Relentless Revolution II

This is the second and perhaps last instalment of my cataloguing what I think are the insights of Joyce Appleby's book. Of course, you have to read the book to see the evidence for these claims. Both individuals and societies are formed by their histories. You can't know where you are unless you see where you came from.

One social change capitalism engendered was long hours of disciplined labor. While peasant work was certainly strenuous, the rhythms of peasant life varied with the season and the weather. Laborers worked especially hard in the spring and harvest, but other times were reserved for play and community events. In England, a logical development of the need for owners to monitor and coordinate their employees’ performances was the factory. Twelve-hour workdays became the norm, producing conditions for workers clearly more onerous than their ancestors. “Taking the long view, economists can show that making goods cheaper usually ends up creating employment by releasing demand for other commodities. The pain comes in the short run, and many an English worker reacted to the pain with bitterness. In the second decade of the nineteenth century, Yorkshire laborers whose families had sheared sheep for generations smashed the shearing frames that were undermining their way of life” (p. 152). These were the Luddites, who declared war on machines. Destruction of property evoked savage responses from the elites who controlled government.

As European contests for supremacy increased, governments needed more revenue, and so heavy import tariffs became prevalent. Various combinations of European countries went to war eight times between 1689 and 1815. This, in turn, motivated these countries to extract as much wealth as they could from their holdings in the “new world.” Sugar became the most lucrative venture. Sugar cultivation needed large numbers of laborers, which eventually resulted in the slave trade. Between 1501 and 1820, 8.7 million Africans were shipped to the Western Hemisphere. Sugar trade showed how the power of the profit motive could override any cultural inhibitions to gross exploitation. And it didn’t even produce long-term benefit for those regions using slaves.

Various histories of the industrial revolution have favored particular causes–high wages and low fuel costs, secure title to land, agricultural improvements, low taxation, the rise of cities, and scientific culture. Appleby sees these influences as mutually enhancing. Ideas were as important as material developments. During this process, the cause of human rights arose to motivate two generations of reformers. In the United States, this eventually led to the abolition of slavery. As Appleby notes, “when New York law denied legitimacy to holding human beings as property, it constituted the largest peaceful invasion of private property in history” (p. 162).

During the 19th century, both Germany and the U.S. passed England in productive power. They did this partly by erecting tariffs to protect their industries. They also copied England’s spectacular new machines, including the steam engine. However, these two countries evolved in very different ways. Americans loved novelty, practiced religious toleration and celebrated the weakness of their political institutions. Germans feared novelty, fought bitterly over differences within the Christian faith and accepted authoritarian politics. Capitalism developed in very different ways. But both benefitted greatly by the building of railroads.

In 1865, the New York Central Railroad alone had assets equal to one-quarter of all American manufacturing wealth. Later, in both countries, other industries acquired great power. This was the era of Carnegie in steel, Rockefeller in oil and banker J.P. Morgan. By 1877 Carnegie’s estate contained one-twentieth of all American dollars. These industries with their high fixed costs were limited to those with large amounts of money. Already in the 1870's, American agricultural production wiped out the peasant economies in eastern and southern Europe. Many in Europe came to the new world for a new start, producing a steady stream of cheap labor. This came at the right time for corporate America, which was de-skilling many jobs as it set up factory assembly lines.

Whereas industrialization slowly developed in the U.S. and England, it came much faster in Europe, conflicting with custom and causing more class conflict. From this came anarchists trying to abolish government, syndicalists promoting massive strikes and Marx’s idea that “private property was not natural but rather a device for confiscating the benefits of industrial wealth that workers were actually creating” (p. 212). The beginning of labor activism coincided with the labor theory of value.

“The very distinctive ideology that dominated public discourse in the United States operated against organized labor. The public tended to view workers as individuals charged with taking care of themselves and their families. Thomas Jefferson made limited government a robust American value. As the champion of ordinary Americans, Jefferson believed that curtailing federal power was the best way of shrinking the influence of a moneyed elite” (p. 216). Change came slowly. President Theodore Roosevelt’s administration prosecuted the Standard Oil trust for violating the Sherman Anti-trust Act, which somewhat slowed the tide of mergers. But the Supreme Court continued to rule legislative changes in favor of workers unconstitutional into the 1930's.

The prevailing view of wages in the early 19th century, the “iron law of wages,” held that employers would always push wages down to the minimal amount a family needed for subsistence. However, in the U.S., led by Samuel Gompers, this did not happen. The eight-hour workday became common without a drop in the average wage. Workers became consumers. Up to that point, capitalist enterprises had responded to demand that was relatively inelastic, e.g. food, shelter and clothing. With workers becoming consumers, industries started gearing toward elastic demand for what were unnecessary goods; people spent out of desire rather than need. This spawned advertising. Marx had believed the downward pressure on wages would lead to capitalism’s extinction. But he was wrong. With the advent of consumer capitalism, people had many roles to play in society other than workers.

Lax state incorporation laws, begun by New Jersey, allowed easy formation of corporate entities. Between 1895 and 1904, more than 157 giant corporations swallowed up 1800 businesses. Close to 100 of these acquired a 40-70% share of their markets, thereby reducing competition. The large capital requirements for technological innovation and economies of scale also favored large size. Corporations existed in perpetuity and were given limited liability and a protected scope of action. Private banks created a market in shares of industrial securities, and new sources of capital. This American trend was the product of unique circumstances, including weak government, an abundance of cheap labor and a large public receptive to standardized products. Our federal government did not even have an effective way to raise revenue until the 16th Amendment allowed the income tax in 1913.

During this time period, European governments colonized Africa, extracting its wealth (and further abusing its people). The increase in wealth furthered their ability to make war. Whereas in the early stages of capitalism, the market economy had followed private investors, governments began to engage in capitalistic enterprises. The competition and emnity between these nations eventually led to World War I, which was followed by The Great Depression and then World War II. By 1945, the optimism of the early 1900's had disappeared. Although the Civil War in the U.S. may have been our greatest period of suffering as a nation, the period of 1914-45 plunged the world into chaos.