Big money and the Corn Laws By Henry C K Liu This article appeared in Asia Times Online on May 1, 2002 Trade is never politically neutral. A look at the politics of trade in 19th-century industrial England, where the modern world trade started, can yield some insight on the politics currently surrounding globalization and its institutional agents: the World Trade Organization and the International Monetary Fund. Since trade and foreign exchange are inseparable, the functions of the WTO are similarly inseparable from those of the IMF. Some 170 years ago, the short, three-day Paris July Revolution of 1830 rose out of a coalition of the upper bourgeoisie, workers, students and the intelligentsia in opposition to Charles X's reactionary policies against, and institutional repression of, the progressive forces that had their roots in the French Revolution, in the decade after the defeat of Napoleon. French class conflict had vented itself through violent revolution because absolute monarchy had been unchallenged until the revolution, as distinct from the evolution of constitutional monarchy in Britain. The French bourgeoisie had no choice but to smash absolutism with the violent passion of the lower classes. Even after the revolution, bourgeois hegemony remained precarious in France because of the residual imprint of the feudal political culture of the ancien regime, despite wholesale cultural cleansing by the radical populist Hebertists in their de-Christianization movement and indiscriminate political cleansing by the Reign of Terror. The reformist bourgeoisie for limited adjustments toward constitutional monarchy, meritocracy, free enterprise, still narrowly property-based laws and state institutions was overtaken by the peasant and plebeian explosion that it had neither wanted nor led. But once the populist movement was subdued, the bourgeoisie quite naturally became the ruling class because of its wealth and dominance of the economy. The absolutist structure now lay in ruins, and the aristocracy lost its feudal privileges. The market economy could spread through all the breaches opened in the collapsed old feudal order, and the bourgeoisie was the obvious class to profit from it, through the power of money, as opposed to the ancient regime role of money as merely an instrument of established political power. The aristocracy retained some residual wealth through its reconciliation with the bourgeoisie in the united front of the property owners against the plebeians. But the future roles of the heirs of the old nobles were not as feudal lords but as large capitalist landowners and as arbitrageurs of social manners eagerly aped by the merchant class. It is a misleading oversimplification to interpret contemporary social and political struggles in capitalist countries as exclusively based on the struggle of the two fundamental classes, the bourgeoisie and proletariat. Society is infinitely more complex. Repeatedly, absolutism rallied the plebeians against the nobility or bourgeoisie, or the bourgeoisie against the nobility, or the nobility rallied the plebeians against absolutism allied to the bourgeoisie. This complexity has not diminished in modern times. Absolutism belongs now to history, but sovereignty is alive and well. The post-revolution French bourgeoisie gained economic dominance yet politically failed to achieve direct control of the state apparatus. Modern capitalism suffered the same fate in many countries. On the coup of 18th Brumiare (November 8-9, 1799) that established the Consulate under Napoleon, Karl Marx insightfully described the historical political immaturity of the bourgeoisie in France; that the French Revolution, with its focus on dismantling all local, territorial, urban, provincial and independent powers in order to create the bourgeois unity of the nation, was bound to develop what the absolute monarchy had begun - centralization, and the extent, the attributes and the agents of governmental authority. It was then left to Napoleon to perfect this state machinery. Neo-liberal globalization faces the same fate. The centralization tendencies of the WTO and IMF run counter to those of national sovereignty. Earnst Cassirer, in the chapter on Hegel in his The Myth of the State, wrote: "Hegelianism has had to pay the penalty of its triumph." It is an observation very applicable to Statism. The state apparatus of the New Deal, as constructed under US president Franklin D Roosevelt, evolved naturally into the postwar military-industrial complex so loved by the right wing. Hans Morganthal (Politics Among Nations) developed the theme that US postwar foreign policy was "imperialistic" in the non-pejorative sense of the word, because it was expansionist and empire-building for the postwar Pax Americana. Of course, both an interventionist government and a military-industrial complex are necessary for an "imperialistic" foreign policy. Thus the revolutionary movement to establish a democratic republic was betrayed in 1830 by the victorious bourgeoisie who turned against populist democracy to prefer a constitutional monarchy with a puppet king, in the person of Louis-Philippe, endorsed by Lafayette of revolutionary pedigree who had adopted a conservative outlook, despite having been imprisoned by Austria as an anti-monarchist until he was liberated by Napoleon. Yet the betrayal of a revolution of working-class insurrection did not dampen radical industrialist leaders in England in their belief that political violence by workers, or the threat of it, might be useful to capitalist causes. The old Tory regime of England began to face challenge by a young radical group sensitive to the needs of new British industrial business interests under the then revolutionary doctrine of liberalism. To protect themselves from the landed aristocrats and the old, biased "watch" system, these radical liberals even introduced a politically neutral professional police in London, called "bobbies", after Robert Peel, scion of the leading new cotton manufacturer family who pushed the idea. These industrialist radicals allowed the first legal crack for unionism and liberalized the old Navigation Act, permitting British colonies to trade with nations other than Britain. They also legalized the emigration of skilled workers and the export of British manufacturing machines. They also further advanced the concept of a secular state responsive to the laws of economics rather than divine right of the sovereign and hierarchical feudalism. But they could not reform parliament, nor the Corn Law of 1815 which protected the interests (rent rolls) of the landed gentry who controlled parliament, led by the ultra-conservative Duke of Wellington, victor at Waterloo over Napoleon. Characteristically, parliamentary democracy stood in the path of socio-economic progress. The 1832 Reform Bill was finally passed under threats of further popular uprising, after incited mobs gained control of Bristol, stormed the jail at Darby and burned Nottingham castle. The Bill heralded the political victory of the British bourgeoisie who stood for industrialization and trade. The liberal Tories eventually became the Liberals and the Tory/Whig coalition became the Conservatives. To deflect attacks on traditional economic privileges, the Conservatives became champions of early workers rights in the new industries and mines, with a devious objective of financially ruining the new entrepreneurs. The Factory Act of 1833, instigated by Robert Owen, forbade child labor (below nine years old) in textile mills, a historic first. But child labor was allowed to continue on the farms as a benign feudal tradition. The Mining Act of 1842 regulated mine employment, forbidding below-ground work the highest paid) for women, and children under 10. The Ten-Hour Act of 1847, passed by the Conservatives in parliament, was attacked by industrialists as "a delusion practiced on the working class", and directly contradictory to the scientific principles of laissez-faire economics. The Liberals formed an Anti-Corn Law League (ACLL) in 1838. The ACLL components included wage earners who wanted low food prices, and industrialists who wanted low wages based on low food costs. The Corn Law defenders cited food independence, national security arguments, and the need to preserve English natural aristocracy social values. But the bottom line was a struggle between new industrialists with support of their workers on one side (oppressed as workers were, and the latent agitation that led to the Revolutions of 1848 and the Communist Manifesto notwithstanding) and the traditional landed-gentry establishment power on the other. The ACLL, based in Manchester, richly funded by both big industries and newly organized wage earners, not unlike many "neo-liberal" think tanks of today, launched a relentless campaign of lecture tours, newspaper articles, polemical pamphlets, political teas, torchlight parades and mass meetings, ironically not unlike the anti-globalization movement that culminated in Seattle in 1999. Thus was born the Manchester School of Economics. Richard Cobden (1804-65), a leading spokesman for the Manchester School of Free Trade, finally won over Sir Robert Peel (second ministry 1841-46), and the Corn Law was repealed in 1846, two years before the revolutions of 1848, along with virtual abandonment of custom duties and the introduction of the income tax to fill the revenue gap. After 1849, Cobden concerned himself chiefly with isolationist foreign policy, advocating non-intervention in Europe and an end to imperial expansion. In 1859, he negotiated the "Cobden Treaty" for reciprocal tariffs with France under Napoleon III, the bourgeois emperor, putting the last nail in the coffin of the anti-British Continental System imposed by Napoleon I, the real emperor. The original Corn Laws in 1360 were a set of regulations restricting the export or import of grain to keep English grain prices low. The purpose of the laws was to assure a stable and sufficient supply of grain from domestic sources, yet allowing for import in time of dearth. The Corn Law of 1815, in contrast, was designed to maintain high farm prices and prevent an agricultural depression after the Napoleonic Wars. Since its repeal in 1846, industrialism became the governing force in England and free world trade its policy which consolidated British control of the sea and the spread of official British imperialism and its network of colonies that constituted the British Empire. The Opium War took place in 1840. This accelerated the growing consolidation of industrial capitalism with colonialism under government protection. National income for the imperialist countries grew, but a relatively small portion of it went to domestic workers beyond subsistence. National income between the home country and its colonies also polarized, as between those nations with empires and those without, setting off a race to acquire colonies even among minor European states such as Holland and Belgium. The accumulation of capital led to a need for a regime for the export of capital in the overseas quest for lower raw material and labor costs, as a way of keeping domestic labor costs low even as general living standards rose. By 1839, British capital reached US$200 million in the US when US gross domestic product (GDP) was $610 million, total gross debt of the nation was only $3.5 million, customs receipts totaled $23 million and tax receipt was a measly $2,553. Workers were then told by the Manchester School intellectuals that the income of workers is set by ineluctable laws of economic science, that it is best and necessary to keep wages low and that the way to a better life is to leave the working class and to ape the employer, or eventually become a Labor Lord. This notwithstanding that British society at that time provided not the slightest social mobility dues to its rigid class structure institutionalized by exclusionary social manners and elocution. Elaborate labor price theories were concocted with circular data justifying the theories explaining circularly that very same data as scientific truth, eventually leading to the theory of non-acclerating inflation rate of unemployment (NAIRU). The reigning doctrine promoted the concept of a labor market. Labor became a commodity, sold by the laborer and bought by the employer in a fantasized free market, the ideal of which would be totally free labor - at zero cost. Thus the English language is insightful that "free" means both the ability to choose and a state of worthlessness in a price regime. The hourly wage serves the employer better than slavery. The employer is not even obliged to pay living wages, as a slave owner had to bear the fixed cost of keeping slaves alive and healthy for work. The labor market is described as being governed by the laws of supply and demand. Low wages are the result of market forces, not immorality on the part of greedy employers. And surplus labor supply, like goods which are stored in warehouses, are to be warehoused by poor relief. The common concept of a free market is that it is a vehicle to realized the lowest price for the buyer rather than the highest price for the seller, as in a cartel, which in modern labor markets is called a labor strike. The New Poor Law of 1834 safeguarded the labor market for employers by making relief more unpleasant than below living wage employment, supported with stern, self-righteous precepts of the dismal science. Two alternatives emerged as reaction: unionism and socialism which asserts that goods are produced for use, not for sale. The term "socialism" originated with the trade union movement founded by Robert Owen around 1830. Socialism spread like wild flowers among the working class after 1830. Industrial capitalism then countered it by gradually tolerating unionism. In France, the socialist movement merged with revolutionary republicanism. Robespierre was rehabilitated as a people's hero despite that fact that the French Revolution aimed only to establish private property rights against the hereditary privileges of church, aristocracy and monarchy. Louis Blanc published his Organization of Work in 1839. In England, Chartism, a working man's reform movement, emerged during the decade of 1838-48 as a reaction to the failure of the Reform Bill of 1832. It represented the first attempt by the British working class to gain political power. All this led to the revolutions of 1848, the suppression of which necessitated unionism under industrial capitalism. Obviously there were multidimensional motives behind the Factory Acts; not the least was genuine social consciousness. Lord Ashley, whose philosopher father was educated by John Locke, later the seventh Earl of Shaftesbury, took the lead on publicizing the social evils of rapid, unregulated industrialization. He even received support from some humanitarian industrialists. Some early legislation adopted the progressive practices of the more progressive and profitable firms of that period. Yet the struggle between the landed gentry and the new industrialists was the dominant play. The abolition of slavery in the British Empire in 1833 cannot be fully understood outside of this struggle. The 1835 Municipal Corporation Act, which modernized local government by breaking up the traditional local oligarchies and replaced them with uniform electoral and administrative machinery, was another assault on the landed gentry. The reform of the Church of England, particularly on unequal income between upper and lower clergy, diluted the hold of the gentry on the Church. The shift of England toward a secular state was tied up with this struggle. The Tories, assaulted in their strongholds on local government and the established Church, launched a counteroffensive into the strongholds of the new liberal manufacturing class: factories and mines. The struggle was couched in moral and scientific tones and often not without sincerity and commitment. The aim of making industrialization less profitable through increased labor costs was undeniably part of the objectives of the Tories who saw the slowdown of rapid industrialization via a dampening of profits as a strategy to preserve their traditional privileges. As it turned out, liberal labor practices and higher wages provided the purchasing power to absorb the production increases of industrialization. So the Tories inadvertently became the midwife to economic democracy. Gladstone's second budget followed the Cobden Treaty with France, a reciprocity agreement that called for another increase in income tax to cover the shortfall of revenue for the government. Neo-liberals in the US promoted global free trade to dismantle the hold of the sunset industries on US political power. Since the beginning of globalization after the Cold War, no US president has come from the Midwest industrial states or the Northeastern liberal states. The collapse of the textile sector in the South, which had been moved a generation earlier from the New England states, changed Democrat Party politics. In retaliation, US labor targets the Third World, including China, for labor practices of US transnationals. Just as industrialist leaders in England believed that political violence by workers might be useful to capitalist causes, neo-liberals look to labor unrest in China after its WTO accession to serve capitalistic causes against Chinese statism. In the past two years, China has adopted a policy of rapidly increasing wages (at the rate of 30 percent per year for three years) in the state sector to stimulate needed domestic consumption and to combat deflation. It reflects Chinese planners' increasing awareness of the fundamental relationship between wages and economic growth. Income is all, particularly under conditions of global overcapacity. It does not mean, however, that the type of labor rights advocated by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), which is politically based, is economically relevant. Neo-liberal market fundamentalism in the 21st century creates a political landscape no less complex than that surrounding the repeal of the Corn Law in 1846. The Wall Street Journal celebrates mass capitalism as the future world order. The membrane separating populist socialism and mass capitalism may not be immune to osmosis.