Nineteenth century economics is described in this chapter as a subject used to train a psychopathic imperial elite – this is illustrated by the policies recommended by economists to manage famines in Ireland and India. The poor had only themselves to blame for their desperate state.
God died in economic thinking sometime in the 19th century, for most theorists anyway. Instead, economics would be contextualised in popular thinking by a philosophical standpoint derived from Darwin. Darwin in turn had been influenced by economist Thomas Malthus, who lectured in economics to at the East India Company training college. The theories developed reflect again the truth of the phrase from Anaïs Nin – “we do not see things as they are, but as we are” and Victorian industrial society was ruthless. As Andreas Weber explains:
“Malthus was obsessed by the idea of scarcity as explanation of social change – there would never be enough resources to feed a population that steadily multiplies. Charles Darwin, the biologist, adapted that piece of theory which had clearly been derived from the observation of Victorian industrial society and applied it to a comprehensive theory of natural change and development.”
“In its wake such concepts as “struggle for existence”, “competition”, “growth” and “optimisation” tacitly became centrepieces of our self-understanding: biological, technological and social progress is brought forth by the sum of individual egoisms. In perennial competition, fit species (powerful corporations) exploit niches (markets) and multiply their survival rates (return margins), whereas weaker (less efficient) ones go extinct (bankrupt). The resulting metaphysics of economy and nature, however, are less an objective picture of the world than society’s opinion about its own premises.” (Weber, 2012)
The claim that the self-organising character of the competitive market would optimise resource allocation in the face of scarcity became the centrepiece of a general ideology. An emerging belief system, which seemed self-evident to powerful men – that the strong were fitter and more competitive. The weak could assume no automatic entitlement to support because that was not nature’s way, it was not efficient. This ideology had expelled considerations of social justice from the economic concept system. “Survival of the fittest” meant those best able to win in a struggle with others – rather than “the survival of those best able to adapt to their immediate environment” which might, alternatively, have meant things like “best able to co-operate for mutual benefit with others and thus, get looked after”.
This was not how the elite of Victorian society operated and the implicit philosophy that prevailed was elaborated by people like Nietzsche:
“To speak of just or unjust in itself is quite senseless; in itself, of course, no injury, assault, exploitation, destruction can be “unjust,” since life operates essentially, that is in its basic functions, through injury, assault, exploitation, destruction and simply cannot be thought of
at all without this character. One must indeed grant something even more unpalatable: that, from the highest biological standpoint, legal conditions can never be other than exceptional conditions, since they constitute a partial restriction of the will of life, which is bent upon power, and are subordinate to its total goal as a single means: namely, as a means of creating greater units of power. A legal order thought of as sovereign and universal, not as a means in the struggle between power complexes but as a means of preventing all struggle in general perhaps after the communistic cliché of Dühring, that every will must consider every other will its equal—would be a principle hostile to life, an agent of the dissolution and destruction of man, an attempt to assassinate the future of man, a sign of weariness, a secret path to nothingness.” (Nietzsche, 2009)
training for psychopaths – economics and famine management
In case this seems an over the top and an extreme quote, chosen for rhetorical effect, then one has only to examine the political economic policies adopted during the Irish famine of the 1840s and the Indian famines of the mid-1870s. In both cases, a sociopathic political elite held rigidly to policies after crop failure that made the situation infinitely worse than they need to have been. Elite thinking was within the framework taught by teachers like Thomas Malthus, at the East India Company’s Staff training College at Hailsbury, on Hertford Heath.
In Ireland, and then in India, the extreme vulnerability of the population before the famines had been already been created by previous policy. In the case of Ireland, the parasitism of the Anglo-Irish landlord class sucked away resources from agriculture to their high life in London that might have been otherwise used to raise the abilities and conditions of the cultivators. Simultaneously, alternative industries and employment could make no headway against English competition when protective tariffs were removed after a brief period of prosperity at the time of the Napoleonic and American wars.
In India, the famines were prepared by the disintegration of community relationships and obligations under the impact of the market. As Davis states:
“The worsening depression in world trade had been spreading misery and igniting discontent throughout cotton-exporting districts of the Deccan, where in any case forest enclosures and the displacement of gram by cotton had greatly reduced local food security. The traditional system of household and village grain reserves regulated by complex networks of patrimonial obligation had been largely supplanted since the Mutiny by merchant inventories and the cash nexus. Although rice and wheat production in the rest of India (which now included bonanzas of coarse rice from the recently conquered Irrawaddy delta) had been above average… much of the surplus had been exported to England.”(Davis, 2002, p. 26)
According to the free trade evangelists, rising prices in a time of dearth would attract imports of grain and people would consume less. Problem solved.
But the problem was not solved – because of price speculation. What actually happened in the 1870s was described by one of the few members of the elite who was not a free market fundamentalist, Richard Grenville, the Duke of Buckingham and Chandos. The refusal to intervene in the market to bring down the price (by selling grain from places of relative abundance) encouraged an orgy of price speculation
as people with wealth bought up grain to profit from the rising prices and made the situation worse. Commented Grenville:
“The rise [of prices] was so extraordinary, and the available supply, as compared with well-
known requirements, so scanty that merchants and dealers, hopeful of enormous future gains, appeared determined to hold their stocks for some indefinite time and not to part with the article which was becoming of such unwonted value. It was apparent to the Government that facilities for moving grain by the rail were rapidly raising prices everywhere, and that the activity of apparent importation and railway transit, did not indicate any addition to the food stocks of the Presidency… retail trade up-country was almost at standstill. Either prices were asked which were beyond the means of the multitude to pay, or shops remained entirely closed.” (Davis, 2002, p. 27)
In both Ireland and India, any idea of intervening in the market to hold down prices was rejected since markets were self-correcting. It would involve the state in needless expense that could be better spent on other things. In the case of India, these greater priorities were the preparation for a military adventure in Afghanistan for the glory of the Viceroy, opium addict Lord Lytton. Then there was a week-long feast for 68,000 VIPs during Queen Victoria’s visit to India – during which time an estimated 100,000 people starved to death in Madras and Mysore.
In both Ireland and India, food was exported out of the country in bulk during the famine. As the population fell by 2 million in Ireland, exports of food from Cork in a single day in November 1848 were 147 bales of bacon, 255 barrels of pork, 5 casks of hams, 3,000 sacks and barrels of oats, 300 bags of flour, 300 head of cattle, 239 sheep, 542 boxes of eggs, 9,300 firkins [about one-fourth of a barrel] of butter, and 150 casks of miscellaneous foodstuffs. (Gallagher, 1995)
In both Ireland and India there was utter terror of supporting the poor during times of hardship. It would create a precedent! It would interfere in the market for labour. It would create dependency. The iron laws of political economy forbad it. Public works as a source of relief might favour some business interests rather than others so they were not to be supported either. At the height of the Irish Famine in 1846, Treasury Head, Sir Charles Trevelyan wrote:
“The only way to prevent people from becoming habitually dependent on government, is to bring [relief] operations to a close. The uncertainty about the new crop only makes it more necessary… These things should be stopped now, or you run the risk of paralyzing all private enterprise and having this country on you for an indefinite number of years.”(Gallagher, 1995)
the poor have only themselves to blame
In both cases the elite convinced themselves, using the ideas of Malthus, that the deaths were Nature’s way of dealing with overpopulation by the poor who were incapable of exercising self-control, and who were therefore bringing down the holocaust upon themselves. “[E]very benevolent attempt made to mitigate the effects of famine and defective sanitation serves but to enhance the evils resulting from overpopulation.”
In the same vein, an 1881 report concluded that:
“80% of the famine mortality were drawn from the poorest 20% of the population, and if such deaths were prevented this stratum of the population would still be unable to adopt prudential restraint. Thus, if the government spent more of its revenue on famine relief, an even larger proportion of the population would become penurious.” As in Ireland thirty years before, those with the power to relieve famine convinced themselves that overly heroic exertions against implacable natural laws, whether of market prices or population growth, were worse than no effort at all.” (Davis, 2002, p. 32)
Having thus, degraded fellow human beings as low as they could go through applying “economic principles”, the sociopathic gentlemen then witnessed the resulting wretches and failed to recognise their own handiwork. Accompanying Queen Victoria in Ireland, historian Charles Kingsley commented:
“I am daunted by the human chimpanzees I saw along that 100 miles of horrible country. I don’t believe they are our fault. I believe that there are not only many more of them than of old, but that they are happier, better and more comfortably fed and lodged under our rule than they ever were. But to see white chimpanzees is dreadful; if they were black, one would not feel it so much.” (Gallagher, 1995)
What is called “political economy” then was a set of doctrines that suited a gentleman elite of genocidal sociopaths. The statement is not written to be read as indignant rhetoric, but as strictly factual. I seek to describe the world as it was then, not as I would have liked it to have been. There is plenty of evidence. The art and journalism of the time shows how these men regarded themselves.
The invisible hand of the market was ideal (and remains ideal) for a sociopathic elite to deny their responsibility to their fellow human beings because it claims to be a way of automatically reconciling self-interested behaviour with optimal economic outcomes. As Kingsley said: “I don’t believe they are our fault”.
It was, and it still is, an argument tailor-made to allow the elite to avoid asking whether appalling suffering and disaster was in any way due to their actions taken in their self-interest. If people starved
it was nothing to do with their rental extraction and systems of land tenure that had destroyed the communal arrangements that preceded them. It was nothing to do with their market arrangements.
It was nothing to do with their speculation driving prices up further. It was nothing to do with their policies which wanted to use tax revenues for status displays or for war adventures to their greater glory. No, one had to obey the invisible hand – and if the inferior people, the little people, the chimpanzees, white or black, starved – then they had called it down on themselves and Nature was now taking them away, as it was bound to. Economics, once a branch of moral philosophy, had become the new theology for money power.
As I have said, economists had constructed a set of arguments that took attention away from the propertied elite. Many economists would have been well aware that prices and the allocation of resources depends on the prior allocation of rights to the different factors of production – but so what? This insight could be consigned to the small print of economics, not the up-front centre of attention. By a process of enclosure, a land market and a labour market were created simultaneously, since people who could no longer draw from the resources of the commons to support themselves had to sell their ability to work on a labour market. But the duress involved in the enclosures, of being forced to work on the terms of the employers, was not something to theorise about. To give deep consideration to issues of justice and duress would have been to stand in the way of improvement and progress. It would be, in the words of Nietzsche, to embark on a path to nothingness. By attacking the poor law for the support of destitute people, and by the expropriation involved in enclosures, the elite ensured that the poor worked on terms that could be dictated by their employers. The path to improvement on the improved lands and through increasing specialisation in the industrial factories was held open. As land and labour became market commodities this could only be regarded as “progress”, because it was a process of completing the creation of a market society which professors of moral philosophy sanctified.
However, neither land nor labour are originally “produced” with the explicit purpose of becoming commodities. There is no sense in which they are “natural commodities” as Polanyi, who documented these processes, pointed out. Land is part of the living natural system of the biosphere and “labour” is the lives of people who have been forced to work on terms dictated by the people who own the land and other resources.
In the ideology of the market, the important idea was that the market produces according to the wishes of the society – but it is true only when those wishes are backed with purchasing power. Here is a theory of what gets produced with available resources – a theory of allocation. The issue of how purchasing power came to be distributed, reflecting the power relationships in the economic and property system, is different by the end of the 19th century. The economists produced more apologetic ideas on this
theme when their rich patrons came under political pressure. It is not, however, a theme to which most economists pay any deep attention. Distribution has been a question that could be mostly ignored because, eventually, with technical progress, everyone would be rich. As we have seen, the original roots of the property system, globally and nationally, lie in power, violence and theft. But a theft justified by the chrematistic religion of economics as “improvement” from which everyone would benefit from… eventually… if they survived.