Portraits of Middle Class Leaders

For the artist Joseph Wright of Derby, these mills were symbolic of a new world and as such fit objects to be put on canvas. He painted two versions of Arkwright's Cromford mills. There is a matter-of-fact depiction by day and a night scene of exquisite beauty, the landscape bathed in the moonlight and in each of the hundreds of windows a naked candle ablaze. Wright was fascinated by the new Edition: current; Page: [6] England. He painted memorable pictures of technological exhibits and scientific experiments. Most significantly, however, he painted portraits and it is for these portraits that have endured for two centuries that Wright is renowned. In them he has frozen for eternity the faces of the men who were ushering in industrial civilization. There are the partners Thomas Bentley and Josiah Wedgwood, the textile magnates Arkwright, Jedediah Strutt, Samuel Crompton, and Samuel Oldknow. In this historical gallery are also the intellectual friends of these manufacturers, who gravitated to the circle around Joseph Priestley (1733–1804). There is the philosopher, poet, scientist Erasmus Darwin. There is the political radical Thomas Day.

Wright's portraits are free of mystery and awe. There is no suggestion of majesty, no theatrical evocation of grandeur or charisma. No aristocratic adornments or symbols clutter the canvas and there is no use of the classical themes or modes that so intrigued the Frenchman David. Instead there is a penetrating steady light that reveals plain men in sober and simple settings. The counting house not the manor house, the mill not the drawing room was their milieu. They mean business. Wright's subjects were not princes, statesmen, or orators. They were entrepreneurs, men of business, and the intellectual spokesmen for that class.2 They were not cosmopolitan public men from London or Bath. They were provincials from Derby, Manchester, and Birmingham. They were industrious men hard at work changing the face of English society and were perceived as such by their contemporaries. A writer for the Edinburgh Review noted:

The characterization of this written portrait is uncannily accurate, despite its sneering smugness. These were indeed aspiring men who had set themselves against the inherited world of aristocratic rank. Their concern was not the “extended standards” but the private world of self. Their own excellence, their own self was, indeed, their subject of computation. They were characteristically honest and straightforward about what they were up to. In his letters Edition: current; Page: [7] Wedgwood described how he had “fallen in love” with and “made a mistress” of his new business. Jedediah Strutt was convinced, “whatever some Divines would teach to the contrary,” that the “main business of the life of man” was the “getting of money.”4

The Middle Class Cultural Revolution: Homo Oeconomicus

A fundamental and momentous shift in values is implicit in the works and words of the circle that Wright painted in the Midlands. A new cultural ideal was taking shape. Homo civicus was being replaced by homo oeconomicus. This, too, was apparent to contemporary observers. In her essay “True heroism,” Anna Barbauld, a member of Priestley's circle, wrote that great men were no longer “Kings, lords, generals, and prime ministers.” There were new heroes, men who instead:

A pamphleteer of 1780 spelled out even more clearly who these new heroes were. They were the men whose portraits Wright painted.

This is no Victorian journalist waxing philosophical on the wonders of the Crystal Palace exhibition. It is an eighteenth-century pamphleteer criticising machine breakers in Lancashire. What the machine seemed to provide was a concrete basis for the emerging belief in unlimited progress and improvement. While some might react with fury to the pain and hurt, homo oeconomicus had seemingly few regrets at the corrosive and unsettling impact of the machine. Tradition, custom, all of the status quo must give way to the felicitous path of progressive change. There is an ominous foretaste of Social Darwinism in the vision of endless innovation and improvement conjured up in 1780.

The machine is the new standard of value. In terms that speak strikingly to later themes of reification and alienation Wedgwood calmly informs a correspondent that he has “been turning models, and preparing to make such Machines of the Men as cannot err.”8

Invention, useful improvement, comfort—these are the central preoccupations of the age. No surprise then that a cult of Benjamin Franklin emerged in Wright's and Priestley's circle. For Anna Barbauld he was a fit model for “true heroism.”

Such men had no need for the teachings of the past. The Annual Register, commenting in 1800 on the accomplishment of the century past, echoes this theme. Prodigious change had occurred in England during those 100 years.

Josiah Wedgwood had a better way to assess the achievements of men like himself. In 1783 he summoned his young workers to a large meeting in a field near his works in Staffordshire. Food was scarce that winter in nearby Lancashire, and what little was available bore prices too dear for most of the workers in the new factories. The workers rioted in Lancashire, breaking machines and sacking shops of bakers and grocers. Wedgwood called the meeting to warn his workers against following the lead of their mates in the cotton mills. “The late tumultuous proceedings,” he cautioned, “were contrary to their own real interests.” The workers would do well, instead, he went on, to ask their parents to compare the countryside as it now stood with what they once knew. Had not poverty been replaced by workers earning double their former wages? Had not miserable huts, poorly cultivated land, and nearly impassable roads been replaced by new and comfortable homes and “the land, roads, and everything else by pleasing and rapid improvements?” There was but one explanation for this transformation, industry, a word laden with meaning for the pious unitarian Wedgwood. “Industry has been the parent of this happy change—a well directed and long continued series of industrious exertions, both in masters and servants.”11 The foundation of a new England was being laid by those Edition: current; Page: [9] who saw hard work as a command of God. Wedgwood, in fact, expanded the decalogue, heaping praise on those “very good in keeping my eleventh commandment—thou shalt not be idle.”12

Dissenters as Apostles of Modernization

Wedgwood's friends, who zealously obeyed this divine injunction were transforming Britain in the way that Burke saw all Europe heading. “The age of chivalry is gone,” he wrote, “that of sophisters, economists and calculators has succeeded. The glory of Europe is extinguished for ever.”13 Throughout most of his career, even in the Reflections, Burke was convinced, it should be remembered, that England was the principal evidence of this most unfortunate transition. He singled out one group as the major modernizing agent in his England—the sectarian protestant dissenters. He was right. While many strands of English life contributed to the modernity that undermined the ancient regime, even parts of the aristocracy itself, the cutting edge of change came from these dissenters, from the likes of Wedgwood. They were the boldest voices attacking the traditional order; they were the secular prophets, the vanguard, of a new social order. These talented and industrious protestant dissenters played the decisive role in transforming England into the first industrial civilization.

By the 1760s and 1770s large numbers of the English dissenters, the subdued and rather quiescent descendants of the nonconformist sects that had waged revolution under Cromwell, had already emigrated to the American colonies. Those Baptists, Presbyterians, Independents (Congregationalists), Unitarians, and Quakers who remained in England constituted only seven per cent of the population. But this seven per cent was at the heart of the progressive and innovative nexus that linked scientific, political, cultural, and industrial radicalism.14 The mnemonic scheme used by generations of English school children to personalize the industrial revolution, for example, the three Ws, Watt, Wilkinson, and Wedgwood, are dissenters to a man. Each of the new manufacturing industries was presided over by dissenters.

Joseph Priestley: Representative Dissenter and Modernizing Bourgeois Radical

An equally strong case can be made for the central and crucial role played by these dissenters in scientific and political innovation, personified best in the career of Joseph Priestley, who more than anyone else qualifies as the pivotal intellectual figure among the bourgeois radicals. Radical in politics, laissez-faire theorist in economics, innovator in science and technology, founder of the modern Edition: current; Page: [10] Unitarian movement, Priestley schooled England's new men of business in the series of dissenting academies at which he taught, while personally serving as the critical link between virtually every aspect of the progressive and innovative bourgeois nexus. Brother-in-law to Wilkinson, friend of Price and Wollstonecraft, “guide, philosopher, and friend of Boulton, Watt, and Wedgwood at Birmingham,” he was “gunpowder Joe” to Burke and the “Church and King” mob that burned his laboratory and home in 1791 sending him to finish his days in dissenter paradise—America.15

The dissenters were proud of their achievements and unafraid to note their wealth. Self-congratulation, in fact, was often paired with threats to leave, should Anglican and aristocratic England bear down too hard on dissent. According to Priestley's calculations, “one-half of the wealth of the nation has been the acquisition of dissenters.” Their secret was one that, he argued, would guarantee success for anyone. “The habits of industry and frugality which prevail among them will not fail to make any set of men rich.” Priestley echoed Tom Paine's Rights of Man by holding out the possibility that if pushed too far the dissenters and leading manufacturers would leave England,16 which of course he himself would do in 1794. The irony is, of course, that it was just such a sense of potential mobility and lack of identification with the soil and traditions of England that further encouraged the very hostility against them that Priestley warned against.

The Dissenters' Legal Disabilities, Marginality, and Creativity

The dissenters operated at the margins of English life, and this sense of alienation had concrete foundations in the objective world. For most of the eighteenth century it was technically illegal, for example, to carry on a unitarian service. But much more onerous than this were the Test and Corporation Acts, the most humiliating of the badges the dissenters had to wear indicating their difference. This legislation, dating from the Restoration and originally directed against Catholics, required all holders of offices under the Crown to receive the sacrament according to the rites of the Anglican church. The Acts also excluded nonsubscribers to the Anglican Edition: current; Page: [11] creed from any office in an incorporated municipality. In addition, only Anglicans could matriculate at Oxford and Cambridge. Exclusion from public jobs was the most serious impact of the Acts, however, for it meant that legions of these talented dissenters were denied one of the most important means a society has to reward its successful: public office in the military or civil establishment.

The radical and innovative role that the dissenters played in the decades after 1760 was in part related to their marginality, and the dissenters themselves sensed that their creative role in English life was related to their exclusion from its mainstream. Anna Barbauld made the connection clear in her Address to Opposers of the Repeal of the Corporation and Test Acts (1790). You have disqualified us, branded us, and kept us separate, she shouts at the establishment. “You have set a mark of separation upon us, and it is not in our power to take it off.” But in doing this the Anglicans had also carved out the unique mission of the dissenters, she hastens to add.

The dissenter not blinded by establishment rewards, and not silenced by the financial advantages of mouthing orthodox truth, is uniquely capable of seeing the appeal of novelty and speaking the words of criticism. Some two decades earlier Priestley had made the same point. “We dissenters,” he wrote, “consider it as our singular privilege, that our situation, how unfavorable soever in other respects, is favorable to free inquiry; and that we have no such bias upon our minds, in favour of established opinions.” Even after his laboratory had been destroyed by the mob in 1791, Priestley proudly asserted his dissenting nature. “I bless God,” he wrote to his friends in Birmingham, “that I was born a dissenter, not manacled by the chains of so debasing a system as that of the Church of England and that I was not educated at Oxford or Cambridge.”19 To the minister and radical, Richard Price, it was indeed his having been spared Oxford and Cambridge that explained the dissenter's innovative and radical disposition. The ancient universities, he wrote, were “fortresses erected for the security and preservation of the Church of England and defended by Tests and Subscriptions.” Free from this training in orthodoxy, the dissenters did not believe that truth was founded 200 years ago. They were not bound to “vile dogmatism,” they were not given to “notions of sacredness in disputable doctrines Edition: current; Page: [12] and stuffing the mind with prejudices.” Dissenters, Price concluded, had a peculiar calling made easier by their exclusion; it was “to suspect our public creeds and forms.”20

In his Reflections on the Revolution in France, Burke would, of course, proudly proclaim the English a people who, in fact, cherished ancient and sacred doctrines, or prejudices, as he called them. Ideas were worthy simply by dint of dogged persistence over time. Dissenters like Price had no truck with the self-evident truth of ancient ideas, however; theirs was seen as a messianic mission to, as Barbauld put it, “destroy the empire of prejudices, that empire of gigantic shadows.” Like the Hebrews, they were chosen by God for their task, and their oppression for their difference was proof of their selection.

The Dissenters' “Novel Doctrines”: Careers Open to Talent

Self-consciously, then, the dissenters saw their mission not only as patrons of scientific and industrial modernity but as enemies of established opinions, vile dogmatism, public creeds, the reverence for opinions and the empire of prejudice. Freed from restraining golden padlocks on their tongues, they were a people “fond of novel doctrines.”

These novel doctrines, the ideology of bourgeois radicalism, are at work in the effort throughout this period to repeal the Test and Corporation Acts. This issue more than any other preoccupied the writings of the dissenters and it is here that one finds the ideological core of dissenting social thought.21 These Acts interfered with religious liberty, to be sure, but even more onerous to the dissenters were their invasion of civil liberty. While they violated the natural religious rights of believers, they also intruded the state into the free competitive market of careers and rewards by right due the talented and industrious. These laws violated the fundamental assumptions of the ethos of the self-made individual and of society disinterestedly rewarding people of merit and talent, people of hard and useful work. By excluding dissenters from public office, the Acts were assailed as the major buttress of an aristocratic order of received and unearned status and rank. They rewarded idle and unproductive people of leisure and lineage. In an essay attacking the Acts, Priestley ridiculed the values and the individuals they favored. They were designed to reward “the gentlemen born,” those “with family and connections respectable... of polished and engaging Edition: current; Page: [13] manners.” It is the demand for careers open to the talented and the charge that aristocratic society blocks such advances that Priestley intones in his mocking comments that “the door of preferment is so open to him [the gentleman born] that he hardly needs to knock in order to enter.”22 No matter how superior the dissenter was it seemed to some of them that the English would always have more respect and rewards for the old order's incompetents. Robert Bage, the dissenter and bourgeois radical novelist, wrote:

Priestley warned that if preferment would not come to the talented and successful dissenters than as “citizens of the world” they would get up and go to where their virtuous achievements were recognized and rewarded. This was shorthand for America and so, indeed, he went.24 The fiery Anna Barbauld did not leave, however, and in making her case for the repeal of the Test and Corporation Acts she addressed the social issue straight on. It was no favor for which she asked but “a natural and inalienable right,” which she claimed was hers and every dissenter's. It was not the religious issue that alone bothered the opponents of the Acts nor, indeed, she added, was religion the main concern of the dissenters. The issue was “power, place and influence.”

Barbauld articulates the very core of bourgeois radical social theory. In the competitive scramble of the market place all citizens are equal in terms of their opportunity to win; no one has built-in advantages of birth or status. Freedom involves unrestrained competition and equality, an absence of built-in handicaps. In the vulgar rhetoric of the bourgeoisie, life is competition, a race for goods and offices, and in this race all have an equal opportunity to win. It is, in fact, these dissenters who popularize the metaphor of the race of life. John Aikin, brother of Anna Barbauld, for example, writes in a letter published for his son: “For what is the purpose of equal laws, Edition: current; Page: [14] equal rights, equal opportunities of profiting by natural and acquired talents, but to annul artificial distinctions, and cause the race of life to be run fairly.”26

Talent vs. Privilege

It was privilege and pride against which middle-class radicals, the useful members of the state, waged war. The fundamental sin of the privileged order was their violation of what Thomas Cooper, the dissenting industrialist, and friend of Priestley and Wedgwood, called “principle of talent.” Government required “talents and abilities,” which were not assigned at birth, but which manifested themselves in personal merit and achievement. While the privileged ruled the state,

Moreover, Cooper argued, the privileged who acquire their control of politics and the social order by dint of birth have no motives to industry or hard work. Everything they need or want is theirs from their station in life. “Take away these inducements by giving them in advance, and you stop the growth of abilities and knowledge and you nip wisdom and virtue in the bud.” Public virtue does not flow from the sated ranks of the privileged but from “insatiable ambition,” and as a “reward for extraordinary talents or great exertions.” The aristocracy by their monopoly of public offices blocked the virtuous citizen from the rightful fruits of his industry. Cooper's rhetoric is vintage bourgeois radicalism.

Middle Class Political Reform for Equal Opportunity: William Godwin and Figaro's Politics

These men of “meritorious attainment” were the bearers of an ideology of equal opportunity. The bourgeois radical demanded political reform in order to destroy forever the aristocratic world of Edition: current; Page: [15] patronage and ascribed status. The demands of the reformers that the suffrage be extended to industrial and commercial wealth, that the new manufacturing centers like Manchester and Birmingham be granted parliamentary representation, that expensive aristocratic institutions be streamlined or eliminated, that dissenters be free to serve as municipal and governmental officials, all involve the vision of careers opened to the talented. A public order managed by men of merit and achievement would in turn reward others for industry and effort. Poor laws would be abolished, taxes decreased, government withdrawn from the market and the pulpit, luxury discouraged, thrift and other middle-class values encouraged. Equality of opportunity was a social ideal that assumed that given a freely competitive environment, the talented would move to the top, a victory for virtue as well as for merit.

Equal opportunity dominated the thought of the bourgeois radicals of late eighteenth-century England. William Godwin, former dissenting minister, and “the philosopher” of the English radicals during the French Revolution is one such example. In his immensely popular and influential Enquiry Concerning Political Justice (1793), he attacked the aristocrat as someone with “no motive to industry and exertion; no stimulus to rouse him from the lethargic, oblivious pool, out of which every human intellect originally rose.” Privilege, Godwin wrote, enables a few to monopolize the rewards “which the system of the universe left at large to all her sons,” and it “kills all liberal ambition in the rest of mankind.” Godwin's treatise, justly remembered as the first important anarchist statement, is a manifesto for the liberal individualistic world view that lashed out at the still powerful remnants of the corporate and hierarchical polity defended by Burke. Godwin proclaims:

Godwin's plea for equality is that of the bourgeois radical. He does not demand leveling and arbitrary equalization, only equality of opportunity. He, too, invoked the metaphor of the race, the competitive symbol of self-reliant liberalism. In Political Justice (1793) Godwin anticipates and sets the pattern for later anarchist ambivalence. While much of his argument for equality expresses itself in images of communal solidarity, it is also expressed in the language of radical and competitive individualism. One dimension of his assault on inequality is couched in the language of bourgeois liberalism. The enemy is aristocratic privilege. In Political Justice Edition: current; Page: [16] some of Godwin's most vitriolic prose is directed at the feudal notions of rank and status. In their place he pleads for the liberal principles of careers and rewards open to talent, industry, and merit. He speaks directly of equality of opportunity, as he makes the classic liberal argument for a fair race, free of special advantages, and with victory assured the best runner:

In passages such as these, Godwin echoes the progressive bourgeois ideology found in the writings of men like Priestley and articulated in the circles of industrial religious dissenters around Wilkinson and Wedgwood.

How fitting, then, that Thomas Holcroft, the dissenter and radical novelist, Godwin's closest friend, and the acquitted conspirator in Pitt's treason trial of 1794, should have been the Englishman to translate Beaumarchais' Marriage of Figaro in 1784. For in Figaro we find the pristine articulation of bourgeois radical ideology. Figaro's denunciation of Count Almaviva in Act 5 captures the spirit of the age.

Bourgeois radicalism was the politics of Figaro's kinsmen in Britain. It was the political program of men and women who were convinced that they had done more, and that they more than anyone else deserved social and political rewards. Bourgeois radicalism was the ideological vision of industrialists, scientists, and their intellectual spokesmen who set out in late eighteenth-century Britain to destroy the political, social, and cultural hegemony of those who had only gone to the trouble of being born.

Long before Marx, observers assumed the interdependence of the economy and the polity. The likes of Priestley, Barbauld, Wedgwood, Price or Paine saw themselves harbingers of political as well as economic change. Contemporaries had numerous concrete symbols of this linkage within even the same family. None the least impressive were, of course, the Cartwright brothers, Edward, the inventor of the power loom, and John, the indefatigable campaigner for adult male suffrage, annual Parliaments, payment for M.P.s and equal electoral districts. Conventional wisdom, in fact, had it that economic change naturally begat political change. Hume and Smith Edition: current; Page: [17] shared Montesquieu's conviction that commercial societies had more political liberty. Economic determinism was a common feature of Scottish historical analysis and it presumed, too, the liberalizing tendencies of economic growth. Sir James Stewart wrote:

Henry Fielding was not the scholar Stewart was, but the novelist was an astute observer of his times. For him, too, it was beyond doubt that economic change would produce political change. “Trade,” he wrote, “hath given a new face to the whole nation, hath in great measure subverted the former state of affairs.” Only the ignorant and the socially blind could not see the political consequences of this transformation, according to Fielding.

Perkin on Interest Groups vs. Classes

Class does not figure in British society in the eighteenth century because the bonds of patronage and dependency prevented any class feelings from emerging, or as Perkin puts it, any “vertical antagonism between a small number of horizontal groups.” The old order with its ruling principles of patronage and connection was characterized by “horizontal antagonism between vertical interest pyramids.” By this Perkin means interest politics. Not class but competing interests, the various estates, corporate, geographical, and religious interests, the connections and factions of court, country, “ins” and “outs” was the stuff of English politics until 1815. The agitation for parliamentary reform that begins in the 1760s and continues in rising crescendo into the 1790s is written off “as characteristic of the old society.” The reformers were merely an interest group of “outs,” seeking office or at best lost rights. These reformers were neither interested in nor responsible for industrializing England. It was, in fact, Britain's landed aristocracy, its “extraordinary elite” which took the initiative here and “used it to create all the preconditions of an industrial revolution,” which would ultimately radically disrupt the very traditional order over which it presided.46

Perkin's Neglect of the Middle Class and His Overemphasis of a Modernizing Aristocracy

It is for making this case that Perkin's book is most often cited. And it is a fascinating case he makes, documenting aristocratic involvement with banking, commerce, transport, and manufacturing. Their role in the abandonment of wage fixing and apprenticeship clauses as bearers of a new laissez-faire ideology is also an argument well made.47 Perhaps less valuable is the suggestion that the elite deserves the credit for the industrial revolution because after all their landed policy of enclosures drove the workers into the factories.48 Of a similar questionable value is his suggestion that the aristocracy helped bring about the industrial revolution because their dominance in politics and the church “helped to divert the energies of the Dissenters away from politics and towards labouring in their vocations of industry and trade.”49

Perkin's modernizing aristocracy is still for the most part a well-made case, and a necessary and useful corrective to accounts Edition: current; Page: [25] (like this very essay) which tend perhaps too much to the other extreme. But surely revisionism has run riot in Perkin's Tory version of a modernizing, innovative, cohesive aristocracy and an utterly irrelevant and quiescent bourgeoisie playing little if any role in “the breakdown of the old order.” To be sure, Perkin sees some place in the story for the disenchantment with patronage and dependency on the part of the “middle and lower ranks or orders.” Still, he is convinced that this itself was “indeed provoked by a rejection on the part of the higher ranks” of their paternal and protective responsibilities.50 Like Carlyle, Sadler, and Disraeli, Perkin is convinced that the old order was done in by “the abdication on the part of the governors.”

The Alleged Irrelevancy of the Middle Class: A Comparison of Perkin's Tory and Thompson's Socialist Readings

While they differ radically in their vision of historical change, the Tory Perkin and the Socialist Thompson share a common reading of the virtual irrelevance of the middle class in the social structure of the eighteenth century. Both tend to see it too submerged in the complex world of deference and connection to be playing any critical (in both senses of the word) role. Both are preoccupied with the polarity of gentry/aristocracy ruling class and all the rest. The one sees one pole as vital and innovative while the other sees it as regressive and the agent of hegemonic control. The one sees no class feelings in the century at all, the other sees plebeian radicalism in a culture and politics of rebellion. But both are convinced of the un-importance of a class conscious third force, a radical bourgeoisie.

It may well be that Perkin's very concern in answering Thompson, in fact, forces him to duplicate Thompson's oversight of any important middle class consciousness. Thompson was wrong, Perkin contends, in labelling Paine, Hardy, and the English Jacobins of the 1790s as class spokesmen. “Were they a class,” he asks, “were they emancipated from the system of dependency?” No, he answers, because they were self-evidently not “consciously proletarian,” and the workers clearly did not flock to their tents. But this assumes the only options are privilege or proletarian.51 They were, indeed, out “to apply the axe to the old society” and they were, indeed, spokesmen for a class, but for a radical middle class.

Like Thompson, Perkin tends to see class and class consciousness as meaningful issues or even concepts in the eighteenth century only in terms of working class. The bourgeoise don't count. How else does one explain a passage in which Perkin dismisses the agitation of a Cartwright and Wyvill as “highly respectable—that is, they did not assume the character of a class attack upon the aristocracy.”52 Can it not be both? Can a class attack on the aristocracy not be respectable? It can not be only if one's reading of class is constrained Edition: current; Page: [26] within a polarity of respectable notables and revolutionary workers. That there was a third force at work, highly respectable men and women out to destroy the world of patronage and paternalism, is the claim of this essay.

To his credit, Perkin also recognizes and brilliantly describes this ideological assault on the old order when he turns to the “entrepreneurial ideal” which he sees emerge in the nineteenth century. Its idealization of competition, hard work, talent, and frugality; its condemnation of idleness, patronage, aristocratic corruption, and jobbing are vividly depicted in the rhetoric of Brougham and James Mill. But this glorification of the middle class as the nation, “the glory of England,” the “wealth and glory of the British name,” is not new. Nor is the antagonism of that class to the ruling ideas and institutions of aristocratic England.53 The roots of that class and that antagonism go deep into the previous century to the Midland's factories, the provincial philosophical societies, and the dissenting schools and chapels of Warrington, Hackney, and Stoke Newington.

Bolingbroke's Civic Humanism vs. ‘Corruption’

In place of class ideology Pocock persuasively makes the case for the hegemony of “classical republicanism,” or “civic humanism.” Part Aristotle, part Cicero, part Machiavelli, civic humanism conceives of man as a political being, whose realization of self occurs only by participation in civic life, by active citizenship in a republic. Edition: current; Page: [27] The virtuous man is concerned primarily with the public good, res publica, or commonweal, not with private or selfish ends. Seventeenth-century writers like James Harrington and Algernon Sidney adapt this tradition, especially under the influence of Machiavelli, to a specifically English context, according to Pocock. This significantly English variant of civic humanism, “neo-Machiavellism,” or “neo-Harringtonianism,” becomes, through the writings of early eighteenth-century English Augustans like Davenant, Trenchard, Gordon, and especially Henry St. John, Viscount Bolingbroke, the ideological core of the “country” ideology as it confronted Walpole and his “court” faction.55 My earlier work on Bolingbroke and His Circle (1968) provided an important link in this intellectual chain, for in it Bolingbroke's preoccupation with corruption was linked to social and political themes.56 Corruption becomes, in fact, a critical concept in the language of eighteenth century politics. Much richer than simple venality or fraud, the concept is enveloped by the Machiavellian image of historical change. Corruption is the absence of civic virtue. Corrupt man is preoccupied with self and oblivious to the public good. Such failures of moral personality, such degeneration from the fundamental commitment to public life, fuel the decline of states and can be remedied only through periodic revitalization or returnings to the original and pristine commitment to civic virtue. Calls for such renewals, for “ridurre ai principii” (Machiavelli's phrase) are the response to corruption.

Bolingbroke's achievement was to appropriate this Republican and Machiavellian language for the social and economic tensions developing in Augustan England over the rise of government credit, public debt, and central banking, as well as for political issues such as Walpole's control of Parliament through patronage or concern over standing armies. Themes of independence and dependence, so critical to the Republican tradition (the former essential for any commitment to the public good), were deployed by Bolingbroke into a social map of independent country proprietors opposing placemen and stock jobbers and a political map of a free Parliament opposing a despotic court.

Pocock's Dialectic of Virtue vs. Commerce and Country vs. Court

In the hands of Pocock and others, this reading of eighteenth-century politics through Bolingbroke's dichotomy of virtuous country and corrupt court does not stop with Augustan England. It becomes the organizing paradigm for the language of political though in England as well as America throughout the century. Analyses that refer to class consciousness or the conflicting class ideologies, that use concepts such as aristocracy, capitalist, feudal, or bourgeois are dismissed as simplistic and proleptic. Challenges to Edition: current; Page: [28] the “primacy” or “omnipresence” of “civic ideology,” of “Aristotelian and civic humanist values,” come not from “simple bourgeois ideology,” or visions of “economic man,” or “capitalist man,” but from a court ideology, part commercial, part elite and by no means representative of a class in any conventional sense. There is no dialectical tension between middle and upper classes, or even between patrician and pleb. These involve “much distortion of history.” But there is for Pocock a proper dialectical reading of the eighteenth century, one which sees everywhere “the dialectic of virtue and commerce.” The American Revolution and the English reform movement of the last four decades of the century involved “a continuation, larger and more irreconcilable of that Augustan debate.”57

Pocock's Interpretation in Light of Bailyn, Wood, and McDonald

Prior to or independent of Pocock's own work, the seminal studies of Bailyn and Wood have made important contributions to this Republican revisionism. Bailyn's The Origins of American Politics and The Ideological Origins of the American Revolution directed attention to the continuity with earlier English oppositional themes in the revolutionary mind set and read the revolutionary debates in the earlier language of corruption and virtue.58 Gordon Wood in The Creation of the American Republic also stressed the importance of the notion of Republican virtue for the American revolutionaries. Popular government requires a virtuous “public spirited, self-sacrificing people,” ever watchful against the spread among them of the dreaded English disease of corruption.59 Pocock, too, sees the American revolution in these terms. The country ideology ran riot in America.” Her Revolution is a Machiavellian “rinnovazionne in a New World,” a “ridurre ai principii,” a “republican commitment to the renovation of virtue.”

But virtue/commerce revisionism has not stopped with the Revolutionary era. More vigorous of late has been Pocock's own suggestion and endorsement of the work of others which, as he notes, makes it clear that in America “to a quite remarkable degree, the great debate on his [Hamilton's] policies in the 1790's was a replay of court-country debates seventy and a hundred years earlier.” Hamilton, with his central Bank, his governmental credit system, his fondness for patronage, his advocacy of a professional army to protect commercial interests, is “a thinker in the direct court tradition.” Hamilton's views were those “Robert Walpole had been attacked for holding.” The Jeffersonians, on the other hand, “spoke the language of the country and knew that they spoke it.” In their polemics “the spirit of Bolingbroke stalked on every page.”60

Edition: current; Page: [29] A host of scholars in recent years have followed the lead of Pocock (and to a certain extent of Wood and Bailyn) in recasting American politics of the 1790s in terms of the nostalgia/modernity split in Augustan England. In The Presidency of Thomas Jefferson, Forest McDonald writes that “just about everything in Jeffersonian Republicanism was to be found in Bolingbroke.”61 John Murin applies the seal of a latter-day Bolingbroke on the Jeffersonians with his verdict that they “idealised the past more than the future and feared significant change, especially major economic change, as corruption and degeneration.”62 What other historians do with this revisionist packaging of late eighteenth-century politics with Augustan labels remains to be seen, although the partisans of Jefferson as a not-warmed-over Bolingbroke are beginning to reply.63 I will have occasion to comment on this reading only in passing where it impinges on my main concern. One might note, for example, that by no conceivable stretch of the imagination can the Jeffersonian, Joel Barlow, who spent several years vigorously writing about and pursuing radical politics in the London of the 1790s, be painted as a nostalgic St. John. He was a bourgeois champion of the market to his fingertips. What I am concerned with directly in this essay, however, is the depiction of English reform in the late eighteenth century as also Augustan politics redivivus.

While country ideology ran riot in America, according to Pocock, actually succeeding in a renewal of republican virtue, in England it was less successful. Still it looked out at a despotic court, pitting nostalgic concern for lost rights, lost virtues, and a lost simple economy against the corruption and complexity of an unreformed and imperial government mired in national debt. Such is Pocock's reading of English reform in late eighteenth-century England. No class ideology, it was simply an expression of civic humanism and country rage. “Georgian radicals in the era of the Revolutionary war and its aftermath used a language indistinguishable from that of their American peers.” That same language of corruption and virtue were being used “against the ministries of George III,” by the foes of Bute “and the friends of Wilkes.” This was no casual flirtation with the language of civic humanism by the radicals. According to Pocock, the country ideology of republican virtue which the Americans used “had originated in England and was still very much in use there. In the minds of James Burgh, John Cartwright, or Richard Price, it was as obsessive and terrifying as in any American mind.” It was “the conceptual framework” behind “radical demands for parliamentary and franchise reform.” In Pocock's Machiavellian Moment, it is Wyvill, Price, and Cartwright who “employed a vocabulary of corruption and renovation little different from that of their American contemporaries.” In an earlier article on “Virtue and Commerce,” it is Burgh, Wilkes, the Yorkshire Movement, the Edition: current; Page: [30] Society for Constitutional Information, Cartwright, and miracula mirabilis John Thelwell who are placed in the tradition of country and civic humanism. They are “key points in the long continuous history of a political language and its concepts.”64 To this group has recently been added Priestley, who, along with Price, is firmly placed in the camp not of a class-conscious bourgeoisie but of those who used “the language of the ‘classical republican symbolism’ (or Old Whig, “country” or “commonwealthman”) tradition,” albeit with some Christian and republican millenialism thrown in.65 Gordon Wood, it should be noted, also tends to see Price, Burgh, and even Paine, in this camp of virtue-obsessed republicans.

Pocock's Stress on the Civic Humanist Tradition

Important in Pocock's reading of these late eighteenth-century radicals is the pessimism he senses in some of them, especially Price and his oft repeated fears over the national debt. Here is no optimistic modernizing spokesman for an insurgent bourgeoisie, according to Pocock, but an anti-market skeptic steeped in civic humanism's “Renaissance pessimism” over the direction of social change and the inevitability of degeneration and decline. Following directly the lead of Davenant and Bolingbroke, it is a mood which, of course, breaks through the writings of Hume and Smith as well. Also important in Pocock's dismissal of any innovative, ideological or discontinuous role for those in the radical camp is his endorsement of the earlier historical findings of Herbert Butterfield and Ian Christie, whose readings of radical agitation in this period emphasize its backward looking quality, its quest to break the Norman yoke and return to the Saxon constitution with its Gothic balance and its popular rights of all Englishmen.66

Pocock's Depreciation of Locke's Influence on Radical English Ideology

If the spirit of Bolingbroke and country ideology dominates radical American and, more specifically for our purposes, radical English political thought in the latter part of the eighteenth century, then the conventional wisdom on Locke's intellectual influence has to be revised. And so it is that Locke and his influence is exorcised from this tale of eighteenth-century thought. He is summarily dismissed from his alleged stranglehold over American and English ideas, in what Pocock describes as “a shattering demolition of his myth.” Deemphasizing Locke involves recognition that “his greatness and authority have been wildly distorted.” The predominant language of politics for eighteenth-century radicals even when concerning “the idea of power reverting to the people,” according to Pocock, is “one of virtue, corruption and reform, which Edition: current; Page: [31] is Machiavellian, classical, and Aristotelian, and in which Locke himself did not figure.” The campaign against Locke is total. Salvoes are levelled against “the image of a monolithically Lockean eighteenth century” and against our thought “dominated by a fiction of Locke.” He is assailed as uninterested in history and, even worse, if analyzed carefully “he would rank on the Court side.” On the whole, Pocock concludes, to understand the debates of eighteenth-century politics does “not necessitate reference to Locke at all.”67

The depreciation of Locke from the seminal role that writers as diverse as Leslie Stephen, Carl Becker, and Harold Laski, had given him was by no means begun by Pocock.68 Implicit in Bailyn's entire corpus is a vast deemphasis of Locke. He is, even more than progressive historiography, the major victim of Bailyn's preoccupation with the language of corruption and virtue in the American Revolution. John Dunn's important article, “The Politics of Locke in England and America in the Eighteenth Century,” dealing with Locke's reputation, is another landmark in the debunking of Locke, and one cited often by Pocock.69 Gordon Wood also suggests that “eighteenth-century English political thought perhaps owed more to Machiavelli and Montesquieu than it did to Locke.”70 Finally, there is Gary Wills's recent argument in Jefferson's Declaration of Independence which replaces Lockean influence on Jefferson with that of Hutcheson and others of the Scottish Enlightenment.71 Locke has been banished from the eighteenth century.

Critique of Winch's Interpretation of Bourgeois Ideology

It is the accusation of prolepsis at the heart of Winch's critique that this essay questions. This study rejects Winch's notion that to read Smith as bourgeois ideology is to use a public language unavailable to the last half of the eighteenth century and found only in the nineteenth century of James Mill et al. Such an ideological language was available in Smith's lifetime. Winch's Smith is a valuable corrective and reminder of the complexity of Smith's thought. It is important to be aware of continuity in Smith's preoccupation with eighteenth-century themes, but this need not sweep away all received wisdom on the role of Smith in the evolution of bourgeois thought. One can be both a bourgeois radical and a thinker concerned with themes important to the civic humanist and country tradition. A new language of public discourse can be acquired alongside the continued use of older words and concepts. To Edition: current; Page: [33] insist that the older language is the only language available produces a dogmatism which sees civic humanism and country ideology lurking behind every text and between every line. It is there, to be sure, and so are newer themes and a newer language of politics, which did not have to wait for the nineteenth century.

Middle Class's Lockean and Radical “Class Ideology”

Informing this new language were older writers. Locke was indeed alive and well in the thought of English radicalism, and not only for Thomas Hardy who wrapped himself in Locke during his treason trials of 1794. Tucker and others attacked the Lockeanism of Price and Priestley.74 Burgh, Price, Priestley, Paine and countless others were less country ideologists than apologists for a radical bourgeois vision. If Aristotle was meaningful to their circle, it was less as a theorist of Republicanism than as champion of the moderate and superior mean, the theorist of a middle class polity. In fact, the major quoters of Aristotle were the Tory clergy who used him to demolish the Lockean arguments of the state of nature and social contract found in radical thought. Burgh and Price, far from nostalgic critics of a new commercial order, accepted a market ideology and the moral supremacy of a talented hardworking middle class.

Bourgeois Radicals as Market Advocates Opposed to Court Privilege

Pocock is quite right to see the court/commerce connection. But in the late eighteenth century the country reform tradition came to terms with the market and, indeed, in the hands of middle-class industrial dissent turns that reform tradition into a wholehearted ideology of the market. The ideological picture is not quite as clearcut as Pocock paints it. The court, while bound to the market and commerce from Walpole on, was enmeshed in the principle of patronage which ultimately flew in the face of market notions of careers neutrally open to talent and hard work. It is here the conflict emerges. Patronage and privilege are principles which pit the court against the bourgeois reformers. Bourgeois radical inveighed against corrupt patronage, but it was a new sense of corruption, the corruption of jobs and places going to undeserving untalented men of birth. It was the privileged court which in this period responded with a nostalgic defense of the ancient constitution, hierarchy, and paternalism. Its defenders ridiculed the leveling ideas of monied men and provincial bumpkins.

Priestley as the Symbol of the Radical Middle Class's Culture, Mission, and Outlook

The Middle Class's Societies as Voices of its Ideology

The seedbed for this radical middle-class ideology and culture in the late eighteenth century were the provincial societies, scientific, philosophical, literary, and constitutional, which sprang up all over England in Manchester, Derby, Birmingham, Sheffield, Norwich, and London. Here and in the dissenting academies, and in the burgeoning associations of manufacturers could be found the “wealth of interacting social relations” that produced family inter-marriage as well as solidarity and class consciousness. Here came together the capitalist and the intellectual, the bourgeois businessman, the political activist, and the religious dissenter. Here men articulated the ideology's sense of itself as representing “the common interest of all members of society.” Here were conceived the formulas that sought “to give its ideas the form of universally valid ones.”93 These classes sought, as James Mill saw all Edition: current; Page: [41] classes sought, “to get up a system of morality for themselves, that is comfortable to their own interests, and to urge it upon other men.”94 These efforts would ultimately prove successful and they would fulfill John Stuart Mill's similar prediction that “wherever there is an ascendant class, a large portion of the morality of the country emanates from its class interest and its feelings of class superiority.”95 But that sense of moral superiority would emerge not in the nineteenth century but in the crucial early years of political struggle in the late eighteenth century.

The writings of the bourgeois radicals represent a vivid consciousness of the mission of the middle class in English society. Decades before James Mill and legions of Victorian apologists for the bourgeoisie, radicals of the 1770s, 1780s, and 1790s made the case for the superiority of men and women from the virtuous and industrious middle ranks. And who was more middle class than the protestant dissenters? John Aikin wrote of his radical associates: “Your natural connections are not with kings and nobles. You belong to the most virtuous, the most enlightened, the most independent part of the community, the middle class.”96 His sister, Anna Barbauld, was equally as insistent that the dissenters were fortunate to be “in that middle rank of life where industry and virtue most abound.”97 Mary Wollstonecraft lamented that women were not more like middle-class men. “The middle rank,” she wrote, “contains most virtue and abilities.” It is where “talents thrive best.” Indeed, her Vindication fo the Rights of Woman was written specifically, as she put it, for “those in the middle class, because they appear to be in the most natural state.”98

Not only was the middle class more virtuous and more industrious, it was also the happiest. There are interesting echoes of Jefferson's pursuit of happiness in Richard Price's observations on the good fortune of the Americans. America is lucky, he wrote in 1784, because the “happiest state of man is in the middle state between the savage and the refined, or between the wild and the luxurious state.”99 Priestley, too, was convinced that middle-class existence was the most felicitous. For several years in the late 1770s he lived in the great house of Lord Shelburne as librarian to this aristocratic patron of bourgeois radicalism. Richard Price had held the job before Priestley, and later Shelburne would champion Jeremy Bentham. Looking back in his Memoirs on his years as resident intellectual for the great, Priestley noted that he was above temptation.

I was not at all fascinated with that mode of life. . . . These people are generally unhappy from the want of necessary employment on which accounts chiefly there appears to be much more happiness in the middle classes of life, who are above the fear of want, and yet have a sufficient motive for constant exertion of their faculties, and who have always some other object besides amusement. I used to make no scruple of maintaining that there is not only the most virtue and most happiness, but even most true politeness in the middle classes of life.100

Edition: current; Page: [42] In these years there emerged a unique bourgeois pride that would later be expressed as its special mission as agents of regeneration and rebirth to fill the void between “an ignorant labouring population and a needy and profligate nobility.”101 The special trait of the middle class was its usefulness, its abhorrence of vice or idleness. The bourgeoisie saw themselves as a people set apart adrift in a sea of the great and the poor. Their chapels, their clothes, their hard work, and their provincialism set them apart as much as the Test and Corporations Acts did. They responded with a conviction of unabashed superiority, cloaked in a vigorous embrace of modernity and their critical role in its onset. They ushered in new notions of time and discipline, and several among them even sought to restructure the English language to rid it of its aristocratic and feudal qualities.

Joseph Priestley and Middle-Class Education

Central to this transformation and to the shaping of middle-class solidarity and its new consciousness was education. One of the most effective weapons in the assault on the old order were the schools which provided a preparation uniquely appropriate for the new age. The leaders of bourgeois England did not come from Oxford and Cambridge where classical and clerical education still dominated the preparation of gentlemen. Adam Smith noted their irrelevance. They were “sanctuaries in which exploded systems and obsolete prejudices found shelter and protection, after they had been hunted out of every other corner of the world.”102 Where learning flourished in the eighteenth century was in Edinburgh and the dissenting academies set up by the sects in response to their exclusion from Oxford and Cambridge. And it was a particular kind of learning that flowered there, perfectly matching the needs of an emerging bourgeois civilization. These academies provided the middle class with a practical education.

The central figure in the development of this bourgeois education was Joseph Priestley, both through his writings and in the example of his many years as teacher in dissenting academies. Priestley's goal was a worldly education in the affairs of society—economic, political, and scientific. “Why,” he wrote, “should youths be trained to be ministers, lawyers, and doctors, and not be trained to be merchants, clerks, and tradesmen?”103 His educational reforms, which soon spread to all the academies, not only produced businessmen and ministers who themselves preached to businessmen, but, as one might suspect, middle-class radicals in politics, restless with the restrictions they faced in a political and social order which they felt to be still very much dominated by the aristocracy and aristocratic principles.

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Priestley and Middle-Class Economics

Priestley's radical vision in a speech he delivered at Hackney contained the new economics of bourgeois radicalism, as well. Part of the “new light” and “rising gale” is a minimal and non-interfering state. This flowed quite easily from Priestley's commitment to religious freedom, for there was a close relationship in the dissenting world view between religious dogma and the political and economic concerns of the bourgeoisie. In addition to the often noted importance in nonconformist doctrine of worldly success and its relationship to thrift, simplicity, frugality, and industry, there was a near unanimity among the dissenting sects in demanding the disestablishment of the church and the complete separation of church and state. Matters of religion and of conscience were held to be totally beyond the competence of the magistrate. The state, it was argued, ought not to interfere in religious matters, its concerns were purely civic. In a constant restatement of Locke's doctrine of toleration, dissenting clergy and political writers insisted that the power of government be limited strictly to preserving the peace and protecting property. What happened in this period is that this constant invocation of the principle of religious laissez-faire, the withdrawal of the state from the realm of belief, became appropriated by secular arguments for economic laissez-faire. The centuries-old restrictions on economic activity inherited from medieval Christian dogma, guild-dominated feudalism, and Tudor paternalism were under attack by the entrepreneurs of industrializing England. Their arguments were reinforced by their religious brethren in the pulpit.

Joseph Priestley here, too, speaks for his age, for his religious brethren, and for his class. In his religious and political tracts, Priestley invokes the doctrinal notion of freedom of conscience, and in his economic writings he wrote of the need for the state to withdraw, the necessity of its being “as little expensive and burden-some as possible.” But, more importantly, Priestley also articulated the new bourgeois demand that government give up its traditional involvement in the economic process. Individualism was as crucial here as in the religious realm, he insisted. Man should be “left to himself.” All the restrictions on individuals should be undone so that they could “revert to that natural condition of man from which we have departed.”104

Business and Legal History

The two winners of the 1978 Bancroft Prize in American History, Alfred D. Chandler's The Visible Hand: The Managerial Revolution in American Business and Morton J. Horwitz's The Transformation of American Law 1780–1860, are prime examples of important scholarly work currently being done in the fields of business and legal history. Each is a notable and worthy contribution to its own area of research; yet, while each deals with his subject in a broad institutional manner, neither author fully relates the impact of his own subject area to the other's field. Business and law, it would seem, developed institutionally independent of each other.

A duality governing the nineteenth and twentieth centuries in America was that of growth versus order. Following in the tradition of James Willard Hurst, Horwitz demonstrates how the law was fashioned and interpreted early in the nineteenth century to “release energy” and to create the nationwide conditions for economic growth. Later in the century the law was used, at least in part, to regulate the economic environment. The history of the late nineteenth and twentieth centuries has been described as a balance between “release” and “control.” Yet Horwitz sees the period as one of rigid formalism that continued mainly to serve business interests. Chandler, however, sees the institutional growth and development of nineteenth century business to be a function of its own inner dynamic, remaining largely unaffected by changes in the law. Neither author takes into consideration the sheer scale of the American legal system. In the 1930s, for example, fifteen million legal actions per year were recorded in the United States. Surely many of these litigations had a great impact on business conduct and institutions, and, these changes in turn had their effect on the law itself.

The three authors of the articles which constitute this issue of Business History Review approach their task by studying legal development within the context of Edition: current; Page: [70] economic and business history and vice versa. Tony Freyer studies the struggle during the late nineteenth century between the federal courts and local interests and its subsequent effect on the rise of a national economy. It was a struggle in which the federal judiciary resolved most of the issues along nationalist lines but one whose results nevertheless still maintained a considerable residue of local diversity. Gary Libecap examines the interplay between Western mining, the law, and its consequent legal and public policy effects. Freyer and Libecap show that the American economy developed within a considerable panoply of regulation long before the generally acknowledged rise of the Administrative State.

Charles McCardy discusses the development of corporate law in relation to the antitrust question. He concludes that the Supreme Court's action in the United States versus E.C. Knight Company case—which made the distinction between commerce and manufacturing—was a well established legal distinction and not a contrivance to enervate the Sherman Act.

These three articles show that the courts played an important and assertive role in the development of the United States economy both on the “macro” and the “micro” level. The interplay of business and law is a clear reality, and much more interdisciplinary work needs to be done to capture the results of this important interrelationship.

Schumpeter's Economic Theories

Joseph Schumpeter (1883–1950) studied economics under the Austrian economists Wieser, Philipovich, and Bohm-Bawerk at the University of Vienna where Bohm-Bawerk took a special interest in the brilliant young economist. Among his classmates were the later leader of the Austrian economists, Ludwig von Mises, and the Austro-Marxists Otto Bauer, Rudolph Hilferding, and Email Lederer. The twin perspectives of Marxian and the Austrian school of economics were to influence Schumpeter's view of the social process throughout his career. After receiving his doctorate in 1906, Schumpeter traveled to England to continue his research and to follow up on his growing interest in mathematical economics, an interest that can be clearly seen in his first major publication, Das Wesen und der Haupinhalt der theoretischen Nationalökonomie.

It is, however, with his second publication, The Theory of Economic Development (1912), that Schumpeter first advanced what was to be his most important contribution to economic theory and what was to remain a constant theme in his work throughout the rest of his life. In this work (unlike his first work where he had “solved” to his own satisfaction the allocation problem in a static setting) Schumpeter turns his attention to the real world of dynamic change. It is here that he unveils the driving force of the market economy—the innovator-entrepreneur. It is the entrepreneur who bursts onto the static scene and, armed with unusual insight, innovation, and perseverance, disturbs the static equilibrium and throws the whole economic system into a frenzy of change, growth, and development.

Schumpeter's scholarly interests were both wide ranging and deep. His knowledge of the theoretical economic literature was astounding, yet his interests were far broader than economics narrowly defined. In his well known essay, Imperialism (1918), Schumpeter sets forth his contention that imperialism is not due to modern capitalist forces but rather to feudal atavisms that remain in the not yet totally modern socio-economic system—an obvious challenge to the theories of Lenin and Hilferding. According to Schumpeter, Edition: current; Page: [71] the purely economic forces are self-equilibrating. It is, therefore, within the political realm that one must look for the causes of market failure and social breakdown.

For years Schumpeter continued work on his theory of innovation and change, and in 1939 he published the fruits of his life-long research: Business Cycles—A Theoretical, Historical and Statistical Analysis of the Capitalist Process. The reception from the profession was disappointing, but, undeterred, he pushed on. In 1942 he published the remarkably successful Capitalism, Socialism and Democracy. This work, addressed to the educated layman, set forth Schumpeter's unique analysis of the capitalist system, a system whose very successes would cause its downfall.

Joseph Schumpeter died in 1950 while at work on yet another and perhaps his most erudite work: History of Economic Analysis. Two years later his wife Elizabeth Boody Schumpeter published the manuscript which detailed two thousand years of economic thought in well over one thousand pages of rich and stimulating prose.

Menger and Entrepreneurship

What contribution to entrepreneurial theory can we find in the writings of the founder of the Austrian School of economics, Carl Menger? Frank Knight claimed that Menger, his contemporaries, and even his successors in the Austrian School were of little help to later economists in the subject of entrepreneurship. Eric Streissler, on the other hand, contends that no less an entrepreneurial theorist than that of Joseph Schumpeter built his own theory of innovative entrepreneurship on Mengerian foundations. W. Jaffe, too, stresses the entrepreneurial element in Menger's work. Schumpeter, however, dismissed Menger's work on entrepreneurship as practically non-existant. Streissler's focus on Menger's preoccupation with the information problem in economics, nevertheless, may give the investigator a promising lead with which to discover Menger's own position of entrepreneurship, if one is to be found.

Menger, it is true, specifically mentions entrepreneurship only briefly in his Grundsatze. Perhaps, however, it is possible to find an implicit understanding of the entrepreneurial function. If so, it will depend on how he treats the following: knowledge, error, and uncertainty.

Knowledge is the constant theme found throughout the Grundsatze—especially knowledge in relation to the activity of economizing. The individual must first perceive that his needs are greater than his means. Second, he must gain specific knowledge about his given circumstances and knowledge of the means to improve his condition.

Knowledge is of course necessary to overcome ignorance, and the market process can be seen as a vehicle for the modification of error over time. W. Jaffe argues that Menger does see the market as such and that therefore Menger's perception of the market was an entrepreneurial one. In reading Chapter Five of the Grundsatze, however, one finds that Menger has completely eliminated error from any role in the determination of prices. The truth is that Menger's price theory was entirely an equilibrium theory in which error and the consequent entrepreneurially driven learning processes were considered an abnormality.

How is this apparent inconsistency to be Edition: current; Page: [72] cleared up? By understanding Menger's differentiation between “economic prices” and “uneconomic prices” one can understand how Menger could place such an emphasis on information, change, and knowledge and at the same time set forth a static equilibrium notion of price determination. For Menger economic prices are those that would obtain under conditions of complete knowledge on the part of all relevant market participants. Uneconomic prices are those found in the real world. It is these prices which ignite the spontaneous development of market institutions which improve the environment within which prices are set and which, over time, modify the “uneconomic” character of these very same prices.

Although Menger posits a theory which is infused with the dynamics of the real world, he never specifically points to the precise element in the process that tends to push the system from uneconomic or distorted prices to economic prices or to prices which correctly reflect the underlying valuations of market participants. As such he never did develop an entrepreneurial theory. Nonetheless, economists as diverse as Schumpeter and Mises working at least in part on the foundation laid by Menger did see the central role of the entrepreneur and did much to develop and clarify the theory of the entrepreneurial market process.

Saint-Simonian Economic Ideas

Ideas as well as narrowly defined economic interests often serve as causal forces in the flow of economic history. To understand economic history the historian must delve into and come to grips with the history of ideas. This article is a study of the relationships between the utopian ideas of the Saint-Simonians and the real world of investment banking and European industrialization, and as such it can serve as a useful methodological lesson for current cliometricians.

The followers of Henri de Saint-Simon (1760–1825) such as Enfantin, Chevalier and especially the Pereire brothers, Emile and Isaac, foresaw and labored to achieve a world of industrialism, peace, and harmony, a world united by railways and fueled by a mammoth credit institution.

The problem with laissez-faire as stated in The Doctrine of Saint Simon, is that “the accident of birth blindly distributes the instruments of production.” Fortunately, however, the capitalist system has within Edition: current; Page: [73] itself the seeds of the correct answer to the problem—the banking system itself. The banks serve as intermediaries between those with capital and those who have none. The banks perform the crucial function of directing the tools of production into the hands of those who most need them. It is the banking sector which will be expanded, strengthened, and centralized to carry out the function of determining and guiding the direction of the future industrialized economy. A central bank will organize and direct secondary banks which will in turn serve as feed back centers, sending information to the central bank concerning local conditions. Each industry is to have its own specialized bank designed to meet its own particular needs.

The success of these Saint-Simonian ideas can be measured by the magnitude of their implementation. Friedrich Hayek has pointed out that the Saint-Simonians, especially Enfantin, were forerunners of the Suez Canal Company in Egypt. Enfantin then went on to create the merger of the Paris-Lyon-Mediterranean Railroad. Michel Chevalier, coauthored the Anglo-French Treaty of 1860 which greatly expanded trade and industrialization throughout France. But by far the most significant implementation of Saint-Simonian ideas appears in the economic activities of Emile and Isaac Pereire who founded the Paris-St. Germain railroad and then were instrumental in creating the famous Credit Mobilier. The Credit Mobilier pioneered in numerous investment and central banking functions, including discounting, advances of long term credit, industry-wide rationalization and reorganizations.

Imitators of the Credit Mobilier sprang up all over Europe during the last half of the nineteenth century, often under the direction of the Pereire brothers: the Darmstadter Banks in Germany, Credito Mobiliario Espanol in Spain, Credito Mobiliare Italiano in Italy and the Credit-Anstalt in Austria. An indication of the perceived worthiness of the Saint-Simonian ideas can be seen in the fact that when the Rothchilds moved to block the Credit Mobilier, they were moved to adopt the same method of organization and operation as the institution they replaced.

The Free Market & the Third World

The Third World's political and economic discourse maintains a consistent hostility to the free market. Prof. Bauer traces the origins of this opposition and chronicles the progress of anti-market ideas throughout the twentieth century.

During the hundred years before the Second World War, the market system regulated domestic and foreign trade in much of Asia, Africa, and Latin America. During the period, impressive material progress was achieved over much of this area—notably in the Far East, Southeast Asia, and West Africa. Since the war, however, the Third World has raised a loud outcry against the market. Criticisms range from the liberal economy's “failure” to assure public or private happiness to its inability to provide uniform material progress to all strata of society at the same time. Currently, the anti-market, centralized planning approach to economics is axiomatic in underdeveloped countries.

Although this hostility emanates from the Third World, it originates in the West. For example, developmental economics in Western universities propound a strong centralist position. Third World students trained in those schools return home to spread the message of market failures and state planning successes.

In addition, United Nations agencies Edition: current; Page: [74] and national aid organizations, such as the U. S. agency for International Development, explicitly exclude from economic consultant positions all those who do not espouse the planning model. Finally, international reporting, documentary films, and even the visual arts and entertainment propagate the centralist approach among intellectuals not versed in economics and among the masses in general. As a result, economic debate in the Third World revolves mainly upon the choice of the Soviet or Chinese model of development. The options have thus grown excruciatingly narrow. In Third World economic discussion, protocol discourages citing examples of free market development such as Japan, Taiwan, Hong Kong, and Singapore—areas which have advanced farther and more rapidly than their centrally planned counterparts.

It must be stated, however, that, if Third World socialism originated in the West, Third World conditions allowed it to flourish. The authoritarian tradition of most underdeveloped nations readily accommodates the coercive style of the centralized planners. In addition, Third World politicians, as politicians elsewhere, can rarely resist opportunities to extend their influence. With increased licensing of economic activities, control of foreign trade, and establishment of state trading monopolies, politicians can considerably enhance their power. Also, many intellectuals in poor countries cannot resist the lure of preferment as government consultants or the opportunity to lord it over an unlettered populace. Few such avenues to privilege would exist in a free market society.

Democratic Capitalism, Justice, & Religion

Novak attacks the conventional theological condemnation of democratic capitalism. Such criticism usually exaggerates the evils of capitalism, blames it for imaginary faults, and refrains from offering us a superior social system. In this anti-capitalism, modern theologians are unfortunately following a long tradition. Contrary to Weber, Calvinist theologians always resisted capitalism; furthermore, Bonhoffer, Barth, Tillich, and the early Niebuhr were socialists.

Theologians are thus quite traditional in their nonmarket economics. First, their view of social justice contrasts modern alienation to a mythical simple community of togetherness where no one uses anyone as a means. Second, their view of social justice centers on distribution, thus ignoring Adam Smith's economic revolution which demonstrated that new wealth could be created and thus pointed to an ethic of productivity.

Theologians need to learn economics, need to make some empirical comparisons with socialism, and also need to devise a new theological account to match economic reality. Democratic capitalism consists of an economic market, a democratic polity, and a pluralistic culture. A theological analysis of it would go as follows. The aim of this social system is to improve the well-being of all mankind by creating wealth and thus liberating people by giving them more leisure, mobility, and opportunity. Second, the democratic capitalist system is highly fraternal since it requires associations and cooperation. Third, this system depends on a sense of sin, for in order to bend human nature successfully to produce social benefits, an awareness of the weakness of human nature is necessary.

Property, Law, and Economics

These two reviews of A. Allan Schmid's book are generally complementary. Schmid identifies the way institutions shape interactions through property rights. Property rights create the opportunities, costs, and constraints of transactions and economic distributions. Schmid combines the positive analysis of such institutions with a normative analysis. He criticizes the predominant Pareto efficiency criterion and other criteria for welfare economics as being disguised value judgments. He also believes that economist's contributions ought to be limited to providing information about the source and consequences of conflicts over interests. This role of the economist is not, however, value free, since it assumes informed choices are better than uninformed choices.

The two reviewers' criticism is that Schmid fails to provide a convincing value criterion for economic analysis, given that he has criticized welfare economists for their disguised value judgments. Furthermore, Schmid does not discuss the fact that institutional “constraints” depend in part on people's perceptions concerning whether they are indeed constraints or liberating devices.

The Economic Analysis of Law vs. Values

O'Driscoll here criticizes Richard Posner's economic analysis of law, partly by commenting on a paper by Charles Fried on the same subject entitled “The Laws of Change”.

The economic analysis of law exhibits both a positive and a normative aspect. First, the positive analysis claims that common law has been efficient. This is so only in the trivial sense that any application of means to ends is rational and thus “efficient.” If we narrow the notion of efficiency, such as to economic efficiency, then common law could not be efficient. The economic variables are subjective and involve expectations, so ex post outcomes must involve disrupted expectations for at least one party and thus are not typically efficient. Similarly, ex post judicial decisions would not be efficient for both parties since one party's expectations have to be foiled. Nor is it possible for judges to assign rights and liabilities solely on efficiency grounds because utility or wealth maximization requires some set of rights and rules to govern the choice process.

Posner also errs in believing that where there are prohibitively high “transactions costs,” judges can mimic markets. But as the debates with the socialists of the 1920s and 1930s show, where information is lacking a market is impossible, and it is only where information is lacking that a need to “mimic” markets would arise.

Posner also claims that economic analysis will tell us why laws change, and that Edition: current; Page: [76] judges conceal their true (economic) reasons for their opinions. Fried correctly countered that the reasons laws change is due to moral reasoning, since law is a branch of morality. However, Fried goes too far in assuming moral arguments are the whole motivational story. Economic motivation plays some role. Nor should Fried chide economists for saying nothing about the content of preferences. All preferences are, for economist qua economist, equal with regard to allocational choices, and the economist has no business saying moral distinctions can or cannot be made within these preferences. In fact, when persons' changing preferences and their deliberations about such preferences are essential to the analysis, we are beyond pure economics. A theory for prescribing legal changes is not a pure economic theory.

Finally, O'Driscoll argues that both Fried and Posner (as well as John Rawls) share the same faulty view that law can be deduced from simple principles (moral principles and wealth maximization, respectively). Law evolves and grows and it is not just constructed. Hence it cannot really be deduced from axioms or principles.