in the Halifax area were
bypassing the merchants of Leeds and breaking into
both local and export markets on their own. (On
Hill, see Frank Atkinson, Some Aspects of the
Eighteenth Century Woollen and Worsted Trade in
Halifax, Halifax: Halifax Museums, 1956; and R.G.
Wilson, Gentlemen Merchants: The Merchant
Community in Leeds 1700-1830, Manchester:
Manchester University Press, 1971, pp. 58-60.)

“In the West Riding it was manufacturers, not
merchants, who built most woollen mills. Indeed,
of the mills built in Leeds and Huddersfield
before 1835, only one in six were financed and
operated by individuals of mercantile origin. (Pat
Hudson, ‘Proto-industrialisation: the case of the
West Riding Wool Textile Industry in the 18th and
early 19th centuries’, History Workshop 12, 1981,
p. 48; idem, From Manor to Mill: the West Riding
in Transition’, in Manufacturing in Town and
County, p. 140.) The same phenomenon has been
observed in the case of the textile mills in the
Calder Valley below Dewesbury. John Goodchild has
shown that, of those scribbling and fulling mills
established between 1780 and 1800 whose origins
can be established, nine were developed by
clothiers, six by merchants and another two by
joint-stock companies. Equally important, one of
the region's largest and most innovative mills was
initiated by Benjamin Hallas, a master clothier
who came from a long line of handloom weavers.
(John Goodchild, ‘Pildacre Mill: an Early West
Riding Factory’, Textile History 1, 1970.)

“To focus on the development of small producers
into merchants and large employers - what Marx
called the ‘really revolutionary way’ towards
capitalism - is not to deny that in many areas
industrial capitalism emerged out of merchant-
controlled putting-out systems. (Marx, Capital,
vol. 3, trans. David Fernbach, Harmondsworth:
Penguin, 1981, p. 452.) It is to insist, however,
that we closely inspect these systems; for often
they reveal yet another form in which small
producers developed into merchants and employers.
Indeed, the great weakness of recent theories of
‘proto-industrialization’ as applied to England is
their tendency to assume that a linear path of
development accounts for industrialization, one in
which urban merchant capital stimulated, by
expanding foreign markets seizes control of
peasant production, erects putting-out systems and
proletarianizes the peasant producers. (See Peter
Kriedte, Hans Medick and Jurgen Schlumbohm,
Industrialization Before Industrialization, trans.
Beate Schemp, Cambridge: Cambridge University
Press, 1981, pp. 2-3, 21, 34; and Peter Kriedte,
Peasants, Landlords and Merchant Capitalists,
Leamington Spa: Berg, 1983, pp. 1, 10, 40, 42, 59,
78, 80, 90, 131. For critiques of this thesis, see
Hudson, p. 34-60; and Rab Houston and K.D.M.
Snell, ‘Proto-Industrialization? Cottage Industry,
Social Change, and Industrial Revolution’,
Historical Journal 27, 1984, pp. 437-92.) Yet any
serious examination of the relationship of
merchants to English industry is forced to
conclude that many ‘merchants’ had developed in
precisely the way described by Marx, as small
producers who undertook direct marketing of their
product (and that of others), and employed
putting-out and factory labour. (One of the
shortcomings of Marx's discussion in chapter 20 of
Capital, vol. 3 is that he does not consider this
question of the origins of merchants. Thus, to
illustrate ‘Way 2’, he refers to ‘the English
clothier of the seventeenth century, who brought
weavers who were formerly dependent *[this is a
typographical error; a misquote; should be
“independent” – R Allen]* under his control’, p.
452. As I have tried to demonstrate, this was not
always an example of a merchant becoming an
industrial capitalist, but could just as well
illustrate the path by which a small producer
became both a merchant and/or putter-out.) The
Huddersfield woollen industry provides a case in
point: ‘Neither was the demarcation between
clothier and merchant as rigid as is sometimes
thought ... A few of the more substantial
clothiers did, in fact, dress their pieces, and
probably those of their neighbours, and were
merchants in all but name.’ (Crump and Ghobal, pp.
90, 94.)

“The research of S.D. Chapman on the Midlands'
textile industry illustrates the same pattern.
Chapman demonstrates that many Midlands hosiers
‘climbed from the ranks of frame operatives to
the position of merchants’, kept their own
workshops, owned 50 to 100 frames, and used 100 to
150 more, thus providing employment for about 800
domestic workers. (S.D. Chapman, The Early Factory
Masters, Newton Abbot: David and Charles, 1967,
pp. 19-25, 34, 79-80, 94; idem, ‘The Transition to
the Factory System in the Midlands Cotton-Spinning
Industry’, Economic History Review, 2nd series,
18, 1965, p. 537. For an interesting discussion of
similar patterns in London, see. R.G. Lang,
‘Social Origins and Social Aspirations of Jacobean
London Merchants’, Economic History Review, 2nd
series, 27, 1974.)

“Understanding the way in which mercantile and
industrial capital frequently combined in the same
hands in early modern England requires us to
redraw our picture of the putting-out system. Too
often commentators have forgotten that master-
manufacturers regularly combines direct employment
of wage-labour with putting out. Indeed, even
early factory masters often continued putting-out
operations. Moreover, many of the ‘merchants’ who
engaged in large-scale putting-out had come from
the ranks of the small masters. (J.D. Chambers,
The Workshop of the World: British Economic
History from 1820 to 1880, 2nd edn, London: Oxford
University Press, 1968, p. 14. See also Crump and
Ghorbal, pp. 66, 92; Crouzet, p. 123; Chapman,
Early Victorian Factory Masters, pp. 53-4, 79;
idem, ‘James Longsdon’, pp. 273, 283-4; Heaton, p.
298.) This is not to deny that some with
exclusively mercantile interests moved into
putting-out or went on to build mills. It is to
insist, however, that many large capitalists did
not develop in this way, and that many ‘merchants’
had actually climbed from the ranks of the small
manufacturers and continued to combine industrial
and mercantile activities. (See Chapman, Early
Victorian Factory Masters, pp. 19-25, 78-82.)

“Moreover, contrary to many misconceptions, the
putting-out system did not close off the path by
which small producers developed into full-fledged
capitalists in their own right. Even the
Lancashire cotton industry, largely organized by
‘merchants’ who put out materials for work by
domestic labourers, provided avenues for the
‘revolutionary’ path to industrial capitalism.
Indeed, in its early stages, putting-out in
Lancashire involved not so much the distribution
by merchants of materials to individual spinners
and weavers as the provision of cotton to small
country employers who ‘put out’ these materials to
the direct producers. These country manufacturers
‘formed an intermediate class of middlemen-
manufacturers, employing the spinners and fustian
weavers of their districts, and standing on a
footing of some independence in relation to the
Manchester linen draper’. Country manufacturers
were often well positioned to establish their own
connections with London merchants, to move into
local wool dealing and finishing processes, and to
accumulate capital on a significant scale.
Wadsworth and Mann point out that ‘although most
of the weavers and spinners were employees under
one form or another of the putting-out system, the
system was not a closed one ... It was a short
step from weaver to putter-out, and from putting-
out agent to manufacturer.’ (Ibid., p. 277. See
also Julia de Lacy Mann, ‘Clothiers and Weavers in
Wiltshire during the Eighteenth Century’, in
Studies in the Industrial Revolution, ed. L.S.
Pressnell, London: Athlone Press, 1960, p. 83.)

“To be sure, for every small producer who made the
transition to merchant and industrial capitalist,
dozens of others failed. Yet this was merely
another way in which social differentiation took
place within the ranks of small producers and
created both indigenous capitalists and
proletarians. And this phenomenon of class
differentiation among petty commodity producers is
a central moment in the total process of primitive
accumulation of capital. François Crouzet depicts
this aspect of capitalist industrialization with
great clarity: ‘there were many individuals whose
main occupation was actually in industry, but who
were also small, part-time farmers, with, as
borderline cases, those who had just enough land
to maintain one horse and/or cow. A selection
process took place among these people in the late
eighteenth and early nineteenth centuries. Many
had to retreat, became cottagers doing handloom
weaving and were eventually absorbed into the
proletariat. But there was also a superior class
of artisans-cum-farmers, who had greater resources
and, probably, more ability and more luck than
others. They, or their sons, succeeded in becoming
putters-out, then merchant-manufacturers, and
eventually they established a factory.’ (Crouzet,
p. 123.)”

Ron Allen

Jan 4, 2004, 5:17:02 PM1/4/04
Book Title: Against the Market: Political Economy, Market

Socialism and the Marxist Critique

Author: David McNally

Chapter 1. Origins of Capitalism and the Market

Section: Market Competition and Proletarianization

Alongside outright expropriation of the bulk of the
peasantry, then, the disintegration of feudalism unleashed
new forces of petty commodity production as some small
producers, emancipated from feudal exactions,
increasingly produced for the market. In the context of a
growing labour market, competition favoured those
producers who could accumulate sufficiently to employ
more and more wage-1abourers. It was these capitalist
producers, tending to concentrate production at one site,
who were able to lower average costs of production
(through economies of scale and successful exploitation
of labour) and thereby force smaller producers into
decreasingly viable strategies of ‘self-exploitation’ in
their desperate efforts to produce according to average
costs of production. But the long-run trend was for these
smaller producers to be bankrupted and driven into the
ranks of the proletariat. Thus, just as class differentiation
took place within the ranks of the peasantry, so it did
among petty producers in manufactures. It is this
phenomenon Marx had in mind when he claimed that
capitalism develops on the ‘tomb’ of petty production,
and when he described the dissolution of ‘private property
based on the labour of its owner’ as a central aspect of
primitive capitalist accumulation. (Marx, Capital, 2, pp.

Marx’s point here is particularly relevant to any full
understanding of the capitalist market. The key to that
market, as we have seen, is the commodification of
labour-power. The necessity for the majority to enter the
labour market in order to procure their means of
subsistence radically transforms the whole of economic life.
It means that all inputs and outputs of a production
process will tend to be ‘marketized’ and ‘monetized’.
Generalized commodity production is thus possible only
if labour-power exists as a commodity on a large scale.
For this reason Marx writes that ‘this one historical pre-
condition comprises a world's history’. (Ibid., p. 274)

Moreover, in the context of a far-reaching labour market,
petty commodity production will tend to be transformed
into fully capitalist production through processes of
market competition. Indeed, competition will generate a
growing labour market as numbers of small producers
are regularly bankrupted and proletarianized. It follows
that, just as proletarianization is the key to creating a fully
capitalist market, so that market, once created, will
continually reproduce proletarianization -- and on a
growing scale. Moreover, market competition in such a
context means constant pressures to raise levels of labour
exploitation as a condition for the survival and
reproduction of the producing unit. Proletarianization and
intensified exploitation are thus inherent in all market
processes where labour-power exists as a commodity on a
significant scale.

One can readily see these tendencies at work in the early
history of industrial capitalism in Britain as battles for
survival among manufacturers intensified pressures on
employers to drive down real wages or boost levels of
labour productivity (and exploitation) through industrial
and technological reorganization. These tendencies
achieved their classic form in the automated factory,
where living labour is subjected to a discipline embodied
in the objective structure and rhythm of machinery. But
the growth of the automated factory in sectors like cotton
and iron did not automatically give rise to machine
production elsewhere.

As Marx pointed out, an industrial revolution in one
sphere often intensifies pre-factory forms of production in
other sectors, while also creating entirely new forms of
sweated labour. Nevertheless, the development of the
automated factory means that machine production ‘now
plays the determining role everywhere’. It does so either
by drawing domestic industry into its orbit -- as ‘an
external department of the factory, the manufacturing
workshop, or the warehouse’ -- or by forcing capitals in
other spheres to engage in ever more ‘shameless’ forms
of exploitation in order to maintain a competitive footing.
The result is that, while manufacture, handicrafts and
domestic work continue to exist, they are ‘totally
changed and disorganized under the influence of large
scale industry’ and reproduce and overdo ‘all the horrors
of the factory system’. Thus, while the industrial
revolution does follow a basic pattern determined by the
appropriateness of the automatic factory to capitalist
exploitation, this revolution ‘is accomplished through a
variegated medley of transitional forms’ -- a medley in
which handicrafts, manufacture, and domestic production
continue, albeit in ways largely determined by the
dynamics of mechanized production. (Ibid., pp. 590-91,
600, 602, 604)

What was common to the working class of this period,
then, was not the experience of factory labour, which was
confined to a minority throughout most of the nineteenth
century, but the experience of intensified exploitation.
Whether they worked on the land, in the factory or
workshop, or in the home as output labour, workers were
subjected to more intense forms of labour (often under
more direct and systematic control from the supervisor,
master or employer). The rise of more fully capitalist
relations of production increased pressures towards
specialization and division of labour. This involved
significant changes as well in the role of the family and
women's labour.

The evidence suggests that prior to 1760 labourers’
families had a more flexible and equal division of labour
than that which developed during the era of the industrial
revolution. Access to commons, the viability of much
independent commodity production within the household
and freedom from substantial reliance on wage-labour
created some space for a more diversified family
economy, embracing men, women and children. To
be sure, this domestic economy was often harsh and
oppressive; but it also provided both men and women
opportunities for a degree of independence which later
contracted. And in the case of women, the increasing
shift of production away from the household contributed
to a more rigid division of labour beteen the sexes.
One observes this trend most clearly in the case of
industries in which domestic organization gave way to
centralized workshops and factories. In the words of
Ivy Pinchbeck,
“Women's work was most varied where the influence of
capital in the trade was negligible, as among the small
Yorkshire clothiers. When every process from the fleece
to the woven piece of cloth was undertaken in the home,
the women of the family commonly assisted in all the
operations. Big capitalistic production, on the other hand,
meant a division of labour in which women were
relegated to certain occupations, the number of which
tended to be reduced as capitalistic organization
developed.” (Ivy Pinchbeck, Women Workers and the
Industrial Revolution 1750 - 1850, 1930, rpt London:
Virago, 1981, p. 121.)

Men often resisted these developments as much as
women. They complained of losing the assistance of their
wives and children, and objected to the notion that
increased wages were adequate compensation for the loss
of a previous way of life. (Ibid., pp. 121-2. See also Snell,
p. 307) Yet the trend was largely irreversible. As
household and site of production were increasingly
separated, the economic independence of women,
especially women with children, declined. Child-rearing
and upkeep of a household were more and more detached
from production for the market; as a result, working-class
mothers played a decreasing role in commodity
production. (Snell, p. 311; Mary Lynn McDougall,
‘Working Class Women During the Industrial Revolution,
1780-1914’, in Becoming Visible: Women in European
History, eds Renate Bridenthal and Claudia Koonz,
Boston: Houghton Mifflin, 1977, p. 275; Theresa M.
McBride, ‘The Long Road Home: Women's Work and
Industrialization', in ibid., pp. 282-4; Louise A. Tilly and
Joan Scott, Women, Work, and Family, New York: Holt,
Rinehart and Winston, 1978, pp. 127-9) Part and parcel
of these developments was a sharp reduction in the range
of jobs done by women. As Pinchbeck showed, well into
the eighteenth century women were apprenticed to an
enormous number of trades -- from goldsmiths, stone-
masons, engravers and furniture makers to clothiers,
weavers, doctors and dentists. Yet in the nineteenth
century a dramatic contraction took place in the trades
open to women. The separation of agriculture and
industry, the rise of the large workshop and factory, and
the tendency towards increasing specialization all
conspired to reduce the range of economic options for
women: factory work was available in a few trades and
domestic service grew; but more and more women with
children found themselves on the margins of the market
economy. (Pinchbeck, ch. 12; Snell, pp. 272-83, 294-

These changes were part of a radical transformation in
the substance and rhythm of everyday life. And at the
heart of this transformation was the destruction of those
elements of independence which had protected workers
and their families from utter subjection to the market.
Despite specific differences in their experiences, workers
shared a common sense of loss of control and
intensification of labour. During the years 1780 - 1832,
as E.P. Thompson notes, the English working class felt a
series of grievances arising from “changes in the
character of capitalist exploitation: the rise of a master-
class without traditional authority or obligations: the
growing distance between master and man: the
transparency of the exploitation at the source of their new
wealth and power: the loss of status and above all of
independence for the worker, his reduction to total
dependence on the master's instruments of production: the
partiality of the law: the disruption of the traditional
family economy: the discipline, hours and conditions of
work: loss of leisure and amenities: the reduction of the
man to the status of an ‘instrument’.” (Thompson,
Making, pp. 202-3)

It was in these ways that the whole working class
experienced the industrial revolution. However much
their work situations varied, all workers felt the impact of
the new dynamics introduced by the rise of the factory
during a period of sharpening capitalist competition.
These new dynamics involved a radical recasting of
relations between capital and labour, and produced the
great social struggles in which the workers began to
define themselves as a class.

Edmund Esterbauer

Jan 6, 2004, 7:13:39 AM1/6/04
What drivel! The market is liberty. It is the action of people entering
free exchange without bureaucratic coercion.

"The true value of democracy is to serve as a sanitary precaution protecting
us against the abuse of power...In its present form ..It has ceased to be a
safeguard of personal liberty, a restraint from abuse of government
power..It has on the contrary, become the main cause of a progressive and
accelerating increase in the power and weight of the administrative
Friedrich A. Hayek

"Ron Allen" <> wrote in message

Ron Allen

Jan 10, 2004, 9:58:29 AM1/10/04
Book Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique

Author: David McNally

Chapter 1. Origins of Capitalism and the Market

Section: The Working Class and the Industrial

Harold Perkin has written that ‘a regular,
disciplined, reliable labour force was -- and is
-- the most hazardous requirement of an industrial
revolution’. (Harold Perkin, The Origins of Modern
English Society 1780-1880, Toronto: University of
Toronto Press, 1969, p. 89) Hazardous it was,
because workers resisted the manifold processes by
which they were made entirely reliant on the
vagaries of the market in labour and subjected to
the pressures (both direct and indirect) of
mechanization. The battle to create a disciplined
proletariat was fought as a campaign against
anything that provided labourers with an element
of independence from the labour market. We have
examined perhaps the most important of these
conflicts in the previous chapter -- the
enclosure debate which played a central role in
the creation of a large and growing proletariat,
and which was often conducted in terms of an
attack on the ‘independence’ of labourers with
a cottage or access to common lands. According to
the developing precepts of political economy, the
propertylessness of the majority was the
indispensable prerequisite to the advance of
civilization -- which, ironically, was defined in
terms of the displacement of common ownership by
private ownership of productive resources. (I have
discussed this issue with respect to Locke and the
first Whigs in ‘Locke, Levellers, and Liberty:
Property and Democracy in the Thought of the
First Whigs’, History of Political Thought 10,
1989, pp. 17-40)

The debate over enclosure was not the only arena
in which the argument over labour, property and
political economy was conducted. There were many
other interrelated issues around which this battle
raged between 1780 and 1834. Five of these
particularly deserve comment in the context of
this study: (1) perquisites and embezzlement; (2)
apprenticeship; (3) labour discipline; (4)
property, crime and punishment; (5) poor law
policy. Each one of these debates focused on the
need to render the working class utterly reliant
on wage-labour. I intend here to deal with the
first four of these issues, leaving a discussion
of poor law policy for a later chapter.

Perquisites and Embezzlement

The idea that labour should be paid exclusively in
terms of a money wage was foreign to the
experience of many workers in the eighteenth and
early nineteenth centuries. By-products of the
production process were commonly considered the
rightful property of the labourers. To take just
two examples, it was customary for weavers to take
‘thrums’ -- the weft ends left on the loom after
the removal of finished cloth -- and for
shipwrights to appropriate ‘chips’ -- waste scraps
of wood which could be used or sold as firewood
-- as a supplement to the money wage. These
perquisites were widely considered to belong to
the labourers as a form of ‘property’ established
and sanctioned by long-standing custom. (John
Rule, The Experience of Labour in Eighteenth
Century Industry, London: Croom Helm, 1981, pp.
124-33; Peter Linebaugh, ‘Labour History without
the Labour Process: a Note on John Gast and His
Times’, Social History 7, 1982, pp. 319-27; C.R.
Dobson, Masters and Journeymen: A Prehistory of
Industrial Relations 1717-1800, London: Croom
Helm, 1980, pp. 27-9)

In the environment of intensified labour and
heightened capitalist competition which emerged in
the second half of the eighteenth century, many of
these perquisites were redefined in law as forms
of ‘theft’, as embezzlement of property which
rightfully belonged to the employer. Associations
for the prosecution of embezzlement were formed by
masters, modelled perhaps on those created by
rural gentry for the enforcement of game laws and
prosecution of poachers. These associations
employed inspectors to search workers’ homes for
‘stolen’ materials and provided funds for
prosecutions. By 1777 the penalty for embezzlement
had increased to three months in a house of
correction, up from fourteen days in 1749.
(Michael Ignatieff, A Just Measure of Pain: The
Penitentiary in the Industrial Revolution 1750-
1850, Harmondsworth: Penguin, 1987, pp. 27, 108;
Rule, p. 131)

The attack on perquisites was not simply an
attempt to minimize costs, although it was that in
part; it was also an attempt to impose a stricter
labour discipline by establishing both the right
of the employer to full ownership of all the
products of the labour-process, and the complete
reliance of employees on their money wage. In
large measure, the issue at hand was the
imposition of ‘the money-form as the exclusive
basis of the material relation’ between capital
and labour. (Linebaugh, p. 321) The same issue was
central to the dispute over apprenticeship.

The Apprenticeship Debate

The Statute of Artificers and Apprentices of 1563
required that any practitioner of a wide variety
of crafts had first to serve a seven-year
apprenticeship under a master craftsman. In return
for honouring their obligations under the Act,
apprentices were often boarded in the home of
their master or mistress, and, as with service in
husbandry, the latter were commonly expected to
provide food, clothes and tools, and to pay entry
fines or company dues at the end of the seven-year
term. Rather than an arrangement determined by a
free labour market, apprenticeship entailed a
regulated, customary relationship in which the
money-wage played an often secondary role. (See
Rule, ch. 4; Snell, pp. 256-7; Iorwerth Prothero,
Artisans and Politics in Early Nineteenth-Century
London, Folkestone, Kent: Dawson, 1979, pp. 31-4)
In practice, however, the Act had never been
enforced systematically, and as the eighteenth
century progressed it was consistently violated
and modified. Thus, the mean length of
apprenticeships declined from six and a half years
in the 1750s to four years by 1795. During the
1820s and 1830s, apprentices completed their
apprenticeships at about seventeen years of age,
as opposed to nearly twenty years of age before
1780. Moreover, the increase in apprenticeships
that were illegal, and in those that were
terminated by decision of the masters, or by
apprentices running away suggests a steady
deterioration in the conditions of this
relationship. (Snell, pp. 236, 253, 259-62)

The dilution of apprenticeships elicited a twofold
response: a decline in the real wages of artisans
and a concerted attempt by the latter to enforce
and to strengthen the stipulations of the Act of
1563. (On the decline in artisan wages, see Rule,
p. 68; and Snell, p. 245. On the apprenticeship
campaign waged by artisans, see Prothero, ch. 3;
Rule, pp. 111, 117; and T.K. Derry, ‘The Repeal of
the Apprenticeship Clauses of the Statute of
Apprentices’, Economic History Review 3, 1931, pp.
67-87) Not surprisingly, the employers’ campaign
against apprenticeship was conducted in terms of
the language of political economy and laissez-
faire; apprenticeship laws were denounced as
violations of natural liberty and free trade.
During the debate of 1810-11 on the petitions of
cotton weavers, for example, Parliament had
pronounced that the weavers' proposals to
enforce apprenticeship infringed ‘on personal
liberty in that most essential point, the free
exercise of Industry, of Skill, and of Talent’.
(As cited by Derry, p. 75) Similarly, the
artisans’ campaign of 1812-14 to strengthen the
apprenticeship laws was met with the argument that
all such legislation should be repealed, since
this would force workers to become more
industrious. As one such proponent put it,
“Repeal that statute, and all combinations will
cease; wages will rise or fall in proportion to
the real demand for labour, and mechanics and
manufacturers will be induced, by the competition
incident to the freedom of employment, to work
with much more care and industry.” (J. Chitty, A
Practical Treatise on the Law Relative to
Apprentices and Journeymen, and to Exercising
Trades, 1812, as cited by Prothero, p. 58)

The artisan campaign to strengthen apprenticeship
was a vast and well-organized movement involving a
petition bearing 32,000 signatures sent to the
House of Commons in April 1813, followed by
another with more than 60,000 names. (Derry, pp.
73, 58) Central to the campaign was an argument
which defined labour as a form of property which
should be subject to protection in law. The public
appeal issued as a result of the artisan meeting
held at the Freemasons’ Tavern on 14 January, 1814
spelled this out clearly:
“The apprenticed artisans have, collectively and
individually, an unquestionable right to expect
the most extended protection from the Legislature,
in the quiet and exclusive use and enjoyment of
their several and respective arts and trades,
which the law has already conferred upon them as a
property, as much as it has secured the property
of the stockholder in the public funds; and it is
clearly unjust to take away the whole of the
ancient property and rights of any one class of
the community, unless, at the same time, the
rights and property of the whole commonwealth
should be dissolved, and parcelled out anew for
the public good.” (As cited by ibid., p. 78)

By rejecting the artisans’ arguments, and by
repealing the apprenticeship clauses of the
Statute of Apprentices in July 1814, Parliament
announced that it would not recognize the
accumulated knowledge and skills acquired by
apprenticeship as a form of ‘property’ eligible
for legal protection. We shall return below to the
debate over property and political economy which
found expression in the conflict over
apprenticeship. What needs to be emphasized for
the moment is that, whether we accept that the
repeal of the apprenticeship clauses represented
the removal of ‘the last major legislative
limitation on the labour market’, it clearly did
reflect ‘the need of capitalist employers for a
mobile labour force whose supply and price would
be determined by the ‘natural’ laws of a free
labour market’. (Rule, p. 95) Moreover, this
victory for the capitalist labour market was to be
reaffirmed with the defeat in July 1835 of
Fielden’s Bill to fix wages in the handloom
weaving trades, a defeat that was re-enacted
several times between 1837 and 1840. (See Paul
Richards, ‘The State and Early Industrial Capital:
The Case of the Handloom Weavers’, Past and
Present 83, 1979, pp. 91-115; and Thompson,
Making, pp. 300-301)

Constructing Labour Discipline

The virtue of Perkin’s statement, quoted at the
beginning of this section, is that it indicates
the immense difficulties associated with the
construction of a disciplined industrial
proletariat. This is especially clear in the case
of factory labour. Workers generally resisted
employment in factories, associating them with
coercion, punishment and loss of independence. The
design of factories along the lines of houses of
correction did much to encourage this association.
For this reason, early factories often used
indentured labour, usually that of children. Even
here, enormous difficulties were encountered.
Figures for one mill indicate that fully one third
of apprentices died, absconded or had to be sent
back to parents and overseers between 1786 and
1805. (Chapman, Early Factory Masters, pp. 167-70.
On the penal origins of factory design, see
Ignatieff, p. 32)

In addition to the problem of attracting
employees, the early factory masters also
encountered that of inculcating habits of
punctuality, regularity, and industry. The pre-
industrial workforce followed a unique rhythm of
work and leisure. The practice of ‘St. Monday’
(taking Monday as a holiday from work) was
widespread, as was the taking of numerous
feastdays throughout the year. By no means should
the domestic system be glorified; nevertheless,
‘however intermittent and sweated its labour, it
did allow a man a degree of personal liberty to
indulge himself, a command over his time, which he
was not to enjoy again’. It was the element of
‘command over his time’ which the early factory
masters sought especially to eliminate. ‘Time was
the new idol – together with care, regularity and
obedience.’ (Wadsworth and Mann, p. 391; Neil
McKendrick, ‘Josiah Wedgwood and Factory
Discipline’, Historical Journal 4, 1961, p. 51)
Central to the creation of labour discipline,
therefore, was a new experience of time which was
materially embodied in bells, clocks, clocking in,
fines for lateness and absenteeism, and so on. It
should go without saying that the battle to impose
factory discipline was a battle over the very
culture of life, labour and leisure. (In addition
to McKendrick, see E.P. Thompson, ‘Time, Work-
Discipline and Industrial Capitalism’, in Essays
in Social History, eds M.W. Flinn and T.C. Smout,
Oxford: Oxford University Press, 1974; and Sidney
Pollard, ‘Factory Discipline in the Industrial
Revolution’, Economic History Review, 2nd series,
16, 1963-4; Douglas A. Reid, ‘The Decline of Saint
Monday 1766-1876’, Past and Present 71, 1976, pp.

This battle was often depicted by the
practitioners and ideologists of early industrial
capitalism as a great moral crusade for social
improvement. Thus, Josiah Wedgwood maintained that
he sought ‘to make Artists ... [of] ... mere men’,
and to ‘make such machines of the men as cannot
err’. Difficult though this operation might be,
Wedgwood conceived it in heroic terms: ‘It is
hard, but then it is glorious to conquer so great
an Empire with raw, undisciplin'd recruits.’ (As
cited by McKendrick, pp. 35-6) In addition to the
bell and the clock, Wedgwood introduced a sweeping
set of work rules. Nevertheless, the success of
the factory masters at inculcating industrial
discipline, while real, should not be exaggerated.
Wedgwood, for example, completely failed to
control the potters’ attendance of fairs and
wakes. When a riot broke out at his pottery at
Etruria in 1783, he called for military
repression; the end result was the arrest and
conviction of two men, one of whom was hanged.

It was generally coercion such as this, not
incentive, which instilled the new labour
discipline. Pollard sums up the balance of the
experience when he writes that
“the modern industrial proletariat was introduced
to its role not so much by attraction or monetary
reward, but by compulsion, force and fear. It was
not allowed to grow as in a sunny garden; it was
forged over a fire by the powerful blows of a
hammer ... The typical framework is that of
dominance and fear, fear of hunger, of eviction,
of prison for those who disobey the new industrial
rules.” (Sidney Pollard, The Genesis of Modern
Management: A Study of the Industrial Revolution
in Great Britain, London: Edward Arnold, 1965, pp.
This is confirmed by the questionnaires returned
to the Factory Commissioners in 1833, which showed
that of 614 incidents of the use of discipline to
enforce obedience among factory children, 575 of
these were coercive –- ranging from corporal
punishment to dismissal –- whereas a mere 34 cases
showed attempts at positive inducement to
obedience. (Ibid., p. 189)

Often, mechanization was the only way to break
working-class resistance by establishing a rhythm
of production materially embodied in the machine
rather than in the skills of the labourers. As
Sadler's parliamentary committee reported in
1831-2, in a statement which reinforces Marx's
view that ‘machinery ultimately forced the worker
to accept the discipline of the factory’.
(Pollard, p. 263; McKendrick, pp. 40-46, 52;
Parliamentary committee, as cited by Pollard, p.
258) But especially during the early transition to
industrial capitalism, the use of state power was
never far from sight, and was called in whenever
the employer could not sustain discipline on his
own. And use of state power involved more than
periodic use of troops; it also involved whole new
arrangements governing crime and punishment.

Property, Crime and Punishment

The emergence of new definitions of property and
crime has received increased attention in recent
years. The Black Act 1723, for example,
criminalized a range of activities which had long
been considered legitimate exercises of customary
right: appropriating timber, underwood, hedges and
fruit from trees; taking fish from ponds; damaging
woodlands and orchards; and so on. (See E.P.
Thompson, Whigs and Hunters: The Origin of the
Black Act, New York: Pantheon, 1975; and Douglas
Hay et al., Albion’s Fatal Tree: Crime and
Punishment in Eighteenth-Century England, New
York: Pantheon, 1975) Similarly, the laws on
embezzlement described above represented an
assertion of newly defined rights of property
against communal and customary rights. Not only
did the law increasingly punish transgressions of
capitalist property rights, it also sought to
punish those who tried to elude the discipline of
the employer and the labour market. The Vagrancy
Act 1744, for instance, endowed magistrates with
the power to whip or imprison beggars, peddlars,
gamblers, strolling actors, gypsies, and ‘all
those who refused to work for the usual and common
wages’, and it bestowed on them the right to
imprison ‘all persons wand’ring abroad and lodging
in alehouses, barns and houses or in the open air,
not giving a good account of themselves’. The
emphasis on disciplined adherence to wage-labour
was often made explicit. Blackstone explained that
one of the reasons for criminalizing the taking of
rabbits was to inhibit ‘low and indigent persons’
from pursuing the hunt rather than ‘their proper
employments and callings’. (As cited by
Ignatieff, pp. 25, 26) In a variety of ways, then,
eighteenth-century law was recast in order more
effectively to subjugate workers to the discipline
of the labour market: by punishing ‘vagrancy’
(avoidance of wage-labour), and by eliminating
alternatives to waged work -- hunting, fishing,
wood gathering, the taking of thrums and chips.

This extension of the rights of property, the
assault on supplementary forms of income, the
decline of real wages in numerous industries and
the more powerful assertion of capitalist
authority combined to produce an escalation in
the crime rate. Moreover, as transportation
declined as a form of punishment (largely because
of the war with America), the prison population
soared. John Howard, philanthropist and prison
reformer, estimated that the number of imprisoned
had increased 73 per cent between 1776 and 1786.
Accompanying this was the increasing severity of
punishment: the number of persons executed in
London between 1783 and 1787 was 82 per cent
higher than it had been in the previous five-year
period. This trend was exacerbated by the trade
depression and mass unemployment, which followed
the end of the Napoleonic Wars, resulting in a
sharp rise in the number of people committed to
trial, a trend that continued into the 1840s.
(Ibid., pp. 84, 87, 154, 179) Not only did the
law create a whole new set of ‘crimes’ against the
rights of property; the era of the industrial
revolution also saw a radically new conception of
the nature of punishment, a conception that was
embodied in the order of the penitentiary.

Understood in ideological terms, the development
of the penitentiary was an expression of the
liberal English materialism which contributed to
the construction of bourgeois society. Central to
this doctrine was the notion that human beings
could be remade, by a combination of coercion,
education and changed circumstances, to create
a disciplined and industrious labour force. In the
first instance this required, as we have seen,
eliminating those conditions which sustained the
material and spiritual independence of the
labourers -- be they common rights, perquisities,
or apprenticeship laws. At the level of the
factory, it involved moulding people to the
exigencies of industrial production, as expressed
in Wedgwood's conviction that he would ‘make such
machines of the men as cannot err’. In terms of
legal punishment, it involved a growing commitment
to the idea that means would have to be found to
discipline the mind as well as the body by forcing
the prisoner to internalize the new moral code, to
accept his guilt as an idler, thief, vagrant or

Arguments proliferated to the effect that prisons
should combine ‘correction of the mind’ with
correction of the body; that conscience must be
relied on to ‘hold a man fast when all other
obligations break’; and that this would be
achieved by means of a system of correction based
on ‘softening the mind in order to aid its
amendment’. (All three of these representative
statements are cited in ibid., pp. 46, 72, 74. The
eighteenth-century ‘technologies’ of punishment
are the focus of Michel Foucault’s insightful but
frustratingly idealist Discipline and Punish: The
Birth of the Prison, trans. Alan Sheridan, New
York: Vintage, 1979) Central to these views was
the notion that solitary confinement was the most
effective way to break down the psychological
resistance of offenders, to soften their minds and
transform their consciences. Perhaps the clearest
formulation of the view that penitentiaries could
remake prisoners was to be found in Bentham's
famous arguments on behalf of his Panopticon,
where he described penal correction as ‘a species
of manufacture’ which employed ‘its particular
capital’, i.e. the material form of the
penitentiary with its proposed system of cells,
supervision, labour and punishment. (Jeremy
Bentham, ‘Letter to Lord Pelham’, London, 1806, p.

The new ideologists of the penitentiary thus
advocated a mode of discipline designed to reform
and correct offenders, not merely to inflict
punishment on them. By the 1820s, however, these
arguments were modified by others, which called
for a concerted effort to worsen the conditions of
prisoners. As in the campaign against the old poor
law, proponents of an attack on prisoners’
conditions claimed that the latter lived better
than many British labourers. As a result, diets
were reduced, floggings were increased and
unproductive labour on the treadmill was
introduced. At the same time, a series of Acts
passed between 1823 and 1831 increased the
powers of magistrates, provided for the building
of new prisons and created a new police force in
an effort to broaden the material means for
enforcing the growing rights of property.
(Ignatieff, pp. 168, 175-7, 184-5)

The creation of the ‘free’ labour market was thus
the result of decades of coercive measures,
embodied in a regime of law and punishment,
designed to destroy communal property rights and
establish the unfettered sway of capitalist
private property. Moreover, as we have seen, the
creation of a fully marketized economy was
essential to the construction of those property
relations. For the labour market presupposed the
destruction of communal property and reproduced
the dispossession of the labourers. Rather than
the natural outgrowth of economic life, the ‘free
market’ was the product of class policy and class
power. It was this reality that Karl Polanyi had
in mind when he coined his memorable phrase:
‘laissez-faire was planned’. (Karl Polanyi, The
Great Transformation, Boston: Beacon Press, 1957,
p. 141) And theorists of the developing working
class knew it. As a result, at the same time as
workers resisted their increasing subjugation to
the labour market, working-class writers sought to
launch a theoretical assault on the principles
which underpinned the planned creation of the
‘free’ market in labour. Inevitably, this required
a theoretical confrontation with political

Ron Allen

Jan 22, 2004, 8:13:15 AM1/22/04
Book Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique

Author: David McNally

Chapter 2 Justice and Markets: The Ambiguous
Legacy of Adam Smith

“Did Dr. A Smith ever contemplate such a state of
things? it is in vain to read his book to find a
remedy for a complaint which he could not conceive
existed, viz. 100,000 weavers doing the work of
150,000 when there was no demand (as ‘tis said)
and that for half meat, and the rest paid by Poor
Rates.” (As cited by J. L. Hammond and Barbara
Hammond, The Skilled Labourer 1760-1832, 2nd edn,
London: Longmans, Green, 1920, p. 123.)

So testified Thomas Ainsworth, a ruined man, about
the depression in the British cotton trade which
followed the Napoleonic wars. What is most
important in Ainsworth’s statement, at least for
our purposes, is his reference to Adam Smith
(1723-1790, Scottish economist), which identifies
an important problem. For central to Smith’s
theory of growth in the Wealth of Nations was the
notion that capital accumulation inevitably
involved an increase in employment and wages. Yet
the experience of the British economy in the half-
century after the publication of the Wealth of
Nations in 1776 seemed directly to controvert
Smith’s analysis. Instead of increased prosperity
and security for ‘the sober and industrious poor’,
as Smith called them, commercial society appeared
to offer greater misery and poverty. The result
was that Smithian political economy underwent a
marked bifurcation: on the one hand, defenders of
the status quo stripped Smith’s economic theory of
its commitment to rising employment and wages (and
hence of its ethical dimension) in order to
justify the ill fortunes of labourers as necessary
and inevitable; on the other hand, critics of
emerging industrial capitalism used Smith’s
theories of growth and distribution in order to
indict poverty and the factory system. As a
result, by the 1820s, ‘Smithian’ apologists for
industrial capitalism confronted ‘Smithian
socialists' in a vigorous, and often venomous,
debate over political economy. (For a discussion
of the term ‘Smithian socialists’, see Noel
Thompson, The People's Science: the popular
political economy of exploitation and crisis
1816-1834, Cambridge: Cambridge University Press,
1984, ch. 4.)

The term ‘Smithian socialists’ immediately invites
surprise. Wasn’t it Smith, after all, who
constructed an idealized image of bourgeois
society which became a cornerstone of ideological
defences of capitalism? Certainly this is the
dominant view. Yet working-class radicals did not
see things that way. While they directed
substantial energies into a campaign against
political economy, their targets were usually
Malthus (Thomas Robert Malthus, 1766-1834, English
economist) and his Ricardian (David Ricardo, 1772-
1823, English economist) adherents. And they often
used Smith’s work as a weapon in their campaign
against these political economists. That Smith’s
name was invoked by dogmatic defenders of the
capitalist market is of no little historical
import. But the Smithian legacy was a contested
one. Understanding why this was so, and how an
apologetic bourgeois version of Smith came to
prevail, is crucial to grasping the evolution of
political economy and socialism during this

But the question of the Smithian legacy is of more
than historical interest, particularly because
modern ideologists of the market continue to claim
Smith as a prophet of ultra-liberalism. Friedrich
von Hayek (1899-1992, British economist, born in
Austria), for example, is moved to assert that
‘the foundation of modern civilization was first
understood by Adam Smith’. (F. A. Hayek, The
Political Order of a Free People, 2nd edn,
Chicago: University of Chicago Press, 1981, p.
158.) And the foundation of modern civilization
that Smith apparently first grasped is the
‘spontaneous order’ of the competitive market.
According to Hayek, human civilization involves a
long struggle against ‘primitive instincts’ such
as solidarity, benevolence and the impulse to put
the needs of the community first. These instincts
underpin socialism and all theories of social
justice. Yet the greatness of modern society
consists in the substitution of ‘artificial rules’
which free the individual from the primitive
constraints imposed by communal impulses and
enable unfettered competition to establish a
‘spontaneous order’ conducive to liberty and
prosperity. (F. A. Hayek, Knowledge, Evolution and
Society, London: Adam Smith Institute, 1983, pp.
32, 39; Social Justice, Socialism and Democracy,
Turramurra: Centre for Independent Studies, 1979,
p. 21; Law, Legislation and Liberty, vol. 2,
London: Routledge and Kegan Paul, 1976, pp.

Hayek claims Smith’s famous discussion of the
division of labour in Book One of the Wealth of
Nations as the germ of the modern theory of market
society. (F. A. Hayek, New Studies in Philosophy,
Politics, Economics and the History of Ideas,
Chicago: University of Chicago Press, 1978, pp.
268, 269; idem, Knowledge, p. 19.) Yet there is
something disingenuous about Hayek’s attempt to
enlist Smith as a warrior against those inherited
instincts which lead to the valuing of
benevolence. For the best scholarship on Smith has
demonstrated that at the heart of his thought was
a considered attempt ‘to reconcile the old ethics
and the new economics’. (This is the expression
used by George Davie in a discussion of ‘Berkeley,
Hume, and the Central Problem of Scottish
Philosophy’, in McGill Hume Studies, eds David
Fate Norton, Nicholas Capaldi and Wade L.
Robinson, San Diego: Austin Hill Press, 1976, p.
44. It is a central argument of my Political
Economy and the Rise of Capitalism: A
Reinterpretation, Berkeley: University of
California Press, 1988, ch. 4, that Smith produced
the most sophisticated, although ultimately
flawed, attempt at such a reconciliation. For one
of the best treatments of this problem see J.
Ralph Lindgren, The Social Philosophy of Adam
Smith, The Hague: Martinus Nijhoff, 1973.) Rather
than reject all previous ethics, Smith sought to
work some of their central elements into a moral
and jurisprudential theory which could outline a
means of sustaining justice and benevolence within
a commercial society. This inevitably produced an
enormous tension in his thought as he struggled to
weave morality and the market into a new
theoretical synthesis.

Ludwig von Mises (1881-1973, Austrian economist),
Hayek’s teacher and predecessor, at least
acknowledged the ambiguous legacy of Smith in this
regard, noting in Theory and History that the
author of the Wealth of Nations ‘could not free
himself from the standards and terminology of
traditional ethics that condemned as vicious man’s
desire to improve his own material conditions’.
(Ludwig von Mises, Theory and History, New Haven:
Yale University Press, 1957, p. 168.) In an effort
to appropriate the Smithian legacy to his own
ends, Hayek prefers to ignore these aspects of
Smith’s thought, to smooth out its tensions and
flatten it into a homily for the market. Subtly,
however, he has come to put greater emphasis on
Smith’s adversary, Bernard Mandeville (1670-1733,
British physician and satirist) as the first
prophet of the cult of the market. But in
depicting the author of the Wealth of Nations as a
Mandevillean, Hayek is engaged in nothing less
than a wholesale vulgarization of Smith’s thought.

Given the obvious nature of this vulgarization, it
is ironic that much recent scholarship has
presented a ‘new’ image of Smith which looks
remarkably like a much older picture. A long-
standing line of interpretation depicted the
author of the Wealth of Nations as ‘an unconscious
mercenary in the service of a rising capitalist
class in Europe’ and as ‘the prophet of the
commercial society of modern capitalism’. (Max
Lerner, Introduction to Adam Smith, The Wealth of
Nations, ed. Edwin Cannon, New York: Modern
Library, 1937, p. ix; Joseph Cropsey, ‘Adam Smith
and Political Philosophy’, in Essays on Adam
Smith, eds Andrew Skinner and Thomas Wilson,
Oxford: Oxford University Press, 1975, p. 132.)
Recent interpretations have arrived at a more
theoretically subtle and informed image of Smith
by setting the Wealth of Nations alongside its
author’s first work, The Theory of the Moral
Sentiments (1759), and students’ notes of his
Lectures on Jurisprudence from his tenure at
Glasgow University. The author of the Wealth of
Nations thus emerges as a much more sophisticated
and profound theorist than earlier images had
suggested. Notwithstanding these modifications,
the final image offered in the new interpretation
is remarkably similar to the traditional one. In
one of the most influential volumes in this area,
we are informed, for example, that Smith was
engaged in a ‘defence of modernity’ and that
‘Smith’s argument remains the core of modern
capitalism’s defence of itself. (Istvan Hont and
Michael Ignatieff, ‘Needs and Justice in the
Wealth of Nations’, in Wealth and Virtue: The
Shaping of Political Economy in the Scottish
Enlightenment, eds Istvan Hont and Michael
Ignatieff, Cambridge: Cambridge University Press,
1983, p. 2; Michael Ignatieff, ‘Smith, Rousseau
and the Republic of Needs’, in Scotland and
Europe, 1200-1850, ed. T. C. Smouth, Edinburgh:
John Donald, 1986, p. 193.)

The new interpretation situates Smith in a long
line of jurisprudential theorizing which,
rejecting classical civic humanist concerns for a
virtuous society of publicly spirited citizens,
gave priority to the rights of individuals to
pursue their economic well-being free from
traditional moral and social restraints. (Among
the most important examples of this
interpretation, see Quentin Skinner, The
Foundation of Modern Political Thought, 2 vols,
Cambridge: Cambridge University Press, 1978;
Duncan Forbes, Hume’s Philosophical Politics,
Cambridge: Cambridge University Press, 1975;
James Tully, A Discourse of Property: John Locke
and his Adversaries, Cambridge: Cambridge
University Press, 1980; Knud Haakonssen, The
Science of a Legislator: The Natural Jurisprudence
of David Hume and Adam Smith, Cambridge: Cambridge
University Press, 1981; and Richard Teichgraber,
III, ‘Free Trade’ and Moral Philosophy: Rethinking
the Sources of Adam Smith’s ‘Wealth of Nations’,
Durham: Duke University Press, 1986. For a
critique of the conclusions arrived at in this
approach with respect to Locke, see David McNally,
‘Locke, Levellers and Liberty: Property and

Democracy in the Thought of the First Whigs’,

History of Political Thought 10, 1989, pp. 17-40.)
In this view, Smith’s theory adopts the
individualistic co-ordinates of economic ‘rights’
and ‘liberties’ as an alternative to those of the
virtuous republic; its coherence thus derives from
a preoccupation with those political conditions
which protect the rights of individuals to free
exercise of their labour and their property. In
place of the conflict between virtue and
corruption, Smith’s argument is said to have
substituted that between personal liberty and
public restraint. The result is a sharp depiction
of Smith as a defender of capitalism and a
theorist of ‘possessive individualism’. It follows
from this view that classical economists such as
David Ricardo and John Stuart Mill (1806-1873,
English philosopher and economist) were correct to
see themselves as the heirs of Smith; and that
early socialist writers had no right to lay claim
to the author of the Wealth of Nations. (This is
the view especially of Samuel Hollander, The
Economics of David Ricardo, Toronto: University of
Toronto Press, 1979, pp. 652-60, a position which
is repeated, not surprisingly, by another
subscriber to the ‘jurisprudential’ approach,
Biancamaria Fontana, Rethinking the Politics of
Commercial Society: the ‘Edinburgh Review’ 1803-
1832, Cambridge: Cambridge University Press, 1985,
p. 80. For my critique of Hollander’s
interpretation of Smith, see McNally, Political
Economy, pp. 242-8.)

The jurisprudential interpretation has generated
some important insights into the overlapping and
interlocking lines of argument that run through
the Wealth of Nations. But, by constructing its
argument in so thoroughly one-sided a fashion, it
fundamentally distorts our image of Smith. In a
manner similar to Hayek, albeit with much greater
theoretical sophistication, it has treated the
Wealth of Nations as if all that really matters
are the early chapters of Book One on the division
of labour and exchange, and Book Five on the tasks
of the legislator in a system of economic liberty.
Ironically, as one commentator notes, ‘the
economic analysis of the Wealth of Nations’ has
had ‘a shadowy existence’ in recent debates over
Smith. (Donald Winch, ‘Adam Smith’s “Enduring
Particular Result”: a Political and Cosmopolitan
Perspective’, in Hont and Ignatieff, p. 268.)
Equally significant, the connection between
Smith’s moral philosophy and his theory of
economic exchange has been obscured.

It is the object of this chapter to outline the
very real tensions that run through Smith’s
thought, tensions that derived from his ingenious
but untenable effort to reconcile ‘the old ethics
with the new economics’. I endeavour to show that
Smith’s ‘economics’ presuppose his moral theory
and its jurisprudential component, and that the
transformation of his thought into an apologetic
bourgeois ideology required a systematic
vulgarization, a process in which Malthus played a
central role. Finally, I argue in subsequent
chapters that Smith’s ‘solution’ could not survive
the changed circumstances of the transition to
industrial capitalism. The disintegration of his
system was therefore inevitable. Equally
inevitable were the efforts of both apologists for
and critics of early industrial capitalism to base
their arguments on that work which held sway over
the entire field of political economy – the Wealth
of Nations.

Ron Allen

Jan 22, 2004, 8:53:40 AM1/22/04
Book Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique

Author: David McNally

Chapter 2 Justice and Markets: The Ambiguous
Legacy of Adam Smith

Virtue and Commerce: Against Mandeville

‘If Dr. Hutchinson could give no lecture without
attacking The Fable of the Bees, we may be sure
that his student Adam Smith very soon turned to
it.’ So writes F. A. Hayek. Indeed, Hayek proceeds
to claim that the central arguments of The Fable
of the Bees became the basis of the approach to
social philosophy of David Hume and his
successors’. (Hayek, New Studies, p. 252.) That
such statements can be made today is testimony
not only to shoddy scholarship, but, more
significantly, to the strenuous efforts which have
been made for nearly two hundred years to revise
Smith in order to transform him into an apostle of
self-interest, competition and the market.

Let us start by setting the terms of the
discussion. The ‘Dr. Hutchinson’ in question is
Francis Hutcheson (1694-1746), Professor of Moral
Philosophy at Glasgow University and teacher of
Adam Smith. Modern studies have rightly treated
Hutcheson as the key figure in the early Scottish
Enlightenment, as ‘the personality most
responsible for the new spirit of enlightenment in
the Scottish universities. (Gladys Bryson, Man and
Society: The Scottish Enquiry of the Eighteenth
Century, Princeton: Princeton University Press,
1945, p. 8.) The Fable of the Bees was the work of
the Dutch doctor Bernard Mandeville. It appeared
in 1705 as a poem entitled The Grumbling Hive, or
Knaves Turned Honest, a satirical effort designed
to debunk classical moral theories by showing that
selfish passions were the basis of human action
and that these, not ostensible virtues, often
served the best interests of society, if properly
manipulated by a clever statesman. Nine years
later Mandeville republished the poem with a prose
commentary. Another nine years after that he
brought out a second edition under the title,
Fable of the Bees, or Private Vices Public
Benefits. Then in 1728 a second volume appeared
which elaborated the original argument in greater
detail. (Bernard Mandeville, The Fable of the
Bees, 2 vols, ed. F. B. Kaye, Oxford: Oxford
University Press, 1924.)

Central to the perspective of the Fable was the
claim that corruption, fraud and deceit were
socially and economically beneficial. As the story
unfolds, elimination of these three vices, and
their replacement by traditional virtues, results
in the collapse of industry and trade. Mandeville
argues that luxury and extravagance,
traditionally considered vices, in fact provide a
stimulus to many trades, just as theft provides
work for the locksmith. While he did not insist
that all vices automatically produce public
benefits – this requires the ‘dextrous Management
of a skillful Politician’ - he prided himself on
having demonstrated that society is not built on
‘the Friendly Qualities and kind Affections that
are natural to Man’, nor on ‘the real Virtues he
is capable of acquiring by Reason and Self-
Denial’. Rather, he claimed to have proved ‘that
what we call Evil in this World, Moral as well as
Natural, is the grand principle that makes us
sociable Creatures, the solid Basis, the Life and
Support of all Trades and Employments without
exception’. (Ibid., p. 369.)

More than any other theoretical encounter, it was
his confrontation with Mandeville which decisively
shaped the political thought of Smith’s great
teacher Francis Hutcheson. Although Hutcheson
adduced a number of strictly economic arguments
against the author of the Fable, his critique
hinged on a theory of the human passions. Here,
the key line of argument was the claim that human
beings possess both selfish and social passions.
Among the latter is ‘a natural impulse to society
with their fellows’ and a ‘moral sense’ (or
senses), which predispose individuals to favour
the public interest. Social life requires a
carefully regulated balance and harmony among
these impulses, but it is not simply reducible to
any one of them. (See the discussion in McNally,
Political Economy, pp. 164-7.)

Contrary to Hayek’s crude effort to collapse Smith
into Mandeville’s position, it is clear that the
author of the Wealth of Nations adhered much more
closely to the Hutchesonian perspective. In one of
his earliest published efforts, a 1756 letter to
the short-lived Edinburgh Review, Smith took issue
with both Mandeville and Rousseau and their shared
view that ‘there is in man no powerful instinct
which necessarily determines him to seek society
for its own sake’. Smith rejected this asocial
conception of human nature, although he was
clearly more sympathetic to Rousseau’s overall
position. His description of Mandeville’s views
as ‘profligate’ and his denunciation of their
‘tendency to corruption and licentiousness which
has disgraced them’ go some considerable way
toward undermining the notion that Smith was in
any sense an adherent of the author of the Fable.
(Adam Smith, ‘Letter to the Edinburgh Review’, in
his Essays on Philosophical Subjects, London:
Oxford University Press, 1980, pp. 250, 251.)

Moreover, these criticisms were not isolated
events. It was one of the central purposes of
Smith’s major work in moral philosophy, The Theory
of the Moral Sentiments (first edition 1759) to
refute the claim of ‘the selfishness school’ that
the foundation of all human action is selfish
passion. Smith there attacks Mandeville’s system
as ‘wholly pernicious’ and as a piece of
‘ingenious sophistry’. And he writes that ‘It is
the great folly of Dr Mandeville’s book to
represent every passion as wholly vicious, which
is so in any degree and in any direction’.

The first sentence of the Moral Sentiments
directly attacks this position. Smith writes that,
'How selfish soever man may be supposed, there are
evidently some principles in his nature, which
interest him in the fortune of others, and render
their happiness necessary to him, though he
derives nothing from it, except the pleasure of
seeing it.' (Adam Smith, The Theory of the Moral
Sentiments, Indianapolis: Liberty Classics, 1969,
pp. 47, 487, 493. This work is hereafter cited as

Smith grounds our capacity for moral behaviour in
our ability, via the imagination, to sympathize
with the situations of others, and in our desire
to act in such a way as to elicit their sympathy
in turn. Our impulse for sympathy with others is
rooted in the pleasure afforded by communication
and conversation. Human beings dislike disharmony
and disagreement, Smith believes; this gives rise
to ‘the naturall inclination every one has to
persuade’. In order to produce a convergence and
harmony of opinions and sentiments, ‘every one is
practising oratory on others thro the whole of his
life’. ‘Nothing pleases us more’, he writes, ‘than
to observe in other men a fellow-feeling with the
emotions of our own breast.’ Seen in this light,
the art of communication is the creation through
language of a sympathetic identification between a
speaker and his listeners. (Adam Smith, Lectures
on Jurisprudence, ed. R. L. Meek, D. D. Raphael
and P. G. Stein, Oxford: Oxford University Press,
1978, p. 352, hereafter cited as LJ; Smith, TMS,
p. 54. The human need for communication and
conversation is a much neglected aspect of Smith’s
thought. For more on this point, see McNally,
Political Economy, pp. 178-81.) Smith is quite
explicit about the role of sympathy in this
process of communication. As he puts it in a
passage from his Lectures on Rhetoric and Belles
Lettres, 'Whenever the sentiment of the speaker is
expressed in a neat, clear, plain and clever
manner, and the passion or affection he is
poss[ess]ed of and intends, by sympathy, to
communicate to his hearer, is plainly and cleverly
hit off, then and then only the expression has all
the force and beauty that language can give it.'
(Adam Smith, Lectures on Rhetoric and Belles
Lettres, ed. John M. Lothian, Carbondale: Southern
Illinois University Press, 1971, p. 51.)

It follows, then, that sympathy is essential to
the fullest possible communication of our
sentiments. And sympathy, he argues, ‘cannot in
any sense be regarded as a selfish principle’.
(Smith, TMS, p. 501.) In addition to self-
interest, human behaviour is governed by social
passions - sympathy and the desire for
conversation and communication. Our sentiments
thus involve a natural desire for a community of
feelings and opinions. ‘The great pleasure of
conversation and society’, he continues towards
the end of the Moral Sentiments, ‘arises from a
certain correspondence of sentiments and opinions,
from a certain harmony of minds, which, like so
many musical instruments, coincide and keep time
with another. But this most delightful harmony
cannot be obtained unless there is a free
communication of sentiments and opinions. (Ibid.,
p. 531.)

Our desire for sympathy with and from others
arises, therefore, from the pleasure we derive
from society, understood as a community of
language and sentiments. Human beings are thus
naturally sociable; yet sympathy involves more
than a natural instinct or moral sense: it
requires an exercise of the imagination through
which we attempt to place ourselves in the shoes
of another in order to form an image of their
experience, and to imagine how our behaviour in a
given situation appears to them. Indeed, Smith
maintains that through social interaction we
internalize norms of appropriate behaviour (a sort
of moral code), and that we attempt to measure our
own behaviour against our notion of how it would
appear to a disinterested or ‘impartial
spectator’. Thus, the desire for sympathetic
interaction is natural; the moral sentiments,
however, are socially constructed through our
acceptance of behavioural norms as the necessary
condition of sympathy with others. (It is worth
noting that such a position represents a unique
synthesis of Hutcheson’s largely naturalistic and
Hume’s essentially rationalistic explanations of
moral behaviour, one which Smith thinks overcomes
the weakness in the positions of his

Smith argues, however, that our imaginary entry
into the experience of others is inevitably
‘imperfect’; we can never truly experience the
full degree of their joy or their grief. For this
reason, the fullness of their sympathetic
identification with us requires that we moderate
and subdue our passions. In so doing, we make our
experience more accessible to them, and thereby
enhance our ‘correspondence of sentiments'. In
order that others may enter into his experience,
the individual must control his passion, he ‘must
flatten ... the sharpness of its natural tone, in
order to reduce it to harmony and concord with the
emotions of those who are about him’. (Smith, TMS,
p. 67.) Moderation and self-control are thus
prerequisites of communication and conversation;
without self-control there will be discord rather
than concord of sentiments, and society in the
fullest sense of the term will not be possible.
Our natural impulse towards society requires,
therefore, that we learn to shape our behaviour to
conform to prevailing standards and expectations.
And this involves ‘humbling the arrogance’ of our
self-love and bringing ‘it down to something that
other men can go along with’. (Ibid., p. 162.)
Thus, however much self-love is part of the
natural constitution of human beings, so is the
social impulse towards conversation and society,
an impulse which underlies learned behaviour
through which we control our self-love in the
interest of harmony with others.

The psychological underpinnings of Smith’s theory
of society are thus anything but the sort of self-
seeking individualism commonly associated with
Thomas Hobbes and Bernard Mandeville. Following
his teacher Francis Hutcheson, Smith starts from
the premiss of natural sociability. And he sees
the essence of our ‘socialization’ as involving
acquired habits of self-control in order that we
might have the pleasures of conversation and
society. Moreover, these are the presuppositions
of his discussion in the Wealth of Nations of the
division of labour and exchange.

Ron Allen

Jan 22, 2004, 9:34:24 AM1/22/04
Book Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique

Author: David McNally

Chapter 2 Justice and Markets: The Ambiguous
Legacy of Adam Smith

Dependence, Independence and Wage-labour

Perhaps the most important of these tensions
concerns the problem of personal independence in
commercial society. Smith's hostility to feudalism
(and the feudal nobility) was fuelled by his
belief that the ties of personal ‘dependence’
which bound the poor to the rich inevitably
demeaned and corrupted the former while rendering
the latter overbearing and abusive. One of the
attractions of commercial society for Smith was
that it dissolved these ties: ‘Nothing tends so
much to corrupt and enervate and debase the mind
as dependency, and nothing gives such noble and
generous notions of probity as freedom and
independency. Commerce is one great preventive of
this custom [of dependency].’ (Smith, LJ, p. 333.
On this point, despite some theoretical
shortcomings, see Thomas J. Lewis, ‘Adam Smith:
The Labor Market as the Basis of Natural Right’,
Journal of Economic Issues 11, 1977.)

Consistent with this view, the early chapters of
the Wealth of Nations employ a model of commercial
society based upon interaction between independent
commodity producers like butchers, brewers and
bakers. Such individuals are independent not only
in the sense that they are not bound to a lord;
they are also independent owners of their own
means of production and work for themselves, not
an employer. It is clear that Smith preferred an
economy based on independent commodity producers
(including a large number of yeomen farmers). He
writes, for example, that

‘Nothing can be more absurd, however, than to
imagine that men in general should work less when
they work for themselves, than when they work for
other people. A poor independent workman will
generally be more industrious than even a
journeyman who works by the piece. The one enjoys
the whole produce of his industry; the other
shares it with his master. The one, in his
separate state, is less liable to the temptations
of bad company, which in large manufactories ruin
the morals of the other. The superiority of the
independent workman over those servants who are
hired by the month or the year, and whose wages
and maintenance are the same whether they do much
or do little, is likely to be still greater.'
(Smith, WN, 1, p. 101.)

The ‘superiority of the independent workman’ is
thus both economic, because of the greater
industry of those who work for themselves, and
moral, as a result of the lack of direct exposure
to the immorality of other (wage-dependent)
workmen. But Smith’s idealized independent workman
is not economically self-sufficient. As his
strictures against the ‘slothful and lazy’ country
weaver indicate, Smith envisages independent
workmen who are specialized commodity producers.
(See ibid., p. 18.) They operate, therefore, in
a network of market relations with others; but
they do so from a position of independence. It is
easy to comprehend the attractions of such an
outlook given Smith’s moral philosophy. An economy
of independent commodity producers comprises
relations between individuals who are (at least
formally) equal. The butcher, the brewer and the
baker must conduct themselves prudently in order
to elicit the sympathetic understanding of those
with whom they exchange, just as they must be
capable of entering into a sympathetic
appreciation of each other’s position in turn. A
commercial society in which ‘every man is in some
measure a merchant’ thus constitutes in principle
for Smith a network of equitable relationships
between free and independent individuals.

A model based on independent commodity producers
is at the heart of Smith’s Lectures on
Jurisprudence and the first five chapters of Book
One of the Wealth of Nations. (It is true, of
course, that Smith does use examples of nail-
making and pin-making manufacture, but these are
mere illustrations of his argument for the
productivity generated by division of labour; they
do not affect the core model he employs in these
early chapters, which indicates his tendency to
conflate the division of labour in industry with
social division of labour in general. On Smith’s
neglect of fixed capital, see McNally, Political
Economy, pp. 240-43.) Chapter 6 of Book One
introduces a radically different model, however,
one based on the agrarian capitalist triad of
landlord, capitalist and wage-labourer. Smith
introduces this triadic model in order to account
for natural price (value) and the distribution of
the national income among the three main social
classes. In so doing, his model acquires a much
deeper and richer historical realism. (This shift
in model is crucial to Smith’s description of an
‘adding up’ theory of value based on the
respective contributions of land, labour and
capital in place of a simple labour theory of
value. I have argued elsewhere that Smith acquired
the triadic model from the physiocrats. See
McNally, Political Economy, pp. 234-50.) At the
same time, however, the force of his argument that
commercial society fosters independence is
significantly weakened. Indeed, Smith now
acknowledges that in modern Europe, ‘the greater
part of the workmen stand in need of a master’
(i.e., they do not own or possess means of
production), and indeed that wage-labourers
outnumber independent workmen by a ratio of 20 to
1. (Smith, WN, 1, p. 83.) The only way of
fitting this reality into Smith’s initial model is
to treat those who sell their labour as
‘merchants’ just like those who sell commodities
produced by their employees. The notion that both
capitalists and wage-labourers represent free and
independent buyers and sellers in the market is,
of course, one of the classic apologetic claims of
vulgar bourgeois economics. Although Smith’s
slippage from the one-class model of independent
commodity producers to the three-class model opens
the door to doing precisely this, it is clear that
he does not do so for apologetic purposes.
Nevertheless, by treating a tripartite class
society as a society of independent ‘merchants’,
Smith developed a line of thought which was to be
crucial to the development of political economy as
a pure and simple bourgeois ideology.

Ron Allen

Jan 22, 2004, 9:15:34 AM1/22/04
Book Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique

Author: David McNally

Chapter 2 Justice and Markets: The Ambiguous
Legacy of Adam Smith

Sympathy, Communication and Exchange

It seems probable, Smith argues in his treatise on
political economy, that the human ‘propensity to
truck, barter, and exchange one thing for another’
is the ‘necessary consequence of the faculties of
reason and speech’. Indeed, in his Lectures on
Jurisprudence, Smith traces this propensity to our
natural inclination to persuade. Moreover, this
propensity is uniquely human, ‘it is common to all
men, and to be found in no other race of animals’.
Certainly, ‘nobody ever saw a dog make a fair and
deliberate exchange of one bone for another with
another dog’. (Adam Smith, The Wealth of Nations,
2 vols, eds R. H. Campbell and A. S. Skinner,
Oxford: Oxford University Press, 1976, pp. 25-6.
This work is hereafter cited as WN. On the origins
of the propensity to exchange in our inclination
to persuade, see Adam Smith, LJ, p. 352.)
Exchange is both a reasonable and a sociable act.
It presupposes that, by language, I can
communicate the (imagined) benefits that another
might derive from something I possess and,
similarly, that I might equally conceive of the
benefits I would receive from something which they
possess in turn. Thus, although I appeal to the
self-interest of the butcher, the brewer or the
baker, this appeal presupposes that I participate
with them in a network of communication and social
interaction without which ‘deliberate exchange’
could not occur. (See McNally, Political Economy,
pp. 210-11.) Furthermore, exchange is impossible
unless I am able to acquire (via the imagination)
a sympathetic understanding of the interests of

Division of labour and exchange is thus predicated
on co-operation and interaction. Indeed, it is not
the anonymous and impersonal character of exchange
that appeals to Smith, but the possibility that
involvement in an exchange economy or ‘commercial
society’ could have a moralizing impact on the
individual. In the Moral Sentiments he writes, for
example, that ‘in the race for wealth, and
honours, and preferments, he may run as hard as he
can, and strain every nerve and every muscle, in
order to outstrip all his competitors. But if he
should justle, or throw down any of them, the
indulgence of the spectators is entirely at an
end. It is a violation of fair play, which they
cannot admit of.’ (Smith, TMS, p. 162.)

However comical this picture may appear in light
of the reality of modern capitalist behaviour,
there can be little doubt that Smith took it
seriously and that he hoped that an exchange
economy would provide a context of social
interaction which would reinforce the need for
self-control and adherence to customary forms of
moral behaviour.

Although he appears to have become increasingly
pessimistic in later years about the civilizing
effects of commerce and exchange, Smith still
hoped that commercial society could enforce
standards of propriety and prudent behaviour.
(McNally, Political Economy, pp. 225-7. On Smith’s
growing pessimism as reflected in the 1790 edition
of the Moral Sentiments, see John Dwyer, Virtuous
Discourse: Sensibility and Community in Late
Eighteenth-Century Scotland, Edinburgh: John
Donald, 1987, ch. 7; and Ralph Anspach, ‘The
Implications of the Theory of the Moral Sentiments
for Adam Smith’s Economic Thought’, History of
Political Economy 4, 1972, pp. 176-206.) Indeed,
it was central to his view that one of the
greatest merits of commercial society - the
increase in national wealth it generates –
would benefit the ‘sober and industrious poor’
only if such standards of prudence and propriety
were reinforced, not undercut, by the behaviour of
people in the market. According to Smith, by
interesting others in our economic situation (what
we can offer in exchange) and taking an interest
in their offerings in turn, human beings construct
a network of economic co-operation and transaction
- a social economy - in which they can develop
unique talents by means of specialization. The
result is twofold: first, the development of
special talents and professions; and, second, the
enormous augmentation of wealth such
specialization produces. (Smith, WN, 1, pp. 22,
29, 30.) Smith's praise for the division of
labour embraces both of these interrelated
consequences. But there can be no doubt that his
emphasis is on the latter.

The great achievement of commercial society for
Smith is ‘that universal opulence which extends
itself to the lowest ranks of the people’. Indeed,
Smith claims that the gap between the comforts of
a European prince and those of ‘an industrious and
frugal peasant’ is not so great as that between
the latter and ‘many an African king, the absolute
master of the lives and liberties’ of thousands.
(Ibid., 1, pp. 22, 24.) While this is the
greatest advantage of commercial society over
other forms, it is clear that Smith was deeply
worried that prevailing prejudices and practices
could prevent the poor from enjoying the increased
comforts that should rightfully be theirs in
modern society. For this reason he endorses the
‘liberal reward of labour’ and claims, contrary to
a long-standing view, that such a reward
‘increases’ rather than diminishes ‘the industry
of the common people’. Smith, in fact, defines
wealth in terms of consumption which is, he
claims, ‘the sole end and purpose of production’
and he denounces measures to limit wages. (Ibid.,
1, p. 99, 2, p. 660, l, p. 283. See also Samuel
Hollander, The Economics of Adam Smith, Toronto:
University of Toronto Press, 1973, p. 146.) In
this vein, he defends ‘the liberal reward’ of
labour in terms of straightforward justice and
equity: ‘Is this improvement in the circumstances
of the lower ranks of the people to be regarded as
an advantage or as an inconveniency to the
society? The answer seems at first sight
abundantly plain. Servants, labourers and workmen
of different kinds, make up the far greater part
of every great political society. But what
improves the circumstances of the greater part can
never be regarded as an inconveniency to the
whole. No society can surely be flourishing and
happy, of which the greater part of the members
are poor and miserable. It is but equity, besides,
that they who feed, cloath and lodge the whole
body of the people, should have such a share of
the produce of their own labour as to be
themselves tolerably well fed, cloathed and
lodged.’ (Smith, WN, p. 96.)

Smith’s support for the ‘liberal reward of labour’
was crucial to his theory of commercial society.
Like the other great representatives of ‘the
Scottish historical School’ - Francis Hutcheson,
Lord Kames, Adam Ferguson, David Hume and John
Millar - and more so than his friend Hume, Smith
was acutely aware of the losses that accompanied
commercial society. His historical realism,
however, coupled with his belief in the importance
of personal independence and security, allowed him
to construct a cautious - and cautionary – defence
of such a social order. Nevertheless, there are
important tensions and contradictions in Smith’s
theory of commercial society as set forth in the
Wealth of Nations, and these were to be of great
significance for the later development of
political economy.

Ron Allen

Jan 22, 2004, 9:55:24 AM1/22/04
Book Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique

Author: David McNally

Chapter 2 Justice and Markets: The Ambiguous
Legacy of Adam Smith

Exploitation, Equity and the Market

However much the Wealth of Nations opened a line
towards vulgar economics, Smith’s predispositions
were clearly on the side of labourers in their
relations with their employers. He pointed out,
for example, that there were no laws limiting
combinations among employers of the sort that
prohibit trade union combinations. Indeed, he was
openly critical of ‘those laws which have been
enacted with so much severity against the
combinations of servants, labourers and
journeymen’. He notes that, although workers’
combinations attract enormous public attention, in
fact ‘masters are always and everywhere in a sort
of tacit, but constant and uniform combination,
not to raise the wages of labour above their
actual rate’. Indeed, so thoroughly does he
mistrust the conspiracies of employers that he
claims that ‘whenever the legislature attempts to
regulate the difference between the masters and
their workmen, its counsellors are always the
masters. When the regulation, therefore, is in
favour of the workmen, it is always just and
equitable; but it is sometimes otherwise when in
favour of the masters.’ Finally, he argues against
the complaints of masters concerning high wages,
that high profits are a greater cause of high
prices, and thus more hurtful to the public than
high wages. (Ibid., pp. 84-5, 157-8, 114-15.)

Smith’s emphasis on the public benefits of low
prices is worthy of special note. From his
Lectures on Jurisprudence onwards, he maintained
that the best measure of national wealth was the
consumption of the average member of society.
Consequently, anything that raised the prices of
commodities, and thereby made them less accessible
to the majority, diminished national wealth or
‘public opulence’: ‘whatever police [sic] tends
to raise the market price above the natural, tends
to diminish public opulence. Dearness and
scarceity are in effect the same thing. When
commodities are in abundance, they can be sold to
the inferiour ranks of the people ... Whatever
therefore keeps goods above their natural price
for a permanencey, diminishes [a] nations
opulence.’ (Smith, LJ, p. 497.)

This line of argument provides the theoretical
foundation for Smith’s critique of merchants and
manufacturers, his ‘very violent attack’ on ‘the
whole commercial system of Great Britain’ as he
put it. (Adam Smith to Andreas Holt, October 1780
in The Corespondence of Adam Smith, eds Ernest
Campbell Mossner and Ian Simpson Ross, Oxford:
Clarendon Press, 1977, p.251.) For Smith believed
that the laws of the market which underpin
‘natural prices’ are consistently violated by
policies and practices which produce an upward
deviation of market prices from natural prices. In
the ‘natural progress of opulence’, market
competition and increases in productivity tend to
reduce profits and prices to the benefit of the
public. As a result, merchants and manufacturers
have a direct interest ‘to deceive and even to
oppress the public’ by conspiring to boost market
prices and profits:

‘The interest of the dealers ... in any particular
branch of trade or manufactures, is always in some
respects different from, and even opposite to,
that of the publick. To widen the market and to
narrow the competition, is always the interest of
the dealers. To widen the market may frequently be
agreeable enough to the interest of the publick;
but to narrow the competition must always be
against it, and can only serve to enable the
dealers, by raising their profits above what they
would normally be, to levy, for their own benefit,
an absurd tax upon the rest of their fellow-
citizens.’ (Smith, WN, 1, p. 267.)

The Wealth of Nations rings with an indignant
attack on these capitalist groups. Smith denounces
‘the mean rapacity, the monopolizing spirit of
merchants and manufacturers’; he condemns their
‘impertinent jealousy’ and their ‘interested
sophistry’. He compares these groups to ‘an
overgrown standing army’ which attempts to
‘intimidate the legislature’ into erecting ‘the
sneaking arts of under-lying tradesmen' into
‘political maxims for the conduct of a great
empire’. (Ibid., 1, pp. 144, 267, 2, pp. 471, 493,
2, p. 613.) Indeed, Smith believed that these
groups had managed to construct a set of
monopolistic practices - the mercantile system –
which depressed wages and rents by boosting
profits and prices. On top of this, Smith accuses
mercantilism of diverting investment away from
those areas where it generates the most employment
- agriculture and local manufactures - and into
areas such as overseas trade which generate less
employment. Mercantilism thus reduces national
wealth, defined as it is by Smith in terms of the
real level of consumption of the labouring poor.
(See McNally, Political Economy, pp. 223, 231-2.)

Smith's theory of natural price thus had
explicitly normative concerns. Having defined
public opulence (the wealth of the nation) in
terms of the level of consumption of the average
member of society, and having argued that the
natural progress of opulence results in falling
prices and rising wages, his theory of natural
price invokes notions of justice and equity.
Monopolistic practices con-stitute a form of
exploitation - the infliction of an ‘absurd tax’
on the wealth of others. By raising prices and
reducing real wages, they also violate the
principle of ‘equity’ according to which ‘they who

feed, cloath and lodge the whole body of the
people, should have such a share of the produce of
their own labour as to be themselves tolerably

well fed, cloathed and lodged’. Smith, in fact,
held that, by tolerating such monopolies ‘for the
benefit of the rich and the powerful’, the state
was complicit in policies which were ‘evidently
contrary to that justice and equality of treatment
which the sovereign owes to all the different
orders of his subjects’. (Smith, WN, 2, p. 654.
Smith's reference to ‘the rich and the powerful’
can be found in ibid., p. 644.)

Smith's theory of natural price thus offers a
language of moral critique of monopolistic
‘exploitation’ in the market. This should come as
no surprise given that his political economy was
deeply rooted in the traditions of natural
jurisprudence associated with Hugo Grotius (Huig
De Groot, 1583-1645, Dutch jurist and legal
philosopher) and Samuel Pufendorf (1632-1694,
German jurist and legal philosopher), and
transmitted to him by his teacher Francis
Hutcheson (1694-1746, Scotch-Irish philosopher).
As Marian Bowley notes in this regard: ‘Adam
Smith's reliance on competition to eliminate the
divergences [between market prices and natural
prices] was wholly consistent with the acceptance
by some of the later Schoolmen of the price ruling
in a competitive market as the just price. The
requirement of competition by such Schoolmen was
of course due, as with Adam Smith, to the need to
prevent individuals, or groups, from obtaining and
taking advantage of favourable bargaining
positions to raise prices.’ (Marian Bowley,
Studies in the History of Economic Theory Before
1870, London: Macmillan, 1973, pp. 127-8.)

This line of argument was taken up by some popular
political economists who employed Smith's theory
of natural price in order to attack the
‘exploitative’ practices of large merchants and
master-manufacturers. Smith's idealized notion of
the formation of (just) natural prices under
conditions of ‘perfect liberty’ provided a
contrast to the exercise of monopolistic powers
and privileges. At the same time, however, it
confined such ‘critiques of political economy’ to
the sphere of exchange, and in so doing
constrained their analytic range and the political
perspectives which flowed from them, points to
which I shall return.

Ron Allen

Jan 22, 2004, 10:08:23 AM1/22/04
Book Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique

Author: David McNally

Chapter 2 Justice and Markets: The Ambiguous
Legacy of Adam Smith

Moral Economy and the Market

Smith is commonly depicted as a theorist who
asserted the superiority of the market economy
over a regulated ‘moral economy’. (E. P. Thompson,

‘The Moral Economy of the English Crowd in the

Eighteenth Century’, Past and Present 50, 1971,
pp. 89-91; Hont and Ignatieff, pp. 18-21.) There
is an important element of truth in this view.
Certainly, one finds such a perspective in his
treatment of the grain trade in the Wealth of
Nations. There was a long-standing tradition in
England and elsewhere of popular requisitioning of
grain and its distribution according to ‘just
prices’ in times of scarcity and high prices.
Smith saw popular fears that dealers would engross
grain and withhold it from the market in order to
await higher prices, and the exercises of taxation
populaire such fears induced, as entirely
irrational, on the same level as ‘the popular
terrors and suspicions of witchcraft’. (Smith, WN,
1, p. 534.)

He maintained that inland dealers in grain –
independent farmers and bakers - were too numerous
to combine effectively; that forcing farmers to
market their own grain in order to eliminate
middlemen was inefficient as it necessitated tying
up capital in the grain trade which could be
better employed on the land. Except in rare cases
of ‘urgent necessity’, he held that free trade in
grain was the best means of establishing
reasonable prices, which would satisfy the
subsistence needs of the people while providing a
fair profit to the farmer. (Ibid., pp. 526-39.)
Clearly, we have here a straightforward case of
Smith choosing the market in food over the
traditional moral economy.

If the free market in food was one of the
intellectual cornerstones of liberal-capitalist
thought during this period, so was the argument
for the free market in labour. Here again, Smith
comes down on the side of ‘modernity’, which
should come as no surprise given his dislike of
the dependency and corruption he associated with
feudal relations. Yet it is instructive that
Smith's discussion of the labour market assumes
that restraints on the ‘free circulation of
labour’ usually favour employers, not workers.
Thus, when it comes to the poor laws, Smith has
nothing to say about the subsidy they provide to
labour, or their allegedly deleterious effect on
habits of industry - the centrepieces of
nineteenth-century attacks on the poor laws.
Instead, he focuses his attention upon the laws of
settlement, claiming that they are hurtful to the
labourers. He maintains that this is so for three
main reasons.

First, by requiring a year's settlement to
establish eligibility for poor relief, these laws
induce employers to hire for periods of less than
a year. Second, they establish great inequalities
in the price of labour within different areas
since they effectively prevent large numbers from
migrating to high-wage areas in search of work.
Finally, they are ‘an evident violation of natural
liberty’ since they lead to removals from parishes
of non-settlement simply because individuals have
pursued an opportunity to exercise their labour.
(Ibid., pp. 154, 156, 157.) I have shown in
chapter 1 that the reality was more complex; that
the poor often valued the right to parish relief
which could be established under the settlement
laws. Nevertheless, it is significant that Smith
attacks them not for encouraging indolence, but
rather for their alleged cruelty. ‘There is scarce
a poor man in England of forty years of age, I
will venture to say, who has not in some part of
his life felt himself most cruelly oppressed by
this ill-contrived law of settlements’, he writes.
On balance, then, Himmelfarb appears justified in
her judgement that ‘Smith tacitly approved of the
poor laws’. (Ibid., p. 157. Gertrude Himmelfarb,
The Idea of Poverty: England in the Early
Industrial Age, New York: Vintage, 1985, p. 111.)

Paradoxical as it seems today, Smith's defence of
the free market in labour was tied to his
conviction that market interference benefits the
rich and hurts the poor. ‘It is the industry which
is carried on for the benefit of the rich and
powerful’, he asserts, ‘that is principally
encouraged by our mercantile system. That which is
carried on for the poor and indigent, is too
often, either neglected, or oppressed.’ (Smith,
WN, 2, p. 644.) Thus, Smith's ‘language of
markets’ was meant to break down monopolistic
restrictions and thereby boost public opulence.
His attack was not directed at the poor; indeed,
he sought to improve their position. One of the
ironies of capitalist development, however, was
that Smith's rhetoric of the market, joined to a
moral crusade against the ‘indolence’ of the poor,
was to serve as a powerful ideological weapon
against the working class in the age of the
industrial revolution.

Ron Allen

Jan 22, 2004, 10:21:24 AM1/22/04
Book Title: Against the Market: Political Economy,
Market Socialism and the Marxist Critique

Author: David McNally

Chapter 2 Justice and Markets: The Ambiguous
Legacy of Adam Smith

The Economics and Politics of Social Classes

It should be clear from what we have seen thus far
that Smith had deep reservations about the
economic and political practices of merchants and
manufacturers. He believed that these groups would
attempt to build up their political influence to
enact legislation directly contrary to the public
interest in low profits and prices. This was one
reason that merchants and manufacturers ‘neither
are, nor ought to be the rulers of mankind’, and
that the state should ensure that their ‘mean
rapacity’ is ‘prevented from disturbing the
tranquility of anybody but themselves’. (Ibid., 1,
p. 493.)

Who then should exercise state power if not these
groups? There seems little doubt that Smith hoped
that a publicly spirited section of the prosperous
and improving landed gentry (including those who
may have started out in industry or trade) could
rise to their duties to the commonwealth. He
maintained that country gentlemen and farmers were
‘least subject to the wretched spirit of
monopoly’, that they were characterized by a
‘generosity which is natural to their station’,
and that ‘when the public deliberates concerning
any regulation of commerce or police [sic], the
proprietors of the land can never mislead it, with
a view to promote the interest of their own
particular order’. (Ibid., pp. 461-2, 265.) To be
sure, Smith was strongly critical of the great
proprietors descended from the feudal nobility.
But those industrious and improving landowners and
farmers who engaged in the market-oriented farming
appropriate to a commercial society were a
different matter. In their ranks he sought the
breeding ground for that ‘small party’ of ‘real
and steady admirers of wisdom and virtue’ which
was essential if commercial society was not to
decline towards corruption and abusive domination
of the poor by the rich. (Smith's discussion this
group can be found in TMS p. 127. For a fuller
discussion of Smith's profound worries in this
respect, see J. Ralph Lindgren, The Social

Philosophy of Adam Smith, The Hague: Martinus

Nijhoff, 1973, chs 4-6; and McNally, Political
Economy, pp. 180-208.) As Nicholas Philipson
writes, ‘Smith pinned what hopes he had for the
survival of a free society upon the intelligent
and commercially-minded gentry’ who lived at a
distance from the capital. (Nicholas Philipson,
‘Adam Smith as Civic Moralist, in Wealth and

Virtue: The Shaping of Political Economy in the
Scottish Enlightenment, eds Istvan Hont and

Michael Ignatieff, p. 197.)

Thus, while Smith did construct a defence of a
society organized along capitalist lines, it was a
defence of a transitional form of agrarian
capitalism in which the most enlightened section
of the landed capitalists (many of whom would have
come from the ranks of the yeomanry and
medium-sized dealers and manufacturers) - the
‘natural aristocracy’ as Smith called them - would
exercise those civic virtues without which
corruption and decay were inevitable. Smith's
attempt to ‘reconcile the old ethics with the new
economics’ was thus more than a simple ‘defence of
modernity’; and it was certainly no Mandevillean
celebration of the order spontaneously created by
the selfish passions in a competitive market. What
Smith sought was to delineate those political and
social arrangements in which the vigilance of an
enlightened section of the landed class aspiring
to ‘wisdom and virtue’ could protect the wealth-
creating effects of commercial society from abuse
by merchants and manufacturers.

Smith's happy and healthy commercial society was
thus intended to further the interests of the
poor, while limiting the impact of large merchants
and manufacturers on the body politic. To be sure,
historical and social reality proved that such a
scenario was naïve in the extreme. And when the
full impact of capitalist transformation elevated
precisely those groups that worried Smith (in
alliance with a landed class which eschewed its
alleged moral duties), while the poor suffered an
intensification of hardship that would have
shocked him, it was inevitable that his delicate
attempt to balance virtue and commerce, progress
and public opulence, would come crashing down.
Moreover, because of his idealization of free
markets, elements of Smith's political economy
could be used to legitimate outcomes that might
have troubled him deeply. In this regard, Smith
provided at least part of the intellectual armoury
for a position (demoralized capitalist
apologetics) inconsistent with his own moral
predelictions. E. P. Thompson has correctly
grasped this point with respect to Smith's
arguments concerning the grain trade:

‘It is perfectly possible that laissez faire
doctrines as to the food trade could have been
both normative in intent (i.e. Adam Smith believed
they would encourage cheap and abundant food) and
ideological in outcome (i.e. in the result their
supposedly de-moralised scientism was used to mask
and apologise for other self-interested
(E. P. Thompson, ‘The Moral Economy Reviewed’, in
Customs in Common: Studies in Traditional Popular
Culture, New York: The New Press, 1991, p. 269.
While Thompson is not always fully attentive to
the strains and ambiguities in Smith's work, his
insistence on the social context of political
economy is a refreshing corrective to the
propensity of Hont and Ignatieff in particular to
reconstruct Smith in the context of a disembodied,
desocialized, academicized realm of ideas. See
Thompson's telling remarks to this effect, ibid.,
p. 275.)

Smith's moral intent was incompatible with the
nature of the free markets he often idealized.
Those markets embodied a history of force and
coercion and a practice of exploitation which his
moral theory could not countenance. As a result,
his political economy, taken as a totality, was
destroyed by the real course of capitalist
development. What remained were fragments which
would be picked up and carried down roads he might
not have imagined. One of these led to the use of
political economy against the working class.
Another led towards working-class critiques of
political economy. The first road ran from Smith
to Malthus; the second from Smith to Marx.

michael price

Jan 22, 2004, 7:23:50 PM1/22/04
Ron Allen <> wrote in message news:<iRRPb.3980$>...

Which is a strange contention to make.

No it wasn't. He merely based his hope for a defence
of society organised along capitalist lines on a particular
class. That doesn't mean he wanted that class to predominate

> Smith's
> attempt to ‘reconcile the old ethics with the new
> economics’ was thus more than a simple ‘defence of
> modernity’; and it was certainly no Mandevillean
> celebration of the order spontaneously created by
> the selfish passions in a competitive market. What
> Smith sought was to delineate those political and
> social arrangements in which the vigilance of an
> enlightened section of the landed class aspiring
> to ‘wisdom and virtue’ could protect the wealth-
> creating effects of commercial society from abuse
> by merchants and manufacturers.

Specifically the abuse of _limiting the market
to eliminate competition_.

> Smith's happy and healthy commercial society was
> thus intended to further the interests of the
> poor, while limiting the impact of large merchants
> and manufacturers on the body politic.

It was intended to further the interests of everyone,
including the poor.

> To be sure,
> historical and social reality proved that such a
> scenario was naïve in the extreme. And when the
> full impact of capitalist transformation elevated
> precisely those groups that worried Smith (in
> alliance with a landed class which eschewed its
> alleged moral duties), while the poor suffered an
> intensification of hardship that would have
> shocked him, it was inevitable that his delicate
> attempt to balance virtue and commerce, progress
> and public opulence, would come crashing down.

The poor suffered such an intensification of
hardship (if they did) because of government
actions, many in defence of the very groups you
say he feared. It hardly destroys his theories
if what he said comes to pass does.

> Moreover, because of his idealization of free
> markets, elements of Smith's political economy
> could be used to legitimate outcomes that might
> have troubled him deeply. In this regard, Smith
> provided at least part of the intellectual armoury
> for a position (demoralized capitalist
> apologetics) inconsistent with his own moral
> predelictions. E. P. Thompson has correctly
> grasped this point with respect to Smith's
> arguments concerning the grain trade:
> ‘It is perfectly possible that laissez faire
> doctrines as to the food trade could have been
> both normative in intent (i.e. Adam Smith believed
> they would encourage cheap and abundant food) and
> ideological in outcome (i.e. in the result their
> supposedly de-moralised scientism was used to mask
> and apologise for other self-interested
> operations).'

But the "self-interested operations" that caused
harm were hardly free market.

> (E. P. Thompson, ‘The Moral Economy Reviewed’, in
> Customs in Common: Studies in Traditional Popular
> Culture, New York: The New Press, 1991, p. 269.
> While Thompson is not always fully attentive to
> the strains and ambiguities in Smith's work, his
> insistence on the social context of political
> economy is a refreshing corrective to the
> propensity of Hont and Ignatieff in particular to
> reconstruct Smith in the context of a disembodied,
> desocialized, academicized realm of ideas. See
> Thompson's telling remarks to this effect, ibid.,
> p. 275.)
> Smith's moral intent was incompatible with the
> nature of the free markets he often idealized.
> Those markets embodied a history of force and
> coercion and a practice of exploitation which his
> moral theory could not countenance.

His moral theory could countenance the practice
of exploitation quite well, since it was beneficial
to all parties. What it could not countenance
was the use of government force to help the powerful
at the expense of the poor.

> As a result,
> his political economy, taken as a totality, was
> destroyed by the real course of capitalist
> development. What remained were fragments which
> would be picked up and carried down roads he might
> not have imagined. One of these led to the use of
> political economy against the working class.

Which had been happening since before Smith's
grandfather was born.

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