Published by EH.Net (August 2019)

Tim Rogan, The Moral Economists: R. H. Tawney, Karl Polanyi, E. P. Thompson, and the Critique of Capitalism. Princeton, NJ: Princeton University Press, 2017. viii + 263 pp. $40 (hardcover), ISBN: 978-0-691-17300-9.

Reviewed for EH.Net by Janet T. Knoedler, Department of Economics, Bucknell University.

Tim Rogan, a fellow in History at St. Catharine’s College in Cambridge, frames this excellent exegesis of the key intellectual contributions of three towering twentieth century critics of capitalism, R. H. Tawney, Karl Polanyi, and E. P. Thompson, with a trenchant question that underlies most of our modern policy debates: “What’s wrong with capitalism?” (p. 1). Rogan observes that our current debates have focused on the material disparities created by capitalism, framed by the important contributions of such rising stars of our twenty-first century economics as Thomas Piketty and Raj Chetty. However, Rogan also contends that they and others working on this topic in recent years have omitted consideration of the moral critique of capitalism as developed in the key works of the three authors covered in this volume – Tawney’s Religion and the Rise of Capitalism (1926), Polanyi’s The Great Transformation (1944), and Thompson’s The Making of the English Working Class (1963). In Rogan’s view, our current discussions of inequality should include this moral dimension, so clearly articulated by these three scholars: as he puts it, “a preoccupation with material inequality which leaves no room for the considerations this moral critique brought up for discussion leaves contemporary debate diminished” (p. 2).

Rogan connects these three authors and their three seminal books through their efforts to understand the moral implications of the transition to capitalism, specifically, the form of free market capitalism that emerged with the British Industrial Revolution, which in his view, challenged not only the earlier patterns of exchange and production rooted in custom and social norms, but also did away with the ethical principles that had undergirded these processes in earlier traditional societies. Each focuses, in these three important books, on a pivotal moment of change in that society when “tensions between old ethical injunctions and new economic imperatives became acute” (p. 3). Each examined the disruptions to the social fabric that accompanied the rise of capitalism in western Europe, especially, England. Each wrestled with, and ultimately rejected, ideas emerging from the theoretical underpinnings of mainstream economic theory that endeavored to explain the workings of a market economy grounded in utilitarian theory. But each also participated, in different ways, in political debates over the proper role of the state in stabilizing the social order, even as market relationships based on individual effort and outcomes continued to replace the customary social arrangements rooted in older collectivistic understandings of the economy. Rogan devotes one chapter each to Tawney, Polanyi, and Thompson, delineating the intellectual roots and lived experiences that led them to their respective critiques of free market capitalism.

Tawney was exposed directly to working class life while teaching economics in Lancashire and North Staffordshire, England, both communities experiencing unemployment and social dislocation. Tawney came to commit himself not only to academic study of these phenomena but also to the search for practical solutions. He was galvanized by the political and social unrest that followed the death of Edward VII that put England at risk of a constitutional crisis and brought the role of the state in dealing with these social dislocations to the fore. As Rogan states, Tawney realized in this moment that “British society was disintegrating in a clash of groups and interests . . . . [as] interpersonal relationships [were reduced] . . . to the terms of economic exchange encouraged by Victorian political economy” (p. 21), namely, methodological individualism. Tawney began to seek out the intellectual underpinnings that could justify greater social unity: as Rogan quotes Tawney, “‘unity is to be desired in all those matters which involve the everyday life of mankind, not in the sense that all must believe the same things or act in the same way, but in the sense that one man must not suppose that what another believes is dictated solely by selfish interests’” (p. 21). Tawney absorbed ideas from Idealist metaphysics, where the state had a crucial role in promoting unity; from F. W. Maitland’s concerns about a tyrannical state; and from guild socialists such as G. D. H. Cole who saw trade unions as vehicles to supplement the efforts of workers to use solidarity to improve their outcomes. After World War I, Tawney was appointed to the Royal Commission on the Coal Industry, and put some of these ideas to practical use. Although Tawney increasingly saw the state as “’a practical political instrument’” (p. 36), he remained mindful that the state was not a perfect instrument, recognizing, as Rogan quotes him, that “’fools will use it, when they can, for foolish ends, and criminals for criminal ends. Sensible and decent men will use it for ends which are decent and sensible’” (p. 37).

Beyond his ideas about solidarity, Tawney also became acquainted with the Christian Socialists, and began to incorporate explicit consideration of morality in his writings: quoting Tawney, “‘the essence of all morality is this, . . . to believe that every human being is of infinite importance, and therefore, that no consideration of expediency can justify the oppression of one by another’” (p. 43). This idea became the basis for his most important work, Religion and the Rise of Capitalism, in which Tawney investigated the governing principles of the economy that existed in England before capitalism. In Tawney’s view, prior to the rise of capitalism, the state had worked to “‘suppress the greed of individuals or the collision of classes’” [to instate] . . . “‘a much-needed cement of social stability’” (p. 45). An important element of Tawney’s work was not simply the infusion of religion into economics, but also the articulation of the role of social cohesion as it had functioned in an earlier, less secular society. Tawney decided that religion before capitalism had been more than the means of individual salvation; it was also “‘the sanction of social duties and the spiritual manifestation of the corporate life of a complex, yet united, society’” (p. 45). In his treatment of the changing ethos of western society under capitalism, Tawney argued that the Reformation had eliminated this crucial social aspect of the human relationship, not only with God but with each other, leading to the destruction of most of the social structures that had maintained social stability and connected the public and private worlds of the participants in the economy, leading ultimately to the “‘spiritual blindness’” (p. 47) of our modern era. In other words, the destruction of these earlier social relationships, linked to religious ethics, was accompanied by a new faith in unbridled individualism, in the moral as well as the social sphere. Once these traditional social ties were discarded, so too were the mutual understandings and the mutual responsibilities that should have formed the essential underpinnings to a humane capitalism.

The second of these great moral economists of modern capitalism, Karl Polanyi, also examined the transition to capitalism through the perspective of his own ethical understandings of society, and he also framed this understanding with his unique experiences in the politics of his day. Polanyi, as Rogan reports, lived through the tumultuous decades following the First World War and through the Second World War in several European countries where this tumult was most keenly felt. He lived in Hungary during the Communists’ rise to power, and was influenced by their economic ideas. When these communist reforms faltered, Polanyi moved to “Red Vienna” and absorbed ideas from the guild socialists who were driving reforms in education and welfare programs, until he saw the rise of National Socialism in nearby Germany and wisely relocated to England in 1933. There he wrote his essay on the “Essence of Fascism,” critiquing fascism as follows: “‘fascist social philosophy . . . was an attempt to reinforce the sense of inevitability with which people looked to collectivist solutions in the decadence of individualist principles of order’” (p. 67). Rogan sees in this earlier essay by Polanyi his clear intellectual connections to Tawney in the latter’s view of the essential human capacity for “autonomy and responsibility” (p. 69) through “principles of social solidarity” (p. 55) and the “notion of ‘human personality’ at the center” (p. 55) of his work. Polanyi also borrowed ideas from Karl Marx; yet, as Rogan argues, Polanyi rejected what he saw as excessive utilitarianism in Marx in favor of alternative theories that did not reduce human social life to simple economic exchange. But, as Rogan also notes, it is also crucial to see Polanyi’s work as taking place in the context of the enmity toward fascism shared by Christian socialists and secular socialist humanists, two strands of work that Polanyi knew well.

It was after his move to the U.S., and in the context of his earlier writing and experiences, that Polanyi wrote his “masterpiece” (p. 53), The Great Transformation. The most enduring insight of this work was Polanyi’s explication of the double movement, the inexorable transition toward a market economy governing land and labor markets that was followed by the protectionist measures instituted by government to protect these “fictitious commodities” from the excesses of the market by slowing the rate of change. For Rogan, Tawney’s treatment of the problems of capitalism is echoed in Polanyi’s emphasis on the “regeneration of social solidarities amidst capitalism’s dissolution of older social forms” (p. 55). Polanyi wrote The Great Transformation, at least in part, as Rogan sees it, to expand upon the same historical accounts presented in Tawney’s Religion and the Rise of Capitalism, but also to show that this “liberal-capitalist paradigm . . . was itself now in crisis” (p. 78). Rogan also notes that Tawney focused on the form of early capitalism that emerged in the sixteenth and seventeenth centuries during the Reformation period when the earlier economic system rooted in tradition and the principles of just price and social cohesiveness first began to erode. Polanyi instead chose to focus on the full flowering of unregulated market capitalism in the early nineteenth century, with many of these social structures now at risk of destruction, in order to present his analysis of the double movement. The Speenhamland wage subsidies served as his specific example of the protectionist response to these market processes, described by Rogan as Polanyi’s “evidence that the dissolution of medieval moral scruples concerning conduct in economic life was unfinished” (p. 80). For Rogan, thus, both Tawney and Polanyi used their critiques of capitalism to argue on behalf of the essential humanity of the workers caught up in this new harsh system of capitalism that was destroying the essential social bonds between workers. Yet, unlike Tawney, who relied on Christian views of the essential nature of humans to make his argument, Polanyi ultimately chose to return to the ideas of Adam Smith, whom he saw as the “last humanist in political economy” (p. 91), to argue that human relationships were grounded in more than mere barter and exchange, but were, rather, fundamentally tied to social relationships.

When first published, The Great Transformation was received skeptically, as Rogan reports, which was not the case with E.P. Thompson’s History of the English Working Class, written not during turmoil and war, as was the case for Tawney and Polanyi, but instead, during a period of economic growth and relative prosperity in Britain after the Second World War. Thus, the task that eventually fell on the intellectually mature Thompson was to articulate a critique of flourishing capitalism in those favorable conditions as opposed to the economic turmoil and war that conditioned the ideas of Tawney and Polanyi. Yet, as with Tawney and Polanyi, Thompson’s intellectual development was forged in the politics of his own day. While only seventeen, Thompson joined the British Communist Party in 1940 out of his dislike for the fascism engulfing wartime Europe. At the time, British Marxists were arguing, on the authority of their understanding of Marx, for “a new understanding of the nature of scientific research as a practical, problem solving affair of which the state should take charge” (p. 137); interestingly, this group of scholars included physicists and chemists intending to use their study of science, thus informed by Marx, for practical economic aims. Yet, as Rogan also states, Thompson became a communist at a time when “‘uncontrolled romantics’ and ‘cold-blooded theorists’ intermingled in a movement galvanized by the enmity of fascism” (p. 138). Thompson would eventually have to choose between these two understandings of the world. His choice for revolutionary socialism came during his association with the Scrutiny movement, so named for its association with a periodical published by F. R. Leavis, in which “a new kind of radical politics . . . married Marxist sociology with Leavisite cultural criticism” (p. 144). By 1945, with fascism defeated, Thompson turned to Stalinism and thus “to a program of state-based collectivism” (p. 147), combining it with his own critique of individualism. Again, world events intervened: Stalin’s death and Khrushchev’s renunciation of Stalin led Thompson to reexamine his intellectual underpinnings.

As Thompson was regrounding himself, intellectually, Britain was engaging in imperialist actions in the Suez, and in other exertions of postwar military prowess, leading to political protests described by Rogan as a “resurgent politics of conscience” (p. 152). These events, combined with the availability of new English translations of Marx’s early work, led Thompson to rediscover Marx’s “‘notion of the ‘fully human’” and to reconstruct his notion of the human as a social being, in a model of human interaction in economic society based on “‘co-operative productive relationships’” (p. 155), rather than on acquisition and exchange. It was in this context that Thompson was asked to write a history of the English working class, as part of a series of historical texts for undergraduates. Then living in Halifax and working in Yorkshire, Thompson had access to primary source material on British weavers during the Industrial Revolution, so he set out to examine the “depersonalized nature of relations between worker and employer that for Thompson accounted for the demoralization of the ‘working people’ during this ‘classic’ phase of industrialization” (p. 160). What he found was that the earlier moral sanctions that had protected workers — e.g., the just price, social relations between workers and between workers and master — were gone, replaced by impersonal market forces. He found similar impacts on field laborers and London artisans, concluding that market forces had eroded the dignity and status of workers, “depersonalizing” (p. 161) the working class.

Connecting these three authors, thus is a recognition of the fundamental commodification of workers under capitalism and the loss of certain essential aspects of human-ness as part and parcel of that process. All three authors found their way, through different intellectual and political experiences, to articulate their moral critique of capitalism on similar grounds. While these ideas are largely missing from modern economics, including, in Rogan’s view, even the important work of those currently working on economic inequality, Rogan sees useful modern connections between these three towering moral economists and the more recent work of E. F. Schumacher and Kenneth Arrow. He notes that Schumacher’s Small is Beautiful explicitly includes Tawney in formulating his argument on behalf of the “‘dignity’ of ‘human personality’” (p. 188), while Arrow’s 1951 Individual Values and Social Choice pushed his mainstream economist colleagues to think beyond simple utilitarianism to recognize the “solidaristic dynamics in play in economic life now which economists needed to encompass to do their descriptive work properly — dynamics which they were failing to capture because of their continuing fidelity to older ‘individualistic’ assumptions” (p. 194). Following both of their leads, Amartya Sen has become, in Rogan’s view, the most important successor to Arrow and to these others, to take up the question of how a “non-dictatorial politics of reform is possible” (p. 195). In Rogan’s view, Sen, working in the tradition of Polanyi, has also rejected the notion of reducing humans to “rational calculators” (p. 196) of self-interest, a claim that for Rogan has “radical ramifications for economics — advanced here not from an enthusiastic fringe but by one of the discipline’s most distinguished postwar theorists” (p. 198).

All of these economists, the three who are the focus of this book, along with Schumacher, Arrow, and Sen, challenge us as economists to recognize, as Rogan observes, that there is “no one timeless system for reconciling individual values to reach social choices out there awaiting discovery by empyrean economists” (p. 198). Any such system of achieving our best collective choices through whatever process — either capitalism in its fully imagined free-market version or the version that Polanyi envisioned as having at least some protective mechanisms for workers and natural resources, will ultimately be assessed for its success (or failure) at achieving liberty, solidarity and greater levels of equality — measured in material as well as in less tangible forms — for the human participants in its system. Rogan concludes his book by commenting that “politics pervades commercial societies, frustrating the technocratic visionaries of the twenty-first century just as it confounded the goat-and-greyhound utilitarians of the nineteenth century. The question is, what kind of politics?” (p. 200). As Rogan continues, “the question is not whether we have within our grasp the elements of a non-dictatorial politics of reform. The question is what can we make of them” (p. 200). Returning to Rogan’s central animating question at the beginning of this volume, what’s wrong with capitalism, at this point in history? It is a given that the material disparities are with us, that they are growing, that these material disparities are destabilizing and debilitating to humans and to our social systems, and that policy makers have done little to address these disparities, to the detriment of our collective politics, in the U.S. and elsewhere, with disastrous results for the polity. These moral economists challenge us as economists, therefore, not to shy away from the moral implications of our theorizing and our pronouncements under the pretext of avoiding normative judgment, and instead to consider the needs of humanity in our own considerations of the economic, social and moral vicissitudes of twenty-first century capitalism.

Janet Knoedler is Professor and Charles P. Vaughan Chair of Economics at Bucknell University. She is co-editor and co-author of three books, The Institutionalist Tradition in Labor Economics (with Dell P. Champlin), Thorstein Veblen and the Revival of Free-Market Capitalism (with Dell P. Champlin and Robert Prasch), and Introduction to Political Economy (with Charles Sackrey and Geoffrey Schneider), as well as numerous articles on institutional economics. She is also the 2019 recipient of the Veblen-Commons award from the Association for Evolutionary Economics.

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