Article — From the May 2005 issue
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Article — From the May 2005 issue
Looking back two centuries at these early debates, it is clear that a pure free-market ideology can be logically sustained only if it is based in a fiery religious conviction. The contradictions involved are otherwise simply too powerful. The premise of the unpleasant workhouse program was that it would create incentives to work. But the program also acknowledged that there were multitudes of people who were either unable to work or unable to find jobs. The founding assumption of the program was that the market would take care of itself and all of us in the process. But the program also had to embrace the very opposite assumption: that there were many people whom the market could not accommodate, and so some way must be found to warehouse them. The market is a complete solution, the market is a partial solution—both statements were affirmed at the same time. And the only way to hold together these incommensurable views is through a leap of faith.
Victorian evangelicals took a similar approach to the crisis in Ireland between 1845 and 1850—the Great Hunger, what came to be known as the potato famine. In office at the time of the first reports of starvation, the Tory administration of Robert Peel responded with a program of food supports, importing yellow cornmeal from the United States and selling it cheaply to wholesalers. Corn was an unfamiliar grain in Ireland, but it provided a cheap food source. In 1846, however, a Whig government headed by Lord Russell succeeded Peel and quickly dismantled the relief program. Russell and most of his central staff were fervent evangelicals, and they regarded the cornmeal program as an artificial intervention into the free market. Charles Trevelyan, assistant secretary of the treasury, called the program a “monstrous centralization” and argued that it would simply perpetuate the problems of the Irish poor. Trevelyan viewed the potato-dependent economy as the result of Irish backwardness and self-indulgence. This crisis seemed to offer the opportunity for the Irish to atone. With Russell’s backing, Trevelyan stopped the supply of food. He argued that the fear of starvation would ultimately be useful in modernizing Irish agriculture: it would force the poor off land that could no longer support them. The cheap labor they would provide in towns and cities would stimulate manufacturing, and the now depopulated countryside could be used for more profitable cattle farming. He wrote that his plan would “stimulate the industry of the people” and “augment the productive powers of the soil.”
There was no manufacturing boom. Roughly a million people died; another million emigrated. The population of Ireland dropped by nearly one quarter in the space of a decade. It remains one of the most striking illustrations of the incapacity of markets to run themselves. When government corn supplements stopped, and food prices rose, private charities and workhouses were overwhelmed, and families starved by the sides of roads. When British leadership put its faith in the natural balance of an open market to create the best outcome, the result was disaster. Evangelicals like Trevelyan didn’t look smart and pious after the famine; they looked blind to human reality and desperately cruel. Their brand of political economy, grounded in evangelical doctrine, went into retreat and lost influence.
The phrase “political economy” itself began to connote a cruel disregard for human suffering. And so a generation later, when the next phase of capitalist boosterism emerged, the term “political economy” was simply junked. The new field was called “economics.” What had got the political economists into trouble a generation before was the perception, from a public dominated by Dickens readers, that “political economy” was mostly about politics—about imposing a zealous ideology of the market. Economics was devised, instead, as a science, a field of objective knowledge with iron mathematical laws. Remodeling economics along the lines of physics insulated the new discipline from any charges filed on moral or sentimental grounds. William Stanley Jevons made this case in 1871, comparing the “Theory of Economy” to “the science of Statical Mechanics” (i.e., physics) and arguing that “the Laws of Exchange” in the marketplace “resemble the Laws of Equilibrium.”
The comparison with physics is particularly instructive. The laws of Newtonian mechanics, like any basic laws of science, depend on the assumption of ideal conditions—e.g., the frictionless plane. In conceiving their discipline as a search for mathematical laws, economists have abstracted to their own ideal conditions, which for the most part consist of an utterly denuded vision of man himself. What they consider “friction” is the better part of what makes us human: our interactions with one another, our irrational desires. Today we often think of science and religion as standing in opposition, but the “scientific” turn made by Jevons and his fellows only served to enshrine the faith of their evangelical predecessors. The evangelicals believed that the market was a divine system, guided by spiritual laws. The “scientific” economists saw the market as a natural system, a principle of equilibrium produced in the balance of individual souls.