Quakers & Capitalism — The Decline of Evangelical Political Economy
March 30, 2011 § 1 Comment
In 1832 and 1834, the debate in Britain over how to deal with industrial urban poverty took a decisive turn in the New Poor Law, whose policies and ethos more or less dominated Victorian poor relief for the rest of the century. The New Poor Law denied any able-bodied person money or help unless they lived in a workhouse and worked. It mandated that workhouses be built in every parish and living conditions were deliberately designed to be worse than conditions outside the workhouse in order to discourage people from seeking aid. Eligibility requirements were set very high.
The laws were a decisive triumph for evangelical political economy, codifying the mostly predetermined conclusions of the Royal Commission into the Operation of the Poor Laws 1832, two of whose four members were staunchly evangelical (Bishop John Bird Sumner and its economist, Nassau William Senior). They reflected a weird convergence of Thomas Malthus’s population theory and evangelical moral philosophy, David Ricardo’s classical economic theory of wages, and Jeremy Bentham’s utilitarianism. Sumner saw Malthus’s theory of geometric population growth and its threat to national security as part of the Divine Plan and agreed that, by removing some of the poor’s suffering, the old assessment system tended to remove the incentive for moral improvement. The law therefore embraced suffering as a deterrent to the moral vices believed to cause poverty and as an incentive to repentance. It also embraced Benthan’s utilitarian faith in the free market system to provide the “greatest good for the greatest number,” in terms of wages, and also his assumption that people choose pleasant options over unpleasant ones, and would therefore choose to work rather than to live in the workhouse, if conditions in workhouses were bad enough.
Around mid-century, however, evangelical thinking began to lose its hold on the discipline of political economy and on the distinctive middle class piety that it had fostered in British society, though it remained a dominant force in Quakerism (both British and American), especially among the Society’s leadership, until almost the end of the century. The causes of this decline of evangelical influence on economics were its failures on several fronts:
- As economic theory, it failed to keep up with the more effective economic tools of classical economics, as represented especially by the genius of John Stuart Mill, who mastered the entire field by the age of 13, in 1819, but only wrote his masterpiece, Principles of Political Economy, in 1848.
- As public policy, it failed to deal effectively with the intensifying problems of industrial capitalism and eventually gave way to organized philanthropy in the private sector and more liberal policies in British government.
- As moral philosophy, it collapsed in the face of a terrible social and moral calamity—the Irish famine of 1845-1852..
Political economy matures.
Political economy cut its teeth on a series of economic crises in Great Britain. The first major collapse, in 1825-26, was comparable in its severity to the crash of 1929. This was the depression that so exercised J.J. Gurney, which we mentioned in an earlier post.
Evangelical political economists seized on this devastating and totally unexpected event as an example of divine retribution. One radical journalist (William Cobbett) remarked: “Will the Quakers and Unitarians now venture to deny that there is a God?” meaning a retributive, evangelical God. Cobbett’s remark leads us to believe that most Quakers were not prepared to see the crash as divine retribution; even Gurney seems to have thought it more a test than a judgment.
More shocks followed the crash of ‘25, however, with severe recessions occurring in 1837, 1847-8, 1857 and 1866. The sheer regularity of these events called for a more rational explanation than divine wrath in response to greedy speculation and over-investment leading to bubble formation and collapse. The evangelical Malthus had first defined—and predicted—economic collapses, but he ascribed it to middle-class avarice outpacing the natural limits of consumer demand, over-extending itself in debt, and collapsing in bankruptcy. However, as the understanding of business cycles advanced with real experience, the moral argument for recessions began to lose its weight. Morality still figured, of course—there was no denying the role of greed—but the mechanism was revealed as a mechanism, increasingly understood as independent of causal moral factors that could be cured with moral condemnation.
The return of organized giving.
As the industrial revolution became an industrial regime, neither personalized individual, voluntary giving nor the state’s New Poor Laws were up to the job of taking care of the poor, whose ranks were swelling and whose plight was worsening, and not just in the cities but also in the countryside, where the ‘new economy’ was shaking down the old land-based, agrarian rentier economy. Organized giving came back with a moral vengeance in mid-century in Great Britain, becoming a badge of moral probity for the middle and upper classes (think A Christmas Carol, published in 1843) and a requirement for social esteem in the mid-Victorian period. Friends provided tremendous leadership by example in the rise of philanthropy, becoming the signature examples of how and why it should be done.
The great Irish famine proved something of a turning point in the fortunes of evangelical political economics. As a set of ideas, evangelical political economy dominated public intellectual discourse and the minds of key government actors and policy makers through much of the first half of the 19th century and society as a whole in England adopted its moral tone. This consciousness and the policy of strictly limiting governmental intervention on behalf of the poor shaped the early British response to the Irish famine in the beginning. As the crisis intensified, so did the rhetoric of divine visitation. Sir Charles Trevelyan, the British administrator of relief to the Irish, limited his government’s efforts because “the judgment of God sent the calamity to teach the Irish a lesson. . . a direct stroke of an all-wise and all-merciful Providence [designed to reveal] the deep and inveterate root of social evil.” The public works that had been organized were deliberately structured so as to produce no profit, leaving starving men to pay their own expenses while doing pure make work. Then, for a time, all relief was suspended. Meanwhile, the costs of the Poor Law fell on local landlords, who simply evicted their tenants in response, and the Law denied anyone with at least a quarter of an acre of land any relief; it also forced tenants to forfeit their land to their landlord if they couldn’t produce enough to pay rent and taxes. Nearly 200,000 people were driven off the land in 1849-50.
Eventually, however, the suffering became so visibly overwhelming (perhaps a million people died and another million migrated) that it prompted a backlash of moral revulsion against the moralizers. As both human and national sympathies were awakened in England, so was a sense of outrage at the cold-hearted blamers, who were all pointing in different directions at a bewildering multitude of sins that seemed hardly up to the job of justifying such violent wrath from the Almighty. And it became clear that the government had to act much more forcefully.
More importantly, the laissez-faire policies that the British government applied to the problem, from an explicitly evangelical worldview, made things worse. Even Chalmers, who died not long after, admitted that this crisis was an exception and called for intervention. In the face of this moral failure compounded by policy failure, and lacking Chalmers, its guiding light, evangelical political economics fell swiftly from favor.
Quakers, to their credit, were famously heroic in their response to the Irish crisis. They were present in Ireland already in numbers large enough to form a yearly meeting and had already been ministering to the poor of Ireland for generations. They laid no blame, gave abundantly from their hearts and their purses, made no conditions, abided no corruption in the administration of their relief, and they were fair.
One more factor turned the tide against evangelical political economy in mid-19th century—in a word, optimism. Evangelical political economy was, in its essence, pessimistic because the human battle against sin was a losing battle. One looked to the cross for victory, not to markets, the government or social programs. Eventually, those whose hopes rose on the new economy chose the optimism of the classical economists over the ineffectual moralizations of the evangelicals.
Science was taking off, and so was its brother, technology—solving problems, improving living conditions, promising and delivering on a new idea: progress. The Origin of the Species gave progressives the theory of social evolution, a framework for understanding progress. Quantum mechanics seemed to deepen the old Newtonian laws of physical determination with a new language of energy. Dr. John Snow proved that the horrible cholera epidemic of 1854 in London had scientifically definable causes, where the terrible cholera epidemic of 1830 had prompted the same kind of evangelical moralizing that had labeled the crash of ’25 a divine visitation.
In the late 1850s, two other events helped to redirect economics and Quaker culture during the second half of the century. In the economic sphere, the Limited Liability Act of 1855 allowed limited liability to companies of more than 25 members. This made large amounts of personal financial capital available to build large-scale industrial companies without needing charters from Parliament. The United States had always been more friendly to the idea of limited liability and it gained momentum from Jacksonian populism in 1830s, which saw it as a mark of economic democracy. However, since corporate charters were regulated by the states, laws clarifying limited liability moved forward in a more haphazard fashion than in the UK, but by mid-century, the practice of limiting liability for shareholders was widespread.
Meanwhile, in 1859, John Stephenson Rowntree, then just 24, submitted Quakerism Past and Present as an essay for a prize offered to the Friend who could most effectively address the problem of Quaker decline. Within a year, London Yearly Meeting began revising its discipline along the lines he had suggested, ending, among other things, the practice of disowning members for marrying out of meeting and a host of other infractions. British Quakers were finally emerging from their quietist shell.
The New Poor Law stayed on the books for decades, however, and the basic assumption that the poor were responsible for their own plight remained unshaken until the Quaker Benjamin Seebohm Rowntree published his landmark book, Poverty: A Study of Town Life, in 1901.
Evangelicalism in America.
Things were somewhat different in America. Here, the evangelical movement lagged behind that of Great Britain in terms of when it really took hold. Moreover, Friends in America had never become the huge economic force that they had in England and had always been much more diverse in their economic pursuits and status. Many American Friends were still farmers through the 19th century and many were small business tradespeople. Philadelphia had its very rich Quakers and many of them turned evangelical, but the main current of evangelicalism flowed west among Friends of much more modest means. Also, because social welfare was the responsibility of the states, national public policy toward poor relief did not really take shape until the New Deal.
This diversity has made it much more difficult for me to follow all these trails to outline the history of Quakers and capitalism in the U.S. This is one of the areas in which I would hope other Quaker historians might fill in the gaps.
The next transition
In the next post, we will look at the second major period of transition in Quaker economic history, which began with the great conferences in Richmond, Indiana, and Manchester, England, in the early 1890s, and ended with World War I and the Conference of All Friends in 1920. In economics, Seebohm Rowntree’s book ushered in a new understanding of the causes of poverty and the structure of capitalism, and the last and decisive step was taken in legalizing the limited liability corporation, a technology that was destined to deconstruct the great Quaker fortunes of the past two hundred years.