In this brief essay I have no ambition to prove a point. My aim is to clarify the meaning and significance of the inevitable question of living standards in periods of rapid transition from one form of economic organization to another. I call this question "inevitable," and I see the debate about it as inevitable, because as long as societies experience deep economic transformations over the course of one or two generations, they will reflect on how people got through those times. People will ask questions: what has changed, what has been lost, and who has won. Asked the same questions, they would give different answers, reflecting their own values, experiences, feelings, ideologies, and beliefs. In choosing the arguments and facts to support their logic, they would often be biased, because revolutionary change (political, economic, cultural, and social) is always filled with intellectual and moral energy, with emotion, with winners and losers.
It is not surprising that the most heated debates about living standards in the period of the Industrial Revolution in England were in the 1950s and 1960s, when the ideological struggle between communist socialism and liberal capitalism was at its fiercest. The Marxists sought evidence of the original sin of capitalism, while the emerging neoliberal thinkers who rebelled against Keynesian wisdom and eventually became masters of the neoliberal revolution in economic thought of the 1980s-1990s sought evidence of the virtues of the capitalist system even in its unconscious infancy. 1The debate continues today, albeit with less intensity. "Does globalization bring wealth or poverty to developing countries?" was one of the most debated questions among political and economic thinkers in the 1990s and early 2000s. Today, under the pressure of the longest recession in recent history, we inevitably ask what are the virtues and sins of Chinese "state capitalism"? Is the exploitation, suffering and sacrifice of workers in China, India or Bangladesh acceptable and necessary for a better future for their children? What remains behind the Chinese thrift and savings: the workers' wages or the accumulated capital of their masters? How has the standard of living improved or declined in Eastern Europe immediately after the fall of communism? Are Eastern Europeans happier and more prosperous today than before?
One of the virtues of history is that it gives us answers for the present. True, not always complete, not always satisfactory, sometimes even wrong, but answers that always serve as landmarks without which we cannot find the meaning of our contemporary life. So let us see how the standard of living of workers during the Industrial Revolution in England was debated in the twentieth century and how we can make it useful for us today.
There were two sides to this debate, and they tried to find a middle ground, but often ended up at extremes. The "optimists" and the "pessimists" about the living standards of workers in early industrial England faced the same difficult task as any student of the revolutionary process. If one imagines the revolutionary period as a large jigsaw puzzle with missing pieces from two thematically related sides (one with the image of the old, pre-revolutionary system and the other with the image of the new order), one would realize how complicated is the task of making a satisfactory whole out of the jumble.
Professor Hartwell ("an optimist") and Professor Hobsbawm ("a pessimist") were the two prominent historians in the living standards debate of the 1960s and 1970s. They wanted to sort out the evidence of the life of the English working class between 1800 and 1850 and, if necessary, fill in the blanks with their own interpretations.
R.M. Hartwell, an honorary fellow of the neoliberal Institute of Economic Affairs and author of a book on the history of the Mont Pelerin Society, 2 published The Industrial Revolution and Economic Growth in 1971, in which he responded to the pessimistic view that the first stages of the industrial revolution in England were accompanied by increasing poverty and misery among workers. In a chapter entitled "The Rising Standard of Living in England, 1800-1850," he writes that the debate over the standard of living was not "objective," based on known facts, but "a controversy over values." 3 He gives the example of two extreme views in historiography, that of J. Kuczynsky, who declared that the period "brought a rapid deterioration in the condition of the working class," 4 and that of J.H. Clapham, according to which "for every class of urban or industrial labor for which information is available... wages had risen markedly." 5 Hartwell notes that historians often "exaggerate" trends and "over-dramatize" events without feeling that they are violating the facts. He says that an "exact" measurement of the standard of living may be impossible, but a "firm statement" about the trend of the standard of living can be derived. And right after this statement, he says that his goal in this part of the book is to prove that there was an "upward trend" in living standards during the Industrial Revolution. 6
His argument is the following: the analysis of incomes, wage-price data, consumption, and comparison with eighteenth-century living standards shows that the per capita income of the working class rose, prices fell (after 1815) while money wages remained constant, the government increasingly intervened in the economy to protect or raise living standards, thus the real wages of the majority of English workers rose in the years 1800-50. 7 How great was this improvement? Hartwell argues that average real incomes "doubled" between 1800 and 1850, with the caveat that the upward trend was uneven, but by 1830 there was "already ... fifty percent" more. 8
In the next chapter of the book, entitled "The Standard of Living: An Answer to the Pessimists," Hartwell responds directly to his opponents, especially E.J. Hobsbawm, who in 1963 criticized two of Harwell's articles published in previous years. Here he contradicts himself, saying that he had "modified" his conclusions by emphasizing that "the standard of living was not high and was not rising rapidly before the forties, and there was also 'abject poverty' and 'cyclical and technological unemployment." 9 This is a serious change from the previous chapter, where he argued that there was a fifty percent increase in real incomes by the 1830s. But he does not abandon his basic view that the early industrial period was one of "increasing opportunity" for working-class men and women.
My reading of Hartwell has not helped me to construct a satisfactory picture of living standards during the Industrial Revolution. However, I am inclined to accept his general view, despite (or perhaps because of) its vagueness, that this was a period of "increasing opportunity.
So I turned to the pessimists. E.J. Hobsbawm was the leading moderate voice among them. In a paper published in the Economic History Review in 1957, he makes some basic points. He argues that living standards could not rise because there was no effective mechanism for equal distribution of wealth and because the inefficient investment mechanism did not allow enough capital to be spent on wages. 10 "At best... we should expect improvements in the standard of living to be much slower than they might have been, at worst we should not be surprised to find deterioration," concludes Hobsbawm. 11 But this is a vague statement that does not help us know what happened to living standards in England in the first half of the nineteenth century. However, Hobsbawm makes the important warning that "we must be careful not to interpret the qualitative differences between urban and rural, industrial and pre-industrial life automatically as differences between "better" and "worse". 12 With this warning, which I fully agree with, he approaches the debate by showing what he thinks is wrong with the "optimists'" methodology: he says that the evidence that might lead us to relatively correct conclusions is in a) mortality and death data, b) unemployment data, and c) consumption. He rejects the optimists' wage and price approach.
I will not say here what Hobsbawm's conclusions were, because again they were not final and cannot be a satisfactory answer to our question. But I agree with his warning that we must be careful in interpreting the qualitative differences and the empirical data. My view in all of this debate is that for certain groups of working classes, early industrial England was a place and time of "rising opportunity". There is a consensus among historians that living standards rose for the majority after the 1840s. Moreover, the increasing formation of a middle class is an even better indicator of the existence of increasing opportunity. Second, when we study a period of revolution, we must remember that the simple data and measurements (the "empirical" approach) cannot give an answer about the realities of life. The controversy simply cannot leave the realm of "values"-something that Hartwell unfairly criticizes. Even today, more than fifty years later, historians continue to work with inadequate data from the period. More importantly, the economic revolution was accompanied by major changes in lifestyles, labor relations, and culture. These are all sociological and cultural factors that cannot be measured. I am willing to accept that the changes in real incomes (positive or negative) were insignificant compared to the changes in lifestyle, labor relations, and culture. I found a similar view in E.P. Thompson's The Making of the English Working Class. Thompson says, "no serious scholar is now willing to argue that everything was getting worse" as "no serious scholar will argue that everything was getting better" 13 and "...some of the most bitter conflicts of these years turned on issues which are not encompassed by cost-of-living series. The issues that aroused the greatest intensity of feeling were very often those involving values such as traditional customs, "justice," "independence," security, or the family economy, rather simple "bread-and-butter" issues... wages were of secondary importance." 14
As we saw in the debate between Hobsbawm and Hartwell, both historians did their best to bring their conclusions closer together and to reject extremes of the view. Thompson's own conclusion was that the condition of the majority was bad in 1790; it remained bad in 1830, while in the next two decades there were increases in real wages with periodic declines. 15
Although it is very interesting, I think that the debate about living standards in periods of economic transition is not that important. If we really want to build a decent picture of the life of the working class, we should consider the changes in their consumption habits, the changes in their working and living conditions, how workers use their leisure time and how much of it they have. We should also ask whether there has been any significant change in the standard of living of their children, the next generation, which can serve as an indicator of the size and real value of their savings.
When we look at early nineteenth-century England through these indicators, we will inevitably turn to the Marxist sociological approach. It will help us a lot with the overall picture. Marx's observation that "the hand mill gives you society with the feudal lord: the stem mill, society with the industrial capitalist" is hard to dismiss. In early industrial England, as Hobsbawm notes, there were no mechanisms for a better distribution of wealth. It was a period of unchecked capital accumulation. 16 Workers received some benefit from this, because the growth of national wealth always results in an overflow of wealth to the lower strata of society, but capital was concentrated in the hands of capitalists, and those hands were free from government regulation, union pressure, or any other form of countervailing control. Hartwell agrees that the rise in real incomes in the 1830s was not based on a rise in wages, but on their stabilization combined with falling prices and rising productivity. Thus, he agrees that capital did not flow to the working class through the free will of the industrial capitalists.
One thing seems indisputable, and that is the existence of exploitation. Exploitation is a typical feature of any deep economic transformation, whether capitalist, communist, industrial or post-industrial. The industrial economy of communist Russia was built on the backs of the people, Stalin's command economy cost millions of lives; labor relations in early communist Russia were no different from those in the labor camps. The Gilded Age of America was manifested under the ideology of Social Darwinism. Today, state capitalism in China shows how the ordinary worker is underpaid, has insufficient leisure time and miserable living conditions. If you were to ask an Eastern European today whether his or her standard of living has changed since the fall of communism, he or she might say that what matters is political and economic morality, the lack of free education and health care, and not so much the standard of living measured in dollars. 17
Rapid economic change is always accompanied by sacrifice. Thomson notes that for most working people the crucial experience of the Industrial Revolution was felt in terms of changes in the nature and intensity of exploitation. He gives the account of "A Journeyman Cotton Spinner," written in 1818 (the year Marx was born), which I would like to quote at the end of this essay:
"They [the employers, the cotton-mill owners] are literally petty monarchs, absolute and despotic... their all time is occupied in contriving how to get the greatest quantity of work turned off with the least expense... Master spinners are anxious to keep wages low for the purpose of keeping the spinners indigent and spiritless... as for the purpose of taking the surplus to their own pockets... They [the workers] have been for years, with their wives and their families, bondmen and bondmen of their cruel taskmasters. It is vain to insult our common understandings with the observation that such men are free; that the law protects the rich and poor alike, and that a spinner can leave his master if he does not like the wages. True; so he can: but where must he go? Why to another, to be sure. Well: he goes; he is asked where did you work last: "did he discharge you?" No; we could not agree about wages... So that the man is bound, by a combination of circumstances, to submit to his master." 18
If we take this account seriously, the question of living standards inevitably comes second to the question of exploitation, exploitation wherever and whenever it occurs - in early industrial England, in modern China or India, or in any other place in the world undergoing rapid economic change.
***
1 Early capitalism was "unconscious", it existed in practice, but there were no developed theories and understanding of how exactly it worked. There was no awareness of its nature. This was normal - childhood and adolescence are periods of growth, a time of learning, not of knowledge. In the eighteenth century, Adam Smith predicted the liberal and liberating nature of capitalism while the system was still in its embryonic development. In the nineteenth century, Marx revealed its dark side, its cruel and exploitative character. Since then, especially after Keynes' intellectual break with the prevailing economic wisdom in the middle of the twentieth century, we have built up some knowledge, some understanding of the system. Today, the majority believes in the existence of the contradictions of capitalism (see, for example, Daniel Bell's masterpiece "The Cultural Contradictions of Capitalism"). Western politicians (even the American Republicans - George Bush's bailout program) are trying to find a balance between the contradictions. Awareness of the nature of capitalism promises that we can control the system: to suppress its dark sides while promoting its bright ones.
2 A legendary group of neo-liberal economists, social thinkers and philosophers, among which Friedrich Hayek, Karl Popper, Ludwig von Mises, George Stigler, and Milton Friedman.
3 R.M. Hartwell, The Industrial Revolution and Economic Growth (Methuen & Co Ltd., London, 1971), p. 313.
4 J. Kuczynsky, A Short History of Labour Conditions in Great Britain from 1750 to the Present Day (London, F.Muller, 1947) p.16. Quoted by Harwell.
5 J.H. Clapham, An Economic History of Modern Britain. (Cambridge University Press, 1925) p.561. Quoted by Harwell.
6 Hartwell's italics
7 Ibid, p. 314
8 Ibid.p. 315
9 Ibid. p. 344-345. Hartwell's italics
10 E.J. Hobsbawm, The British Standard of Living 1790-1850 (Economic History Review, Vol. 10, No. 1 (1957), p. 47
11 Ibid. p.47
12 Ibid. p.47
13 E.P. Thompson, The Making of the English Working Class" (Penguin Books, 1979), p.228
14 Ibid. p.222
15 Ibid. pp.228-229
16 Quoted by E.P. Thompson in The Making of the English Working Class" (Penguin Books, 1979), p.208
17 Curiously, the desire for a higher standard of living was one of the main reasons for anti-communist sentiment in the late 1980s. The majority of people actually tolerated the political system, but they wanted Western cars and stores full of goods. At the mass level, anti-communist feelings were the result of dreams of a consumer society like that in the West, known mainly from movies and magazines; for the majority, political ideology was of secondary importance.
18 Ibid. 218-219
