Some additional loose ends on TGT:
1. Markets and Energy
I’m sure readers are well aware of the overlap between the rise of the self-regulating globalized Market as described by Polanyi and the expansion of energy use supplied by increasing exploitation of fossil fuels. The explosion of energy production is what made the global self-regulating market a possibility. This allowed self-sufficiency to be cast aside, and enabled the growth of a global monetary economy based on debt. The expansion of industry also provided plenty of jobs for the newly commoditized labor. What fascinates me, though, is the overlap between free market ideas and energy usage. According to Polanyi, market ideas became predominant after 1820, and accelerated after 1830. As we can see from the chart below, this tracks pretty closely to increases in fossil fuel use:
https://ourfiniteworld.com/2012/03/12/world-energy-consumption-since-1820-in-charts/ (Our Finite World)
Now, what will happen as exponential growth comes to an end? As so many people have pointed out, the Market is dependent upon permanent growth. This is why such a novel system could never have come into place before it did. The problem is, it cannot be sustained. Additionally, the current distribution of wealth rests upon the idea that in a growing economy, ownership of wealth is not a zero-sum game. That is, massive the amounts of wealth accruing to the one percent are a driver of even more wealth for the rest of us! This was always a dubious proposition, to put it mildly, but in a low/no growth world, it is demonstrably false. Certainly this growth contributed to the “Hundred Years’ Peace” as surely as haute finance.
2. Institutional Blindness
Conventional economics tends to emphasize the growth and development of institutions, specifically pro-capitalist institutions like absolute ownership of private property, low taxes on wealth accumulation, commodification of land and labor, usury, limited government, and the elimination of tariffs and trade barriers, as the source of our modern economic growth and prosperity. This is the thesis promoted in all economics textbooks and by economic historians like the previously cited Douglass North.
But what if causality is reversed? what if the use of fossil fuels is the root cause of modern prosperity, and we’ve been misattributing it to capitalist institutions that actually cause more harm than good? In essence, this would make economics into one giant Cargo Cult. By convincing us that the wealth-concentrating institutions of capitalism are the root cause of modern living standards, economists prevent any attempt at reform by telling us that we will fall back into the Malthusian Trap by modifying them. But what happens when these aristocratic pro-capitalist institutions run up hard against hard limits thanks to fossil fuels and other environmental limitations? It seem like this is a driver of modern Neofeudalism. Economics is dedicated to furthering this misunderstanding through its dissemination of simplistic libertarian propaganda under the guise of legitimate scientific inquiry.
3. The Irish Case
One thing I was very surprised at in TGT is the lack of mention of the Irish Potato Famine (an Gorta Mór). My guess is that scholarship on the famine was lacking in 1944 when TGT was written. Not only does it back up Polanyi’s thesis, but from a historical standpoint it shows the first attempt at forcibly imposing a market economy upon a pre-market social structure based on the theories of market liberals like Adam Smith. The tragic results of this free-market “experiment” by the English rulers of Ireland was mass emigration and the deaths of millions of people. To this day, Ireland’s population has not recovered. This article tells the story:
Both authors [John Kelly and Tim Pat Coogan] describe the folly and cruelty of Victorian British policy towards its near-forsaken neighbour in detail. The British government, led by Sir Charles Trevelyan, assistant secretary to the Treasury (dubbed the “Victorian Cromwell”), appeared far more concerned with modernising Ireland’s economy and reforming its people’s “aboriginal” nature than with saving lives. Ireland became the unfortunate test case for a new Victorian zeal for free market principles, self-help, and ideas about nation-building.
Ireland still functioned as a basic barter economy—few hands exchanged money and the peasant population relied on their potato crops, which had failed. But rather than provide aid and establish long-term goals for recovery, Trevelyan and his cohorts saw a chance to introduce radical free-market reforms. As Mr Kelly notes, Trevelyan sent his subordinates to Ireland equipped with Adam Smith’s writings, like missionaries sent to barbarian lands armed with bibles. One absurd project to introduce a money economy was part of the public works scheme. Peasants were hired to build unnecessary roads in order to earn money to buy food. But wages were often not enough to match the high food prices enforced by Trevelyan as a measure to attract imports to Ireland, especially from America.
There was plenty of other food to eat besides potatoes, but in an economy where prices were set by “free and open” markets, the people could not afford to buy any of it. To cover up this tragic failure, the Irish themselves were blamed for their own plight: viciously demonized as lazy, morally inferior cretins having too many kids, and ridiculed for their manners, speech and dress:
The belief that the famine was God’s intention also guided much of Britain’s policy. They viewed the crop failures as “a Visitation of Providence, an expression of divine displeasure” with Ireland and its mostly Catholic peasant population, writes Mr Kelly. Poverty was considered a moral failure. Within a few years Irish immigrants flooded the port cities of Liverpool in England, Montreal and Quebec in Canada and New York. The emigrant was considered an object of horror and contempt, as Mr Kelly writes: “pedestrians turned and walked the other way; storekeepers bolted the door or picked up a broom; street urchins mocked his shoeless feet, filthy clothing and Gaelic-accented English.” Throughout the book, Mr Kelly bemoans the tragic effects of human folly, neglect and Victorian ideology in causing the famine and its aftermath. He rejects the charge of genocide. Tim Pat Coogan, however, takes a more radical view in “The Famine Plot”.
His most compelling argument for British negligence is in the final chapter, in which he recalls the xenophobic images and words commonly used to caricature the Irish in Victorian England. Trevelyan and other architects of the famine response had a direct hand in filling the newspapers with the “oft-repeated theme that the famine was the result of a flaw in the Irish character.” And Punch, a satirical magazine, regularly portrayed “‘Paddy’ as a simian in a tailcoat and a derby, engaged in plotting murder, battening on the labour of the English workingman, and generally living a life of indolent treason,” explains Mr Coogan. The result of such dehumanising propaganda was to make unreasonable policy seem more reasonable and just.
Sound familiar? It’s been the “free market” playbook ever since!
Note that the “Starving Irishman” of the nineteenth century was the precursor to the “Starving African” of the twentieth, and both were blamed on out-of-control reproduction and laziness rather than free market ideas. Note also that out-of-control reproduction and starving masses were not a fixture of Africa or India before colonialism. That’s because before the global Market, people’s breeding habits were adjusted to be in line with the prevailing local conditions. Once you start dumping massive amounts of low-cost subsidized grain from overseas on these countries, reproduction swells to the point where everyone becomes dependent on those imports. Thanks to these massive inflows of imported resources, population outstrips the local carrying capacity.
This is a good thing from an industrial standpoint, because it means lots of cheap labor for the factories and sweatshops, and the more desperate the people, the cheaper the labor. That’s why leaders always favor overpopulation–it provides cheap labor, and they can insulate themselves from its ill effects thanks to Market mechanisms (cheap labor provides high profits for you to provide plentiful resources for yourself and your family in a Market economy). The problem is, a spike in food prices causes catastrophe for everyone else. While the movement of grain around the world has indeed alleviated more famines than it’s caused so far, it’s led to tragic overpopulation and sporadic outbreaks of hunger.
4. The Ideological Underpinnings of the Market
Another thing to note is the development of an ethos that supports the market ideology. It at this time that the philosophy of “self help” becomes a critical feature of capitalism. That is not a coincidence! This phrase–Self Help–was actually the title of the first book outlining this philosophy for British audiences around the time of the Irish Famine by the perversely-named Samuel Smiles. It was called “The Bible of mid-Victorian liberalism.”
Its core philosophy was that poverty and misery can only be caused by “poor character,” and that giving assistance to poor people will only make them degenerate and ultimately worse off, while suffering will spur them to “self improvement.” He gives numerous examples of early inventors and industrialists who were born poor but pulled themselves up by their bootstraps by virtue of thrift and industriousness. “Hard work,” business acumen and entrepreneurship are lionized.
Furthermore, He also argues that a nation’s character is nothing more than the aggregate of the character of the individuals of that nation. Thus, giving help to the poor and downtrodden will invariably drag down the character of the entire nation! I encourage you to read it’s nostrums to see the beginnings of modern-day “Conservative” philosophy. It begins (emphasis mine):
“HEAVEN helps those who help themselves” is a well-tried maxim, embodying in a small compass the results of vast human experience. The spirit of self-help is the root of all genuine growth in the individual; and, exhibited in the lives of many, it constitutes the true source of national vigour and strength. Help from without is often enfeebling in its effects, but help from within invariably invigorates. Whatever is done _for_ men or classes, to a certain extent takes away the stimulus and necessity of doing for themselves; and where men are subjected to over-guidance and over-government, the inevitable tendency is to render them comparatively helpless.
Even the best institutions can give a man no active help. Perhaps the most they can do is, to leave him free to develop himself and improve his individual condition. But in all times men have been prone to believe that their happiness and well-being were to be secured by means of institutions rather than by their own conduct. Hence the value of legislation as an agent in human advancement has usually been much over-estimated. To constitute the millionth part of a Legislature, by voting for one or two men once in three or five years, however conscientiously this duty may be performed, can exercise but little active influence upon any man’s life and character. Moreover, it is every day becoming more clearly understood, that the function of Government is negative and restrictive, rather than positive and active; being resolvable principally into protection—protection of life, liberty, and property. Laws, wisely administered, will secure men in the enjoyment of the fruits of their labour, whether of mind or body, at a comparatively small personal sacrifice; but no laws, however stringent, can make the idle industrious, the thriftless provident, or the drunken sober. Such reforms can only be effected by means of individual action, economy, and self-denial; by better habits, rather than by greater rights.
The Government of a nation itself is usually found to be but the reflex of the individuals composing it. The Government that is ahead of the people will inevitably be dragged down to their level, as the Government that is behind them will in the long run be dragged up. In the order of nature, the collective character of a nation will as surely find its befitting results in its law and government, as water finds its own level. The noble people will be nobly ruled, and the ignorant and corrupt ignobly. Indeed all experience serves to prove that the worth and strength of a State depend far less upon the form of its institutions than upon the character of its men. For the nation is only an aggregate of individual conditions, and civilization itself is but a question of the personal improvement of the men, women, and children of whom society is composed.
National progress is the sum of individual industry, energy, and uprightness, as national decay is of individual idleness, selfishness, and vice. What we are accustomed to decry as great social evils, will, for the most part, be found to be but the outgrowth of man’s own perverted life; and though we may endeavour to cut them down and extirpate them by means of Law, they will only spring up again with fresh luxuriance in some other form, unless the conditions of personal life and character are radically improved. If this view be correct, then it follows that the highest patriotism and philanthropy consist, not so much in altering laws and modifying institutions, as in helping and stimulating men to elevate and improve themselves by their own free and independent individual action.
So the answer to the starving victims of the Irish Famine, as certainly it is for the denizens of American ghettos, Appalachia, or the Rust Belt today, is simply to “help yourself.”
This was the introduction of “individualist” philosophy – society and its basic institutions are irrelevant; you are a lone individual and are able to accomplish literally anything through dint of sufficient will and hard enough work. Markets rely on this philosophy as surely as they do on prices and profits. Any failures of the system can be pawned off on individual fault and thus the system cannot fail the people, it can only be failed by the people themselves. It’s also the introduction of the apotheosis of hard work and self denial as the foundation of everything that’s good, and the idolization of the wealthy as “great men” who got where they are by working harder than everyone else and who pull society forward toward constant and neverending progress. From chapter 10:
Any class of men that lives from hand to mouth will ever be an inferior class. They will necessarily remain impotent and helpless, hanging on to the skirts of society, the sport of times and seasons. Having no respect for themselves, they will fail in securing the respect of others. In commercial crises, such men must inevitably go to the wall. Wanting that husbanded power which a store of savings, no matter how small, invariably gives them, they will be at every man’s mercy, and, if possessed of right feelings, they cannot but regard with fear and trembling the future possible fate of their wives and children. “The world,” once said Mr. Cobden to the working men of Huddersfield, “has always been divided into two classes,—those who have saved, and those who have spent—the thrifty and the extravagant. The building of all the houses, the mills, the bridges, and the ships, and the accomplishment of all other great works which have rendered man civilized and happy, has been done by the savers, the thrifty; and those who have wasted their resources have always been their slaves. It has been the law of nature and of Providence that this should be so; and I were an impostor if I promised any class that they would advance themselves if they were improvident, thoughtless, and idle.”
Prior to works like this, individualism was not the guiding philosophy for the economy nor for society itself (remember, they were embedded), Christian charity was. That needed to die in order for the traditional structures of reciprocity, redistribution and householding to be replaced by the impersonal Free Market.
The indifference to the suffering and destitution of those living under the market’s ministrations is crucial to its continuance. The “cult of individual failure” is how this is propagated (read any comments section on the Web). Note how much this philosophy underlies our own attitudes in America toward the poor: they deserve it, it’s their own fault, they are inferior, etc. Only when a majority are made suddenly destitute, as in the Great Depression, does this philosophy fall out of favor.
Eat to much sugar? Obese? It’s your fault for not having enough self-discipline, despite subsidized prices and billions of dollars in advertising put in your face daily. Drink too much? It’s your fault, not that of your genes. Can’t afford a house in an urban area? It’s your fault for not studying hard enough or picking the wrong major. Can’t feed your family? It’s your fault for having children you can’t afford; children are not a blessing, they are a luxury good. Live in an economically depressed area? Just hop in the U-Haul and move, you lazy bum! It allows indifference to the Market’s faults. The Just World/Self Help/It’s Your Fault philosophy is a critical underpinning of the self-regulating market economy. The wholehearted (cold hearted?) embrace of this doctrine is a hallmark of those who support conservative political philosophies (Republicans and Libertarians in the US and Tories in the UK).
It’s a short leap from that to full-bore Social Darwinism. It’s no coincidence that this philosophy, too, appeared under specific economic circumstances, namely the dislocation after the Panic of 1873, which was called the Great Depression at the time (later renamed to the Long Depression). This was also a period of unrestricted free trade and its correspondent extreme wealth and income inequality. At this time, Darwinism was pressed into service to explain how this was the “natural” order of society:
Social Darwinism is a name given to various theories of society which emerged in the United Kingdom, North America, and Western Europe in the 1870s, and which claim to apply biological concepts of natural selection and survival of the fittest to sociology and politics. According to their critics, at least, social Darwinists argue that the strong should see their wealth and power increase while the weak should see their wealth and power decrease. Different social-Darwinist groups have differing views about which groups of people are considered to be the strong and which groups of people are considered to be the weak, and they also hold different opinions about the precise mechanisms that should be used to reward strength and punish weakness. Many such views stress competition between individuals in laissez-faire capitalism…
In 1883, [William Graham] Sumner published a highly influential pamphlet entitled “What Social Classes Owe to Each Other”, in which he insisted that the social classes owe each other nothing, synthesizing Darwin’s findings with free enterprise Capitalism for his justification. According to Sumner, those who feel an obligation to provide assistance to those unequipped or under-equipped to compete for resources, will lead to a country in which the weak and inferior are encouraged to breed more like them, eventually dragging the country down. Sumner also believed that the best equipped to win the struggle for existence was the American businessman, and concluded that taxes and regulations serve as dangers to his survival.
Note that our circumstances are very similar to those of back then. The underpinnings are the same – the futile attempts to create the Global Self-Regulating Market. This time the dollar unites the world instead of gold, and just as precariously. Just as back then, there is a “double movement.” Back then it was populists like William Jennings Bryan and the Progressive movement. Today is it Sanders, Trump, Occupy, the Fight for Fifteen, the Five Star Movement Nuit Debout, the Igninados, etc. And, like then, the wealthy and powerful are using Social Darwinism to justify the current state of affairs, this time tastefully rebranded as the “Human Biodiversity Movement.”