II.) The Shared Observation: Poverty Amidst Plenty.
Left-wing radicals and monetary reformers both identified one of the key paradoxes of the industrial age: widespread poverty amidst extraordinary productive capacity - capacity that was more than capable of meeting the requirements of the population, so much so that a hitherto unheard of phenomena - overproduction, had arisen. There are an abundance of interesting accounts of this development.
We commence with Karl Marx and Friedrich Engels:
'It is enough to mention the commercial crises that by their periodical return put on its trial, each time more threateningly, the existence of the entire bourgeois society... In these crises there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity - the epidemic of overproduction. Society suddenly feels itself put back into a state of momentary barbarism: it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce.'
(K. Marx & F. Engels, The Communist Manifesto, Penguin Classics, page 86.)
Decades later, the anarchist Peter Kropotkin noted:
'During the long succession of agitated ages... mankind has nevertheless amassed untold treasures. It has cleared the land, dried the marshes, hewn down forests, made roads, pierced mountains, it has been building, inventing, observing, reasoning; it has created a complex machinery, wrested her secrets from Nature, and finally it pressed steam and electricity into its service. And the result is that now the child of the civilized man finds at its birth, ready for its use, an immense capital accumulated by those who have gone before him. And this capital enables man to acquire, merely by his own labour combined with the labour of others, riches surpassing the dreams of the fairy tales of the Thousand and One Nights.'
(P. Kropotkin, Conquest of Bread, chapter 1)
He went on to add:
'In our civilized societies we are rich. Why then are the many poor? Why this painful drudgery for the masses? Why, even to the best-paid workman, this uncertainty for the morrow, in the midst of all the wealth inherited from the past, and in spite of the powerful means of production, which could ensure comfort to all, in return for a few hours of daily toil?'
Enlightened economists made a similar observation:
'Under the old régime of handicraft and petty trade, dearth (high prices) meant privation and might mean famine and pestilence; under the new régime, low prices commonly mean privation and may on occasion mean famine. Under the old régime the question was whether the community's work was adequate to supply the community's needs; under the new régime that question is not seriously entertained.
But the common welfare is in no less precarious a case. The productive efficiency of modern industry has not done away with the recurrence of hard times, or of privation for those classes whose assured pecuniary position does not place them above the chances of hard times. Distress may not be so extreme in modern industrial communities, it does not readily reach the famine mark; but such a degree of privation as is implied in the term "hard times" occurs quite as freely in modern civilized countries as among the industrially less efficient peoples...'
(Thorstein Veblen, Theory of Business Enterprise, pages 177-178).
Monetary reformers saw this as well:
''How happens it, then, that in spite of so many miracles of industry science and art, comfort and culture have not become the inheritance of all? How happens it that in Paris and London, centres of social wealth, poverty is as hideous as in the days of Caesar and Agricola ?
Look, for instance, at the condition of the wealthiest nation on earth, England. Here - 'the birthplace of modern political economy' - statesmen and legislators have been largely guided by its teachings. It is said that the Wealth of Nations revolutionized the opinions of England's ministers and caused them to enter upon a new policy in accordance with the doctrines propounded by the great English economist. Clubs were formed for the study of economic questions, and statesmen vied with each other in seeking to bring the commercial laws of England in conformity with those of the new science. According to the judgement of one of England's foremost statesmen and economists, the great work of political economy has been achieved.
"The controversies which we now have in political economy," said the Rt. Hon. Robert Lowe, many years ago, "although they offer a capital exercise for the logical faculties, are not of the same thrilling importance as those of earlier days. The great work has been done." Let us now look at the results. Bearing in mind that the object of the science is 'to provide a plentiful revenue or subsistence for the people, and supply the State with a revenue sufficient for the public service,' let us take a brief survey of 'the great work' that Robert Lowe said 'has been done.'
"In the wealthiest nation in the world," says John Rae, "every twentieth inhabitant is a pauper; one-fifth of the community is insufficiently clad ; the agricultural laborers and large classes of working people in towns are too poorly fed to save them from what are known as starvation diseases ; the great proportion of our population lead a life of monotonous, incessant toil, with no prospect in old age but penury and parochial support ; and one-third, if not indeed one-half, of the families of the country are huddled six in a room, in a way quite incompatible with the elementary claims of decency, health or morality."
"Our exports during the past quarter of a century," wrote Professor Fawcett, "have advanced from £50,000,000 to more than £250,000,000, and our imports have increased to a still greater amount; yet, incredible as it may on first consideration appear, it can, I believe, be proved that whilst there has been this unprecedented increase of wealth, the remuneration of labor has in many instances scarcely advanced at all."
(Arthur Kitson, The Money Problem, Chapter I.)
We conclude this series of excerpts with the observation of Major Douglas:
'On the one hand we have an enormous and increasing capacity to produce the goods and services which are the primary objective of civilisation and which probably form the material basis on which alone a cultural superstructure can be reared. On the other hand we have an immense population not only unable to obtain from the shops, which are so anxious to sell, those goods which they are unable to buy, but are, by the miscalled unemployment problem, prevented from producing still further goods. Ordinary common sense alone seems to be required to recognise that only one thing stands between this practically unlimited capacity to produce and what is in fact a definitely limited capacity to consume, and that is the money system, the bottle-neck which separates production and consumption.'
(Major C. H. Douglas, The Monopoly of Credit, pages 89-90).
The recession that followed the end of the Napoleonic Wars was perhaps the first abundantly clear demonstration of poverty amongst plenty.
'With 1815=100, British exports stood at 76 in 1817 and at 63 in 1823. Protests arising from hunger and unemployment were suppressed. The Peterloo Massacre of August 1819 was followed at the end of that year by the Six Acts that outlawed private military bodies, demonstrations, public meetings, libels against government and working class journals...'
(Guy Routh, The Origins of Economic Ideas, page 135).
The problem was by no means limited to Britain:
'Europe... has in every part arrived at the point of possessing industry and manufacturing power superior to its wants... In reading the commercial reports, the journals and accounts of travellers, we see on every side proofs of the superabundant production which exceeds consumption... We have seen merchandize of every description, but above all that of England, the great manufacturing power, abounding in all the markets of Italy, in a proportion so far exceeding demand, that the merchants, in order to realize even a part of their capital, have been obliged to dispose of them at a loss of a fourth or a third, instead of obtaining any profit. The torrent of commerce repelled from Italy flowed upon Germany, Russia and Brazil, and soon found in these countries similar obstacles.
Mr. Fearon's journey in the United States, concluded only in the spring of 1818, presents the same spectacle in a manner still more striking. From one extremity of that vast and prosperous continent to the other, there is not even a village where the quantity of merchandize offered for sale is not infinitely superior to the means of the buyers, although the merchants labour to allure them by very long credits and facilities of every kind of payment, which they receive by instalments and in goods of every description...'
(J. C. L. Sismonde de Sismondi, quoted in ibid, page 144).
Socialism arose in these conditions as intelligent men grappled with a situation that conventional economists either dismissed as impossible or simply attributed to insufficient work on the part of its victims. Over time, the radicals developed an ideology, whose key underlying tenets may be stated as follows:
1) The Economy Exists to Serve People; People Do Not Exist to Serve the Economy.
2) The Economic System Does Not Serve the People.
3) The Economic System Cannot Serve the People and Therefore Must Be Changed.
Only right-wing liberals, ('conservatives' in American parlance) and others subverted by the vicious Pharisaic saying 'He who will not work shall not eat', question the first tenet: in an era of mechanized production, such views do not merit attention let alone respect. Neoliberals and other adherents of orthodox economic theory deny the second premise: this view too is increasingly discredited as debt, inequality and economic insecurity abound. Left-wing liberals (i.e. those of a social-democratic rather than socialist bent), as well as centrists, challenge the third principle, since they hold the belief that with some policy changes and minor reforms, the system can work for everyone.
The key point of contention between radicals and liberals, lies in whether scarcity is artificial or natural. If scarcity is artificial, then the economic system - by not overcoming this scarcity, and indeed, by facilitating it - is at fault and requires replacement: this was the radical argument as indicated by all the quotations at the beginning of this section. If scarcity is natural on the other hand, then the economic system is simply reflecting a reality which may be altered without replacing the system: this is the liberal argument that dominates both media and academia to this day.
Where radicals differed among themselves was with regard to the type of change required to unlock abundance. This in turn reflected their different diagnoses regarding the main fault of the system they opposed - a matter we turn to now.