Текст бизнес-книги "Grand Pursuit: A Story of Economic Genius"

Автор книги: Sylvia Nasar

Раздел: Жанр неизвестен

Engels and Marx perceived more clearly than most of their contemporaries the newness of the society in which they came of age, and tried to work out its implications more obsessively. Modern society was evolving faster than any society in the past, they believed. The consciousness of change and changeability was a breach in the firmament of traditional truths and received wisdom. In Marx’s memorable phrase, “All that is solid melts into air.”⁵⁷ Surely the vividness of their perceptions owes something to the fact that they came to England as foreign correspondents, so to speak, and that they came from a country that had yet to go through its industrial revolution. The trips from Trier and Barmen in Germany to London were journeys forward in time. Hardly anyone, except perhaps Charles Dickens, was as simultaneously thrilled and revolted by what they witnessed. They professed to despise England’s “philistine” commercial culture while envying her wealth and power. Their observations convinced them that in the modern world, political power grew not from the barrels of guns but out of a nation’s economic superiority and the energy of its business class.

England was the colossus astride the modern world. “If it is a question of which nation has done most, no one can deny that the English are that nation,” Engels admitted.⁵⁸ Industry and trade had made her the world’s richest nation. Between 1750 and 1850, the value of goods and services produced in Britain every year—her gross domestic product—had quadrupled, growing more in a hundred years than in the previous thousand.⁵⁹ The Manifesto emphasized the unprecedented explosion of productive power that Engels and Marx believed would determine political power in the modern world:

The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together . . . It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades.⁶⁰

Marx and Engels had no doubt that England’s capacity to produce would continue to grow by multiples. But they were convinced that the distributive mechanism was fatally flawed and would cause the whole system to collapse. Despite the extraordinary accession of wealth, the abysmally low living standards of the three-fourths of the British people who belonged to the laboring classes had improved only a little. Recent estimates by Gregory Clark and other economic historians suggest that the average wage rose by about one-third between 1750 and 1850 from an extremely low level.⁶¹ True, the laboring classes were now far more numerous, the English population having trebled. And they were not as miserable as their German or French counterparts.

But advances in some areas were balanced by retrogressions elsewhere. For one thing, most of the gain in pay occurred after 1820, and the lion’s share went to skilled craftsmen and factory operatives. Any improvement in the wages of unskilled laborers, including farmworkers, was marginal and was offset, as Malthus had feared, by bigger families. Employment was less secure because manufacturing and construction were subject to booms and busts. Hours were longer, and wives and children were more liable to work as well.

Living standards of urban workers were further undermined by the degradation of the physical environment. The mass migration from the country to the city was taking place before the germ theory of disease had been discovered and before garbage collection, sewers, and clean water supplies were commonplace. Despite the greater poverty of rural England, life expectancy in the countryside was about forty-five versus thirty-one or thirty-two in Manchester or Liverpool. Filth and malnutrition simply weren’t as deadly in less-contagious circumstances. At a time when cities like Liverpool were expanding at rates between 31 and 47 percent every decade, epidemics posed a constant threat. The richest of the rich were not immune—Prince Albert, Queen Victoria’s husband, was carried off by typhoid—but the risks were magnified by poor nutrition and crowding. As the influx of migrants into cities accelerated in the first half of the nineteenth century, the health of the average worker stopped improving with income or actually deteriorated. Life expectancy at birth rose from thirty-five to forty between 1781 and 1851, but raw death rates stopped falling in the 1820s. Infant mortality rose in many urban parishes, and adult height—a measure of childhood nutrition, which is affected by disease as well as diet—of men born in the 1830s and 1840s fell.⁶²

Reactionaries and radicals alike wondered if England was suffering from a Midas curse. “This successful industry of England, with its plethoric wealth, has as yet made nobody rich; it is an enchanted wealth,” thundered Carlyle.⁶³ The economic historian Arnold Toynbee argued that the first half of the nineteenth century was “a period as disastrous and as terrible as any through which a nation has ever passed. It was disastrous and terrible, because side by side with a great increase of wealth was seen an enormous increase in pauperism; and production on a vast scale, the result of free competition, led to a rapid alienation of classes and the degradation of a large body of producers.”⁶⁴

True, as England’s leading philosopher, John Stuart Mill, pointed out, the gradual removal of laws, levies, and licenses that tied the “lower orders” to particular villages, occupations, and masters had increased social mobility: “Human beings are no longer born to their place in life . . . but are free to employ their faculties and such favorable chances as offer, to achieve the lot which may appear to them most desirable.”⁶⁵ But even Mill, a libertarian with strong Socialist sympathies, could see little improvement in the well-being of most Englishmen: “Hitherto it is questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being.”⁶⁶

Thus, in the second year of the potato famine in Ireland, the authors of The Communist Manifesto repeated Engels’s earlier claim that as the nation grew in wealth and power, the condition of its people only worsened: “The modern labourer . . . instead of rising with the progress of industry, sinks deeper and deeper below the conditions of existence of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth. And here it becomes evident that the bourgeoisie is unfit any longer to be the ruling class in society. . . . The proletarians have nothing to lose but their chains. They have the world to win. WORKING MEN OF ALL COUNTRIES, UNITE!⁶⁷

Having been ejected from France for publishing a satirical sketch of the Prussian king, Marx, his growing family, and the family retainer had been living in Belgium on a publisher’s advance for his economics treatise. At the end of his month-long stay in London, Marx had returned to his suburban villa in Brussels, where he promptly put off the task of writing the final version and threw himself into a lecture series . . . on the economics of exploitation. In January, after league officials threatened to hand the assignment to someone else, he finally picked up his pen. Just before news of fighting in Paris between Republicans and the municipal guard reached Great Windmill Street, his partially finished final draft arrived in the mail. On February 21, the league had one thousand copies of the Manifesto, written in German, printed and delivered to the German border with France. All but one copy was promptly confiscated by the Prussian authorities.

Marx and Engels waited impatiently for Armageddon. Like many nineteenth-century romantics, they “saw themselves as living in a general atmosphere of crisis and impending catastrophe” in which anything could happen.⁶⁸ John of Patmos, the author of the book of Revelation, had supplied them with the perfect finale for modern society and their Manifesto: society splits into two diametrically opposed camps, there is a final battle, Rome falls, the oppressed receive justice, the oppressors are judged, and the end of history comes.

History did not end in 1848. The French revolution of that year led not to Socialism or even universal male suffrage, but to the reign of Napoléon III. The declaration of the French Republic resulted in Marx’s summary ejection from Belgium and, a few weeks after he had found a new bolt-hole in Paris, persecution by the French authorities. When the Paris police threatened to banish him to a swampy, disease-ridden village hundreds of miles from the capital, Marx objected on grounds of health and began to look around for a country that would take him. In August 1849 he moved to London, that “Patmos of foreign fugitives” and home of the former French king Louis Philippe and countless other political exiles.⁶⁹ It would be for only a short time, he consoled himself.

Marx’s arrival in London coincided with one of the worst cholera epidemics in the city’s history. By the time it had run its course, 14,500 adults and children had died.⁷⁰ The outbreak encouraged Henry Mayhew, the journalist, to undertake a remarkable series of newspaper stories about London’s poor.⁷¹ A scientist manqué who had a terrible relationship with his father, Mayhew was plump, energetic, and engaging, but absolutely hopeless about money. At thirty-seven, the former actor and cofounder of the humor magazine Punch was still recovering from a humiliating bankruptcy that had cost him his London town house and nearly landed him in jail. After months of grinding out pulp fiction with self-mocking titles such as The Good Genius That Turned Everything into Gold, Mayhew saw a chance for a comeback.

Mayhew’s eighty-eight-part series took Chronicle readers on a house-by-house tour in the “very capital of cholera.”⁷² Jacob’s Island was a particularly noxious corner of Bermondsey on the south side of the Thames immortalized by Dickens in Oliver Twist. Mayhew promised readers a sensational portrait of the district’s inhabitants “according as they will work, they can’t work, and they won’t work.”⁷³ He assured the audience that he was no “Chartist, Protectionist, Socialist, Communist,” which was perfectly true, but a “mere collector of facts.”⁷⁴ With a team of assistants and a few cabmen more or less on retainer, he plunged into the houses with “crazy wooden galleries . . . with holes from which to look upon the slime beneath; windows, broken and patched, with poles thrust out, on which to dry the linen that is never there; rooms so small, so filthy, so confined, that the air would seem to be too tainted even for the dirt and squalor which they shelter.”⁷⁵

Mayhew found that London’s working population was by no means a single monolithic class but a mosaic of distinct and highly specialized groups.⁷⁶ He ignored the city’s single biggest occupation—150,000 domestic servants—whose numbers demonstrated how large the rich loomed in the city’s economy. Nor did he take an interest in the 80,000 or so construction workers employed in building railroads, bridges, roads, sewers, and so on. Instead Mayhew concentrated on a handful of manufacturing trades. As the historian Gareth Stedman Jones explains, London’s labor market was a marriage of extremes. On the one hand, the city attracted highly skilled artisans who catered to the wealthy and who earned one-fourth to one-third more than in other towns, as much as the clerks and shopkeepers who comprised the “lower” middle class. On the other hand, it thrived on an uninterrupted influx of unskilled labor. Laborers also earned higher wages than their counterparts in the provinces, but their living conditions were apt to be worse because of the overcrowded, decrepit housing in areas like Whitechapel, Stepney, Poplar, Bethnal Green, and Southwark, which had been exhaustively documented by parliamentary commissions of the 1840s. Clerks, salespeople, and other white-collar workers could afford the new omnibuses or trains and were escaping to the fast-growing suburbs. Unskilled workers had no choice but to stay within walking distance of their places of employment.

Competition from provincial towns and other countries was a constant source of pressure to find ways to save on labor costs. The system of “sweating” or piecework, often performed in the worker’s own lodging, was tailor-made to keep industries such as dressmaking, tailoring, and shoe manufacturing that would otherwise have migrated out of London on account of its high rents, overheads, and wages. Thus, Stedman Jones concludes, London’s poverty, with its sweatshops, overcrowding, chronic unemployment, and reliance on charity, was, in fact, a by-product of London’s wealth. The city’s rapid growth led to rising land prices, high overheads, and high wages. High wages attracted more waves of unskilled newcomers but also created constant pressure on employers to find ways to replace more expensive labor with cheap labor.

London’s needlewomen epitomized the phenomenon, and they were the subjects of Mayhew’s most sensational stories. “Never in all history was such a sight seen, or such tales heard,” he promised.⁷⁷ Using census figures, Mayhew calculated that there were 35,000 needlewomen in London, 21,000 of whom worked in “respectable” dressmaking establishments that ranged from the bespoke to those that catered to the lower middle class. The other 14,000, he wrote, worked in the “dishonorable” or sweated sector.⁷⁸ Mayhew contended that piecework rates “of the needlewomen generally are so far below subsistence point, that, in order to support life, it is almost a physical necessity that they must either steal, pawn, or prostitute themselves.”⁷⁹

On this occasion, Mayhew was more impresario than observer. In November, with the help of a minister, he organized “a meeting of needlewomen forced to take to the streets.” He promised strict privacy of the assembly. Men were barred. Two stenographers took verbatim notes. Under dimmed lights, twenty-five women were given tickets of admission. They mounted the stage and were encouraged to share their sorrows and sufferings. The minister exhorted them to speak freely. To Mayhew’s amazement, they did:

The story which follows is perhaps one of the most tragic and touching romances ever read. I must confess that to myself the mental and bodily agony of the poor Magdalene who related it was quite overpowering. She was a tall, fine-grown girl, with remarkably regular features. She told her tale with her face hidden in her hands, and sobbing so loud that it was with difficulty I could catch her words. As she held her hands before her eyes I could see the tears oozing between her fingers. Indeed I never remember to have witnessed such intense grief.⁸⁰

Mayhew’s account in the Morning Chronicle confirmed Thomas Carlyle’s worst fears about modern industrial society, inspiring a choleric rant against economists:

Supply-and-demand, Leave-it-alone, Voluntary Principle, Time will mend it; till British industrial existence seems fast becoming one huge poison-swamp of reeking pestilence physical and moral; a hideous living Golgotha of souls and bodies buried alive; such a Curtius’ gulf, communicating with the Nether Deeps, as the Sun never saw till now. These scenes, which the Morning Chronicle is bringing home to all minds of men, thanks to it for a service such as Newspapers have seldom done—ought to excite unspeakable reflections in every mind.⁸¹

Among these unspeakable reflections was the image of a volcano on the verge of eruption. “Do you devour those marvelous revelations of the inferno of misery, of wretchedness, that is smoldering under our feet?” Douglas Jerrold, then editor of Punch and Mayhew’s father-in-law, asked a friend. “To read of the sufferings of one class, and the avarice, the tyranny, the pocket cannibalism of the others, makes one almost wonder that the world should go on.”⁸²

Mayhew’s series in the Morning Chronicle, “Labour and the Poor,” ran for the entire year of 1850. When about half of the articles had run, he revealed his larger ultimate aim. He wanted to invent, he confessed, “a new Political Economy, one that will take some little notice of the claims of labour.” He justified his ambition by suggesting that an economics that did “justice as well to the workman as to the employer, stands foremost among the desiderata, or the things wanted, in the present age.”⁸³

Carlyle’s friend John Stuart Mill had given precisely the same reason for embarking on his Principles of Political Economy, published in 1848, only two years earlier, and already the most-read tract on economics since Adam Smith’s The Wealth of Nations.

“Claims of Labor have become the question of the day,” Mill wrote during the Irish potato famine in 1845, when he conceived the idea for the book.⁸⁴ At the time, the thirty-nine-year-old Mill had long been in love with Harriet Taylor, an unhappily married intellectual whom Carlyle described as “pale . . . and passionate and sad-looking” and a “living Romance heroine.”⁸⁵ As Mill’s frustration over Harriet’s husband’s refusal to grant her a divorce grew, so did his sympathy with her Socialist ideals.

In taking up political economy, Mill hoped to overcome Carlyle’s objection that the discipline was “dreary, stolid, dismal, without hope for this world or the next”⁸⁶ and Taylor’s that it was biased against the working classes. Agreeing with Dickens, Mill saw a particular need to “avoid the hard, abstract mode of treating such questions which has brought discredit upon political economists.” He blamed them for enabling “those who are in the wrong to claim, & generally to receive, exclusive credit for high & benevolent feeling.”⁸⁷

Mill no doubt had in mind David Ricardo, the brilliant Jewish stockbroker and politician who took up economics as a third career at age thirty-seven. Between 1809 and his untimely death in 1823, Ricardo not only recast the brilliant but often loosely expressed ideas of Adam Smith as an internally consistent, precisely defined set of mathematical principles but also proposed a remarkable number of original ideas concerning the benefits of trade for poor as well as rich nations and the fact that countries prosper most when they specialize. Nonetheless, many potential readers of his On the Principles of Political Economy and Taxation were as repelled by Ricardo’s tendency to convey his ideas in abstract terms as by his dour conclusions. His iron law of wages—stating that wages may go up or down based on short-run fluctuations in supply and demand but always tend toward subsistence—incorporated Malthus’s law of population and ruled out any meaningful gains in real wages.⁸⁸

Mill noted that Ricardo, Smith, and Malthus were all vocal champions of individual political and economic rights, opponents of slavery, and foes of protectionism, monopolies, and landowner privileges. He himself favored unions, universal suffrage, and women’s property rights. In response to the economic crisis and social strife of the Hungry Forties, he advocated the repeal of the 50 percent tax on imported grain. The typical laborer spent at least one-third of his meager pay on feeding himself and his family. Mill correctly predicted that once the tax on imports was abolished food prices would decline and real wages would rise. Yet even he remained profoundly pessimistic about the scope of improvements in the lives of workers. Like Carlyle, he was convinced that the repeal of the Corn Laws would only buy time, as the invention of the railroad, the opening up of the North American continent, and the discovery of gold in California had. Such developments, while beneficial, could not repeal the immutable laws by which the world was governed.

Malthus’s law of population and Ricardo’s iron law of wages and law of diminishing returns—the notion that using more and more labor to farm an acre would produce less and less extra output—all dictated that population would outrun resources and that the nation’s wealth could be enlarged only at the expense of the poor, who were doomed to spend “the great gifts of science as rapidly as . . . [they] got them in a mere insensate multiplication of the common life.”⁸⁹ Government could do no more than create conditions in which enlightened self-interest and laws of supply and demand could work efficiently.

For Mill, economies are governed by natural laws, which couldn’t be changed by human will, any more than laws of gravity can. “Happily,” Mill wrote as he was finishing Principles in 1848, “there is nothing in the laws of Value which remains for the present or any future writer to clear up; the theory of the subject is complete.”⁹⁰

Henry Mayhew, for one, refused to accept this conclusion. By his lights, Mill had failed in his attempt to turn political economy into a “gay science,” that is, a science capable of increasing the sum of human happiness, freedom, or control over circumstances.⁹¹ The fact that Mill had not jettisoned the iron law of wages was all the more reason for trying again. Ultimately, Mayhew did not succeed in mounting a challenge to the classical wage doctrine, and neither did anyone else of his generation. Still, his landmark series on London labor became the unofficial Baedeker for a younger generation of “social investigators” who were inspired by his reporting and shared his desire to learn how much improvement was possible without overturning the social order.

In August 1849, less than two years after Karl Marx had arrived in London amid a cholera epidemic, the whole world seemed to be descending upon his sanctuary to see the Great Exhibition. The first world’s fair was the brainchild of another German émigré, Queen Victoria’s husband, Prince Albert, but Marx, who was by then living with his wife, Jenny, their three young children, and their housekeeper in two dingy rooms over a shop in Soho, wanted nothing to do with it. He fled to seat G7 in the high-domed reading room of the British Museum with its cathedral-like gloom and refreshing quiet. Ignoring breathless newspaper accounts about the construction of the Crystal Palace in Hyde Park, Marx filled notebook after notebook with quotations, formulas, and disparaging comments as he pored over the works of the English economists Malthus, Ricardo, and James Mill, the father of John Stuart Mill. Let the philistines pray in the bourgeois Pantheon, he told himself. He would have no truck with false idols.

In May 1851, Karl Marx was no longer the dreamy young university student who spent days holed up in his dressing gown writing sonnets to a baron’s daughter, or the louche journalist who drank all night in Paris cafés. In the ten years since he had obtained his mail-order doctorate from the University of Jena, he had squandered a surprise inheritance of 6,000 francs from a distant relative. He had started three radical journals, two of which had folded after a single issue. He had never held a job for more than a few months. While his erstwhile protégé, Engels, had produced a best seller, his own magnum opus remained unwritten. He had published, but mostly long-winded polemics against other Socialists. At thirty-two, he was just another unemployed émigré, the head of a large and growing family, forced to beg and borrow from friends. Luckily for him, his guardian angel, Engels, had promised to pursue a career at his family’s firm expressly so that Marx could focus on his book full-time.

Meanwhile, as heads of state and other dignitaries swooped into town, Scotland Yard was keeping a close eye on radicals. Judging by a report from a Prussian government spy, the main threat posed by Marx was to Mrs. Beeton’s standards of housekeeping:

Marx lives in one of the worst, therefore one of the cheapest quarters of London. He occupies two rooms. The one looking out on the streets is the salon, and the bedroom is at the back. In the whole apartment there is not one clean and solid piece of furniture. Everything is broken, tattered and torn, with a half inch of dust over everything and the greatest disorder everywhere. In the middle of the salon there is a large old fashioned table covered with an oil cloth, and on it lie manuscripts, books and newspapers as well as the children’s toys, the rags and tatters of his wife’s sewing basket, several cups with broken ribs, knives, forks, lamps, an inkpot, tumblers, Dutch clay pipes, tobacco ash—in a word everything is topsy-turvy and all on the same table. A seller of second hand goods would be ashamed to give away such a remarkable collection of odds and ends.⁹²

The Exhibition season represented a new nadir in Marx’s affairs. Though he adored his wife, he had carelessly gotten Helen Demuth, her personal maid and the family housekeeper, pregnant. Jenny, who was pregnant as well, was beside herself. Three months after she gave birth to a sickly girl, the family’s housekeeper delivered a bouncing baby boy. To quash the “unspeakable infamies” about the affair already circulating around gossipy émigré circles, Marx had his newborn son whisked off to foster parents in the East End, never to see him again. “The tactlessness of some individuals in this respect is colossal,” he complained to a friend.⁹³ The boy’s mother stayed behind to care for the Marx family as before. With home more unbearable than ever, Marx hurried to seat number G7 every morning and stayed until closing.

By the time the Great Exhibition opened on May Day of 1851, Marx had already begun to doubt that the modern Rome would be overthrown by her own subjects. Instead of Chartists storming Buckingham Palace, four million British citizens and tens of thousands of foreigners invaded Hyde Park to attend the first world’s fair. The human wave helped launch Thomas Cook in the tour business and brought people of all backgrounds together. “Never before in England had there been so free and general a mixture of classes as under that roof,” crowed one of the many accounts of the fair published at the time.⁹⁴ For Marx, the fair resembled the games Roman rulers staged to keep the mob entranced. “England seems to be the rock which breaks the revolutionary waves,” he had written in an earlier column for the Neue Rheinische Zeitung. “Every social upheaval in France . . . is bound to be thwarted by the English bourgeoisie, by Great Britain’s industrial and commercial domination of the world.”⁹⁵ The Exhibition was meant to encourage commercial competition, which Prince Albert and some of its other sponsors hoped would foster peace. Marx had prayed for war: “Only a world war can break old England . . . and bring the proletariat to power.”⁹⁶ The worse things got, he reasoned, the better the odds of revolution.

Still, he was not willing to totally discount the possibility that “the great advance in production since 1848” might lead to a new and more deadly crisis. Dismissing the Exhibition as “commodity fetishism,” he predicted the “imminent” collapse of the bourgeois order.⁹⁷ As he and Engels had written in their Manifesto: “What the bourgeoisie therefore produces, above all, are its own grave-diggers.”⁹⁸

Racing against time so as not to be overtaken by the “inevitable” revolution—if not in England, then on the Continent—Marx began working furiously on his own book of Revelation, a critique of “what Englishmen call ‘The Principles of Political Economy.’ ”⁹⁹ Marx spent most days scouring the reading room at the British Museum for material for his great work. To the contemporary questions “How much improvement in living standards was possible under the modern system of private property and competition?” and “Could it endure?” Marx knew the answers had to be negative. His challenge now was to prove it.

When he took up economics in 1844, Marx did not set out to show that life under capitalism was awful. A decade of exposés, parliamentary commissions, and Socialist tracts, including Engels’s, had already accomplished that. The last thing Marx wanted was to condemn capitalism on moral (that is to say Christian) grounds, as utopian Socialists such as Pierre-Joseph Proudhon, who claimed that “private property is theft,” had done. Marx had no intention of converting capitalists as his favorite novelist, Dickens, dreamed of doing with his Christmas Carol. In any case, he had long repudiated the notion of any God-given morality and insisted that man could make up his own rules.

The point of his great work was to prove “with mathematical certainty” that the system of private property and free competition couldn’t work and hence that “the revolution must come.” He wished to reveal “the law of motion of modern society.” In doing so, he would expose the doctrines of Smith, Malthus, Ricardo, and Mill as a false religion, just as radical German religion scholars had exposed biblical texts as forgeries and fakes. His subtitle, he decided, would be A Critique of Political Economy.¹⁰⁰

Marx’s law of motion did not spring Athena-like from his powerful, brooding mind, as his doctor friend Louis Kugelmann supposed when he sent Marx a marble bust of Zeus as a Christmas present. It was Engels, the journalist, who supplied Marx with the rough draft of his economic theory. Marx’s real challenge was to show that the theory was logically consistent as well as empirically plausible.

In the Manifesto, Marx and Engels had offered two reasons for capitalism’s dysfunction. First, the more wealth that was created, the more miserable the masses would become: “In proportion as capital accumulates, the lot of the laborer must grow worse.” Second, the more wealth that was created, “the more extensive and more destructive” the financial and commercial crises that broke out periodically would become.¹⁰¹