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In the Shadow of Speenhamland:
(Social Theory and the Old Poor Law)

December 1, 2000 Fred Block (Department of Sociology University of California, Davis)

references and some tables deleted (because they add nothing and are a pain in the ass to transfer)

This draft is the product of joint work with Margaret Somers, Sociology, University of Michigan, over the last several years. At this point, however, Somers is not responsible for the paper's shortcomings. Valuable research assistance has been provided by Jane Rafferty, Michael Flota, Rene Poitevin, Dan Schinnerer and Dan Samson. My colleagues at U.C. Davis--Greg Clark, Norma Landau and Peter Lindert-- have been very generous in providing data, references, and feedback on earlier formulations. Margie Mendell and Ana Gomez provided valuable assistance with the Karl Polanyi Archives. Revisiting Speenhamland: Social Theory and the Old Poor Law Over the last twenty year's Karl Polanyi's book, The Great Transformation, first published in 1944, has become a canonical text for economic sociologists. As the original source of the idea that even market economies are embedded in social, cultural, legal, and political practices, Polanyi's critique of market liberalism has become increasingly influential across the social sciences. But while the secondary literature on Polanyi has been growing, there has not yet been a serious and systematic sociological evaluation of one of Polanyi's key historical arguments--his analysis of the "Speenhamland" period of English history from 1795 to 1834.

This omission in the literature is particularly unfortunate because Polanyi's Speenhamland argument has had an impact well beyond scholarly circles. Polanyi's analysis has repeatedly been deployed by political figures who did not share his socialist politics. For example, when the Family Assistance Plan was debated in the Nixon White House in 1969, Polanyi's arguments were brought to bear by opponents of any type of guaranteed income (Moynihan 1973). In Europe over the last ten or fifteen years, there has been increasingly serious discussion of providing all citizens with a "basic income" or a "citizens' income" that would be enough to provide basic subsistence. But critics of this idea continue to invoke Polanyi's argument that a system that guarantees a minimal income will inevitably drive down wage levels and worsen the situation of the poor (Howell 1997) .

Just as importantly, the style of argument of the Speenhamland section of The Great Transformation is at odds with the way he argues elsewhere in the book. The difference centers on the issue of determinism--the degree to which events had to unfold along a certain line. In the Speenhamland section, there appears to be a high degree of determinism in the argument. Given a certain institutional environment, it seems inevitable that the effort of the country squires to protect the rural poor through more generous poor relief will have disastrous consequences. But in other parts of the book, Polanyi clearly differentiates his argument from the determinism of the Marxist tradition. For example, the greatest hero in Polanyi's account is Robert Owen--a figure who was dismissed by Marx and Engels as a "utopian socialist". In celebrating Owen as a social and political thinker, Polanyi seems to be rejecting the Marxist claim that any talk of socialism was premature and ahistorical until capitalism had fully developed society's productive forces.

It is our view that this tension between more deterministic and less deterministic modes of argument in The Great Transformation has resulted in considerable confusion about Polanyi's broader theoretical intentions. By reconsidering both the emprical and the theoretical validity of the Speenhamland argument, we think we can cast new light on Polanyi's broader set of arguments. In short, evaluating Polanyi's argument about Speenhamland is important for social policy analysis, for economic sociology and ultimately for social theory. This paper carries out a familiar task --examing how a classical theorist-got a specific historical argument wrong as a way to gain a deeper understanding of the theorists' larger project. In this case, we hope to show that Polanyi's larger argument about the emergence of market society can be placed on a firmer foundation once his Speenhamland account is reconstructed.

The Place of Speenhamland

"The justices of Berkshire, meeting at the Pelikan Inn, in Speenhamland, near Newbury, on May 6, 1796, in a time of great distress, decided that subsidies in aid of wages should be granted in accordance with a scale dependent upon the price of bread, so that a minimum income should be assured to the poor irrespective of their earnings."

The meeting at the Pelikan Inn did occur and the assembled justices did adopt a scale that assured families of different sizes a specific quantity of bread per week. But Polanyi went on to argue that this "Speenhamland system" of "aid-in-wages" was widely adopted and that it had spectacular consequences for the rural poor. England's Poor Law had been in operation for centuries and it required that local parishes assist the eligible poor who were indigent because of old age, illness, abandonment, or lack of work. But according to Polanyi, the Pelikan Inn decision marked a turning point after which the provision of poor relief became substantially more generous because of the bread scale and that increasingly men without work were receiving assistance from the parish authorities.

The consequence of this increased generosity was supposed to be a significant decline in agricultural wages. Since in this period, the Combination Acts outlawed any form of union activity, Polanyi reasoned that rural employers were free to exploit the Speenhamland wage scale. Since a worker with a wife and two children was entitled to the equivalent of 12 shillings worth of bread per week, if the employer cut his wages from 10 shillings to 8 shillings, the workers total income would remain unchanged because the parish would make up the difference. But as workers saw the wage component of their income fall, they had little reason to maintain their work effort at previous levels. The consequence was a drop in labor productivity which then accelerated the employers' incentives to further lower wage rates. The consequence, according to Polanyi, was both deepening poverty and a thorough demoralization of the rural poor who were now deprived of any means to improve their situation. He wrote: "Speenhamland was an unfailing instrument of popular demoralization. If a human society is a self-acting machine for maintaining the standards on which it is built, Speenhamland was an automaton for demolishing the standards on which any kind of society could be based."

Polanyi stressed that part of the demoralization was that the system of poor relief prevented the rural workers from constituting themselves as a class in opposition to the employers. He went on to argue that the rural squires who had established the Speenhamland system had done so through a combination of humanitarianism and self-interest; the latter because they were, without understanding it, seeking to hold off the rise of industrial capitalism by discouraging outmigration from rural areas. But this effort was doomed to fail and produced a catastrophe for the rural poor. The end to Speenhamland came with the 1834 New Poor Law that sought to replace all "outdoor relief"--assistance in the home-- with the punitive institution of the poorhouse. The poor could still receive assistance, but they were forced to accept incarceration in an unappealing institution that usually required them to work. Even the "dark Satanic mills" of early industrialization would now look benign in comparison to the poorhouse. For Polanyi, the !834 Reform was the work of the rising middle class and it marked the definitive transition to industrial capitalism.

The analysis of the Speenhamland episode serves two explicit purposes in Polanyi's broader argument. First, he wants to show that the emergence of market capitalism was not simply the result of a long, slow evolutionary process that was bound to triumph eventually. On the contrary, he argues that at a number of critical junctures, state power played an extraordinarily important role in expanding the scope of market activity. For example, the mercantilist policies of a number of English kings were of critical importance in creating national markets that could not have emerged spontaneously. In a similar manner, the Speenhamland argument shows that a modern labor market in which workers receive income only in exchange for labor did not just evolve; it had to be deliberately legislated through the 1834 New Poor Law.

Second, and more importantly, Polanyi argues that classical economics developed against the backdrop of Speenhamland. When Malthus and Ricardo created their theories of how market economies work, they were extrapolating from the incomplete market economy represented by Speenhamland, rather than from the authentic capitalism that would develop later. It is for this reason that they adopted the pessimistic premise of the "iron law of wages"--that competition would inevitably push wage rates down to subsistence level. Polanyi argues that while that specific premise was discarded by later economists, Malthus' and Ricardo's mistaken generalization from an unsual historical period still introduced a key theoretical distortion into the tradition of classical economics. Polanyi calls this error "naturalism"--the belief that the core dynamics of a market society are shaped by the human relationship to nature, rather than by social relations (Somers 1995a, 1995b, 1999). As we will see later, this specific argument retains much of its power despite substantial problems with the Speenhamland story.

Problems with the Historical Argument

1. The Pervasiveness of the Bread Scale.

Historians still debate the operation of the Poor Law in the Speenhamland era because local administration created wide diversity in actual relief practices and very little systematic data about how these funds were allocated has survived to this day. We know, for example, the total outlays of 15,000 parishes in England for selected years from 1802 to 1834, but we do not know how the expenditures were divided among assistance to the vulnerable populations-- the elderly, the sick, orphans, and unwed mothers, support for local poorhouses, and various forms of outdoor relief, including aid-in-wages. In some parishes, detailed registries of all outlays have survived, but it is difficult for historians to reconstruct the particular rules under which a particular individual was given 6 shillings each week. Moreover, historians have closely analyzed the surviving records of a relatively small number of parishes. There were periodic parliamentary surveys that sought to find out about local relief policies, but generally responses were received from only a small fraction of all parishes and it is difficult to know if the responses are representative (Williams 1981).

In this sea of uncertainty, there are, however, certain clearcut patterns. We know that total poor relief outlays in England rose from 1% of GDP in 1750 to a peak of 2.66% of GDP 1820-1821. They then declined slightly to 2% in 1830-32, and then fell sharply after the New Poor Law to 1.12% in 1840 (Lindert 1998, p. 114). We also know that per capita poor law outlays were consistently much higher in the rural counties of Southeastern England than in any other parts of the country (Blaug 1963, Boyer 1990). In other words, the crisis of the Old Poor Law was almost entirely a regional phenomenon; it centered in the wheat growing counties where a higher proportion of able bodied adults were routinely receiving assistance than in other parts of the country.

But even when one focuses on relief to able bodied workers, parishes during this period experimented with a broad array of different policy measures that could be expected to have different consequences. In fact, the range of measures closely resembles the repertoire of policies that are still used or debated. It is useful to list them by their modern names:

1. Minimum guaranteed income.

This is the Speenhamland bread scale that provides aid in support of wages that Polanyi emphasizes.

2. Seasonal unemployment insurance.

During the winter months when agricultural work was scarce, some parishes provided unemployed farm workers and their families with a weekly stipend that varied depending upon family size.

3. Public works.

Some parishes put the unemployed to work building roads or performing other types of work. Sometimes the supervision was done by public authorities and sometimes by private contractors.

4. Employer subsidies.

Some parishes used poor relief funds to reimburse farmers and other employers who hired the unemployed. This was often called the roundsman system because the unemployed workers would make the rounds of local employers.

5. Workfare.

Some parishes allocated a certain proportion of the unemployed to each local employers with the idea that they would provide employment instead of paying taxes for poor relief. This is often referred to as the labour rate system.

6.Child Allowances.

Many agricultural parishes provided a supplement to the income of male agricultural workers who had more than two or three children.

7. Workhouse.

Well before 1834, some parishes required that the unemployed seeking relief enter a residential facility that involved mandatory work requirements. As with public works, some facilities were publically administered and some were handed over to private contractors.

The distinction between the first and second forms of relief is extremely important because they could both involve use of a sliding scale that links benefits to family size, but their consequences can be very different. The literature provides ample documentation that these seven measures were all used, sometimes in combination in particular parishes and counties, but it is extremely difficult to make definitive statements about how widely used these different relief practices were at specific times.

Nevertheless, there is now considerable consensus within the literature that the bread scale used as part of a guaranteed minimum income was limited to 1795 and other "famine" years when wheat prices were at extremely high levels. In 1795, again in 1802-1803, and still again in 1812, there was a confluence of several factors. In each case, two bad harvests in a row coincided with wartime limitations on agricultural imports from the Continent. The result was a severe upward spike in the price of wheat that placed it beyond the reach of most rural and urban working people (The best account of these famine yeas is Wells 1988). Moreover, as the poor shifted their demand to coarser but cheaper grains, their prices spiralled upwards as well. The consequence was severe distress and the outbreak of food riots in which protesters seized grain from middlemen and bakers. As Polanyi notes, in 1795, this disorder occurred against the backdrop of revolutionary events on the other side of the English Channel, providing local elites with strong incentives to respond to the threat of famine..

The use of the bread scale was a logical method to respond to these immediate crises without altering wage rates or longterm relief patterns. As soon as the price spike passed, most households would no longer be eligible for assistance because the standard wage would purchase a sufficient amount of bread. Even so, the use of the bread scale during these famine years was far from universal even in wheat growing areas. Neuman (1982, p. 160) in a sample of sixteen parishes in Berkshire County itself found none that used the Speenhamland scale in the whole period up to 1834. Poynter (1969 ), Baugh (1975), and Huzel (1989) also stress the limited use of the bread scale. Baugh (1975) suggests that it was much more common for parishes to respond to these years of very high grain prices by using poor relief funds to purchase grain that was then redistributed to households. In others, the farmers sold wheat to their employees at below market prices or--as had happened in earlier famine years--extra charitable efforts by the rich provided some of the poor with food.

While Polanyi's text does recognize the variety of different relief practices, he followed the literature that was available to him in not adequately differentiating the effects of particular policies. On the contrary, he tended to assimilate all of these policies--except for the workhouse--under the broad rubric of aid-in-wages, and then argued as though they all have the same consequence as a guaranteed minimum income. To be sure, all of these policies have the effect of creating a separation between income received and the specific amount and quality of work performed. But as we shall see, there are grave difficulties in jumping to the next step of the argument--that the consequences undermine labor discipline.

It is clear that the bread scale returned as a non-famine practice in the years after the end of the Napoleonic Wars ; in fact, there are many more references to bread scales in the later period than in the earlier. This was a period of economic contraction marked by a dramatic decline in wheat prices. As we will see, there was some downward adjustment of wage rates in this period, but this adjustment was much smaller than the sharp fall in prices. As a consequence, some farms simply went out of business and other agricultural employers sharply reduced their employment levels both during the growing season and particularly during the winter months. This process was assisted by the introduction of threshing machines that further reduced the demand for labor in the critical months after the harvest. All these processes significantly increased rural unemployment and distress and accounted for the sharp rise in poor relief outlays after 1813 (Gash 1935).

But the meaning of the bread scale had shifted in an important way; in the earlier period, employed farm workers would receive an income supplement--contingent on family size--to help them get through the period of high food prices. In the later period, the bread scale was used primarily to determine the amount of relief that seasonally unemployed farm workers were entitled to, given the size of their families. The importance of this seasonal dimension of poor relief is amply supported by data showing that poor relief outlays were often two or three times higher in the winter months than in the spring or summer (Emmison 1933, Snell 1985, Boyer 1990, Reay 1996). As Boyer (1990) has argued extensively, there were strong reasons for parish authorities to provide relief in the winter for unemployed farm workers. Without such relief, levels of outmigration to urban areas would have been much higher which would mean labor shortages during the summer months and severe shortages at harvest time.

It is also important to emphasize that the use of child allowances to supplement the wages of employed workers was common across the period from 1795 to 1834. Williams (1981, p.47) reports that 90% of the 344 parishes that replied to a Parliamentary survey in 1824 and 55% of the 1332 parishes responding in 1832 reported using child allowances. Generally, workers only became eligible for this form of assistance with the third or fourth child below working age. But this is also a form of assistance that would tend to reinforce rather than undermine work discipline, since eligibility for this form of assistance was contingent on being employed. In fact, one can think of these child allowances as a mechanism to reward mature male workers and provide them with additional incentives against outmigration (Boyer 1990).

2. The Logic of the Argument.

The issue of the change in the use of the bread scale over time is critical for Polanyi's core claim: "Under the Speenhamland Law a man was relieved even if he was in employment, as long as his wages amounted to less than the family income granted to him by the scale. Hence, no laborer had any financial interest in satisfying his employer, his income being the same whatever wages he earned....Within a few years the productivity of labor began to sink to that of pauper labor, thus providing an added reason for employers not to raise wages above the scale."

In the earlier period, when the bread scale was used intermittently as a means of famine relief, the claim that employees lacked " any financial interest in satisfying his employer" is simply implausible on several different grounds. First, in a period of extremely high food prices, employees would be desperate to hold on to jobs, both because of the income and the meals that were provided for those who worked from sunup to sundown. Second, the emergency measure was not sufficiently institutionalized to give employees the assurance that the same rules would be in effect in the next year. Finally, and most importantly, for Polanyi's argument to be correct, employees would have to be indifferent as to whether they were working or unemployed since the employer could still fire uncooperative workers.

In fact, it is completely implausible that people did not care whether they were employed or unemployed. In the period from 1795 to 1813, rates of male agricultural unemployment were generally low; wheat acreage and wheat production were expanding and there was a significant increase in the demand for agricultural labor. Since relief was provided in local parishes which were small communities of 200 to 500 souls, it is utterly implausible that the poor law authorities would provide the same income to an individual who had refused to work as that received by a worker. It is utterly mistaken to read the anonymity of the 20th century urban unemployment office back to this period; there was little room for ambiguity as to whether an individual's lack of work was his own fault. The Poor Law authorities had no hesitation to deny assistance to malingerers or to punish those who attempted to gain relief under false pretenses. (Sharpe 1997).

Another possible interpretation of Polanyi's argument is equally implausible. In this account, rural employers used the bread scale so that they could unilaterally cut wages to shift more of the cost on to the poor rates. But farmers were competing with each other to attract employees who would work with a high level of skill and energy. Unilateral reductions in wage levels--even if they were balanced by increases in poor relief--seem like a perfect way to signal that a particular employer was seeking only lower quality workers. Moreover, even if all of the farmers in a given parish managed to agree on a collective strategy to lower wages, they would still have to worry that the better workers would defect to farms in nearby parishes. Moreover, in most parishes, it was the employing farmers themselves who were bearing the cost of the relief system; there was nobody else on to whom the costs were being shifted. Hence, it is difficult to see this as a general explanation for the corrosive dynamics of the bread scale.

When we shift attention to the return of the bread scale after 1813, we have to remember that it was generally used to determine the amount of relief received by the families of those who were seasonally unemployed. But during the seasons when these individuals were employed, they also had very strong financial incentives to satisfy their employers. Since it was likely to be the least productive employees who received the longest seasonal layoffs and since relief payments were well below wage payments, workers had strong reason to seek to persuade their employers that they were among the most productive employees.

When poor relief took the form of seasonal unemployment insurance and child allowances, the impact could actually improve agricultural productivity. Since urban wages were substantially higher than rural wages, these was a constant threat that the more ambitious and energetic rural workers would leave for higher paid urban work. This pull would be even stronger if those who suffered seasonal unemployment were not granted relief. Mechanisms that reduced the size of the urban-rural wage gap, could bolster productivity by helping rural employers retain some employees who might otherwise have found it impossible to remain in the countryside.

There is, however, some greater plausiblity to claims about the destructive impact of poor relief on work incentives when we turn to those policies that were seeking--particularly after 1813--to create work for the unemployed--either through poorhouses, public works, employer subsidies, or workfare. All of these efforts confront the classical dilemmas of "make work"; since the job is not a real job but a condition for receiving relief, it is difficult for the supervisor to elicit high levels of work effort. On the one side, the threat of being fired does not have the same credibility as in an ordinary employment relation. On the other, there is no particular reward for hard work since there are few prospects for promotion or greater employment security. To be sure, these difficulties can be somewhat mitigated by effective supervision that persuades the recipients that the position is like a real job. Yet it seems likely that as a group, the beneficiaries of these programs were considerably less productive than regular agricultural employees.

In fact, many of the specific complaints in the historical record about the corrosive effects of the Poor Law center on groups of the unemployed like the roundsmen who were engaged in "make work" activities. The Royal Commission Report (1834) is filled with stories about the laziness and perfidy of these groups of unemployed men. There is probably considerable truth to these complaints, but the obvious villain here is not poor relief, but structural unemployment that deprived these men both of meaningful work and social dignity.

Moreover, there is little reason to credit the fears of contagion by which the attitudes of the unemployed were supposed to subvert the work incentives of those who were employed. If, for example through the employer subsidies, a group of roundsmen were working for a local employer and were visibly slacking, farmers would obviously worry that their bad behaviour would influence the regular employees. But at the same time, the sight of the roundsmen would likely reinforce the regular employees' fear of unemployment. While they might very well sympathize with the plights of the roundsmen, they were not eagar to share their fate. In other words, the poor productivity of the unemployed was unlikely to subvert the productivity of those who were still gainfully employed.

Yet there was a related form of contagion--rising class resentment of rural social relations that encompassed the unemployed, stable farm workers, and rural artisans. These resentments exploded in the Captain Swing riots that spread throughout the Southeastern counties in 1830 (Hobsbawm and Rude 1968). The main targets of the riots was the increasingly common introduction of the threshing machine that intensified seasonal unemployment and reductions in poor law generosity. The characteristic pattern of the riots was that crowds of farmworkers dressed in their finest clothes led by local artisans would make the rounds of the local farmers and politely ask them to bring out their threshing machines which would then be destroyed.

These riots were correctly perceived by rural elites as indications of the diminishing ability of paternalist methods to maintain order in the countryside. Yet both the form of the protest and the fact that the violence was directed not at the farmers but at the machinery suggests that the rural workers were mobilizing against too little work, not harsh working conditions. There is, in brief, no reason to confuse rising levels of working class militancy with diminished work effort.

3. Trends in Productivity

Part of the reason for focusing on the flawed logic of Polanyi's Speenhamland argument is that the available data provides no support for claims of a collapse in rural productivity. Total wheat production increased substantially between 1790 and 1834; Fairlie's estimate (cited in Johns 1989, pp. 1054-1055) shows that wheat production fluctuated sharply between 1791 and 1811 and then more than doubled by 1834. This increase was facilitated by an expansion in acreage; Holderness (1989, 128-129) estimates that acreage increased from about 2.45 million acres in 1801 to 3.4 million in 1836--an increase of almost 39%. But it wasn't only increased acreage; Holderness (1989, p. 140) suggests that yields per acre might have risen by 33% between 1790 and 1830; Overton (1989) suggests that the increase was 15% between 1801 and 1831.

Unfortunately, the early censuses did not ask about employment, so estimates of the size of the agricultural labor force between 1801 and 1831 in the Southeastern counties are little more than guesswork, but the labor force seems to have grown substantially more slowly than either wheat output or acreage. Wrigley (1986, p. 332) estimates that for the whole country, the number of adult males employed in agriculture increased from 910,000 in 1811 to 981,000 in 1831--growth of only about 8%. Since the wheat growing counties were home to a large portion of English farm workers, it is unlikely that labor force growth in these counties was substantially faster than national growth. Given the doubling of wheat output between 1811 and 1834, there can be little doubt that output per worker rose in this period. Overton (1996) suggests quite substantial increases in labor productivity in agriculture across the whole period from 1800 to 1850. Moreover, even Clark (1991, 1999) who has been most outspoken in criticizing the idea of a productivity increasing "agricultural revolution" in the first three decades of the 19th century acknowledges that labor productivity was either constant or increasing slightly in this period.

4. Trends in Wages.

Since the available data on productivity in the wheat growing regions is sketchy at best, much of the debate has centered on trends in agricultural wages. A number of analysts have supported the Speenhamland thesis by arguing that agricultural wages fell sharply in this period and that it is reasonable to see wages as a reliable proxy for productivity. Many of the sources cited by Polanyi, including Hammond and Hammond (1917) , Webb and Webb (1927), Mantoux ([1928] 1962) have insisted that wage levels fell dramatically during the Speenhamland period.

However, most of the available data series that we have that trace rural wages in this period reveal the same basic pattern. Rural weekly wages rise from 1790 through to the end of the Napoleonic Wars, then there is then a sharp decline, followed by a recovery and a rising wage trend from the early 1820's through to 1834. The reported wage levels in 1834 are generally above the 1790 level. The first systematic series on agricultural wages was developed by Bowley at the end of the 19th century (cited in Mitchell and Deane 1962, pp. 348-349) and it rises from 53 in 1790 to 105 in 1812, then falls to 72 in 1824 before rising to 79 in 1834. Eccleston (1986) found a similar pattern in five Midland counties, and Richardson (1991) reports a parallel pattern in wages on a large farm in Essex.

More recently, Clark (2000) has developed a series for weekly winter wages in the Southeastern counties based on various surviving estate records, including those used by Richardson, and he confirms the same basic pattern.

The contemporary scholar whose findings diverge from this pattern is Snell (1985) who has calculated trends in annual wages for farm servants in a number of Southern counties. Snell compiled his series from an analysis of settlement examinations for unmarried men and women who had been hired by the year as farmservants. In some counties or groups of counties, Snell's findings move in the same pattern as weekly wages cited elsewhere in the literature--wages in the period from 1831-34 were slightly higher than in period from 1791-94. This is true of a group of counties that includes Surrey, Kent, Essex, and Herfordshire, and another group that includes Buckingham, Berkshire, Oxford, and Hampshire. However, for Suffolk and a group of counties that includes Cambridge, Bedford, Huntingdon, and Northampton, he finds drops in wage levels of about 20% and he finds about a 5% drop for Norfolk.

There are, however, several reasons to question the accuracy of Snell's data.. First, his method is based on the assumption that agricultural wages in general will closely track the wages of farmservants who are hired on an annual basis. But Snell and others have suggested that there was a strong shift in this period away from the practice of hiring part of the labor force as farmservants who lived on the premises. Hence, it is entirely possible that over time, the wages of people in this category actually diverged from the larger group of farm laborers. Second, especially after 1830, Snell's data are based on only a very small number of cases--generally less than ten individuals. With such a small number of observations, the danger is high that a few very poorly paid farmservants could have thrown off the results. Finally, in the group of counties that includes Cambridge, his results show that as late as 1826-1830, annual wages were still higher than in 1791-95. In other words, most of Snell's results are consistent with those reported elswhere, and those that are not can be set aside.

5. The relevant price index.

But even if there is general agreement on the pattern of nominal wages, the big question is what happens when an adjustment is made for changes in the price level. This is so critical because prices rose spectacularly from 1790 to 1813 and then fell almost as precipitously. Some price indexes show a literal doubling of the price level between 1790 and 1813. The process of constructing a price index for this period has been highly contentious because it is so closely bound up with the famous debate about whether real wages rose or fell during the period of the industrial revolution (Taylor 1975). For this reason, price indexes have been identified as either pessimistic or optimistic depending on whether they show that wages for many categories of workers fell or rose during the industrial revolution.

The recent history of this debate has been dominated by the more pessimistic Phelps Brown and Hopkins (1956) index, the more optimistic Lindert and Williamson (1985) index, and, most recently Feinstein's (1998) pessimistic index. (Figure 2 compares several of these indices.)

The optimistic price index shows that by 1834 the price level had returned to the same level as in 1790, while the pessimistic indexes show that the price level had risen by about 17%. But both Bowley and Clark show that nominal agricultural wages in the Southeast had risen by substantially more than 17%. In short, even with the pessimistic price index, agricultural wages were higher in 1834 than they had been in 1790. To be sure, the gain is relatively small and the real wage series (Figure 3) clearly shows the disastrous impact on real wages of the wheat price spikes that occurred in 1800 and again in 1813 and of the wage reductions during the agricultural depression in the early 1820's.

In sum, there is no persuasive evidence that agricultural wage levels fell as a consequence of the more generous poor relief that began with Speenhamland. But it is also important that this rather narrow finding not be misunderstood. England experienced dramatic economic growth between 1790 and 1834, and the fact that rural wage earners at the end of the period earned so little that they were still spending close to 70% of their income for food makes it obvious that they were excluded from the income gains experienced by other social groups (Clark 2000). Furthermore, the weekly wages offered to male agricultural workers should not be confused with their standard of living. That depended on how many weeks per year they were employed, the size of their family the earnings of other family members, and a series of other factors.

In other words, despite Figure 3, it is entirely possible that the standard of living of the majority of farmworker families in the Southeastern counties did fall between 1790 and 1834. But that decline would not validate the core claim made by Polanyi or by critics of the Poor Law that Speenhamland policies were responsible for that outcome. If standards of living did fall, it was because of the combination of rising seasonal unemployment and the loss of other sources of family income. There is simply no plausible line of argument that can hold poor law spending responsible for increased unemployment or the reduction of work opportunities for wives. In sum, one can still reject Polanyi's core claim and acknowledge that large numbers--perhaps even a majority--of agricultural worker families suffered a significant decline in living standards during the Speenhamland period.

6. Household Income.

Even though it has no immediate bearing on the validity of Polanyi's historical argument, there is yet another reason why it is important to review the trends in family income in this period. An exclusive focus on male wages distorts our understanding of an historical period when it was completely the norm that wage earner families pieced together their income from multiple sources (Kumar 1988, Horrell and Humphries 1995, Reay 1996). In fact, the only way to make sense of the nominal wage series produced by Bowley and Clark is to recognize that neither employers nor laborers assumed that working class families could survive on the male workers wage alone. This is what made it possible for farmers to resist raising wages as quickly as prices in the period between 1790 and 1813.

Other sources of income included the earnings of women and children in farm work, the earnings of various family members in rural craft industries, and income and food produced on small plots or by grazing animals on the commons. In addition, households also often depended on income from extra work at harvest time, on earnings from gleaning after the harvest (King 1991), food provided through fishing and hunting and income earned on miscellaneous activities like taking in laundry. (Reay 1996 ) It is precisely because of the variety and variablility of these income sources that it is extremely difficult to identify any clear trends in average family income across this period. The best estimates that we have come from surviving family budget data that have been compiled by Horrell and Humpries (1995). They indicate that for the low wage agricultural sector--that tends to overlap with the Southeastern counties--there was a small upward trend in real household income between 1790 and 1834. But this average figure conceals a huge amount of variability and poor relief outlays represented a rising component of family income, rising from a negligible level in the early period to 8% of family income for the 1821-1840 period. This poor relief has to be seen as a mechanism to sustain family income in a context in which it had become increasingly difficult for the rural poor--through no fault of their own-- to piece together an adequate income.

The increasing importance of poor relief can be seen as compensating for three broad trends. First, rural craft industries suffered a dramatic decline in the Southeastern counties in the period after 1790 (Snell 1985, Allen 1992). Some of this decline had been going on for centuries, but the pace of decline was clearly accelerated by the rapid rise of industrial production in the Northern part of the country. This meant that opportunities for family members, especially women, to supplement income with labor on rural craft production simply disappeared in many places. Second, enclosures and consolidations of holdings meant that many rural laboring families lost the capacity to earn additional income by keeping farm animals. In fact, during the Speenhamland period, a major alternative to the poor law that was widely debated was to provide laboring families with allotments--small pieces of land--that would make self-provisioning a real alternative to poor relief in hard times (Barnett 1967) But while the idea was widely discussed, it was never implemented on a wide scale. Third, particularly after 1813, the demand for farm labor diminishes, so that there are reduced earning opportunities for wives and children while men experienced longer periods of unemployment in the winter and early spring months (Snell 1985, Boyer 1990). Reay (1996, p. 129) finds that in one Kent Parish, sixty percent of farm laborers and small farmers required poor relief during the winter months in the 1830's (See also Emmison 1933).

7. Summary of the Data.

The key points from this survey are that the guaranteed income was not widespread enough to have the consequences that Polanyi attributed to it, and the generalized fall in rural wages and productivity did not occur. Polanyi was certainly right to emphasize that rural elites used poor relief to slow the outmigration of rural laborers, and, as we shall see, he was correct in emphasizing the central role that the critique of the poor laws played in the rise of political economy. But the hard times that befell laboring families in the wheat growing regions in the period after 1813 were not caused by the Poor Laws; they were the consequence of what we would now term structural unemployment and the loss of traditional forms of family provisioning.

Where Polanyi Went Wrong

Polanyi was an extremely careful scholar and his bibliography indicates that he read virtually everything that was available on the Poor Law, including much of the relevant pamphlet literature of the 18th and 19th centuries. The obvious question is why then was he mistaken about Speenhamland. The answer is that Polanyi was attempting a new interpretation of facts that had been carefully documented both in the tradition of economic liberalism and in the tradition of leftist social criticism that went back to Marx and Engels. Polanyi took the broad agreement about the facts of the matter by writers on the opposite poles of the ideological spectrum as an indication that the basic data were reliable; he was simply going to provide a new explanation for these facts. He was misled because both economic liberals and their leftist critics had ideological reasons for constructing the facts in a certain way.

While Malthus and Ricardo had frequently polemicized against the negative consequences of the Poor Law, it was the Royal Commision Report on the Poor Law--commissioned in 1832 and released in 1834 that provided the basic template for understanding the Old Poor Law. The Royal Commission Report has been seen as one of the first moments of the systematic use of social science to shape public policy; the Commissioners placed great emphasis on their systematic collection of data about the effects of the Poor Law. Their widely circulated report provided abundant evidence that Poor Law generosity had contributed to a dramatic decline in rural wages, productivity, and morale. It was literally not until Mark Blaug's pathbreaking articles in 1963 and 1964 that the Royal Commissioners' work was effectively debunked. Blaug showed that the Commissioners had made up their minds before the data had arrived, did almost no analysis of the quantitative data that they had collected, and relied--almost completely--on the highly suspect reports of local parish officials--usually clergymen--whose views had often been shaped by thirty years of ideological assaults on the Poor Law.

It is surprising and depressing that it took almost 130 years for an effective critique of the Royal Commisioners Report to appear, since the New Poor Law that followed the Royal Commissioners' recommendations was bitterly attacked by the Anti-Poor Law movement--an important current of the working class protests that culminated in Chartism in the 1840's. The complication is that those who ultimately emerged as the major theoretical defenders of working class radicalism--Karl Marx and Friedrich Engels-- basically accepted the accuracy of the Royal Commission report (Marx 1932 , Engels [1845] 1958). References by both men to the Poor Law are relatively brief, but Marx in Capital and Engels in The Condition of the English Working Class take the view that the administration of the Poor Law between 1795 and 1834 played a critical role in immiserating the rural working class. Hence, the evidence cited by the Royal Commissioners of widespread rural economic and social degradation seemed obviously to be reliable. For Marx and Engels, the Poor Law, along with enclosures, were part of the process of "primitive accumulation" by which wealth was extracted from the rural poor in order to help finance industrial investment.

That Marx and Engels took this position is hardly surprising given the central role that the downward pressure on wages plays in Marx's economics. Since Marx borrowed from Ricardo both the labor theory of value and the iron law of wages, it is logical that he also borrowed Ricardo's extremely negative view of the Poor Laws. Marx's writings on Malthus are particularly scathing, and he repeatedly contrasts Ricardo's intellectual honesty with what he saw as Malthus' mendacity. But Marx quickly slides over the reality that much of the Ricardian edifice was built on Malthusian foundations.

But whatever were Marx and Engels' motives for taking a negative view of the Poor Law, their intellectual prestige meant that subsequent historians--writing from a standpoint sympathetic to labor--tended to echo their views. Hence, the main strand of labor history in England from the Hammonds (Hammond and Hammond 1913) and the Webbs (Webb and Webb 1927) through to E.J. Hobsbawm (Hobsbawm and Rude 1968) and E.P. Thompson (1963) --who obviously published after Polanyi-- have not questioned the Royal Commission's "facts" and have taken it as a given that the Poor Law played a critical role in the immiseration of the rural working classes. Furthermore, scholars who were not explicitly pro-labor, but who were seeking to elaborate a balanced view of early industrialization also tended to accept the Royal Commissioners facts as evidence of the painfulness of this transition. A number of scholars in this category on whom Polanyi heavily relied included William Cunningham (1922) in England and Paul Mantoux ([1928] 1962) in France.

In light of the scholarly consensus that Polanyi confronted, he had no choice but to accept the basic facts in the historical record. What he sought instead to do was to give those facts a new interpretation. Polanyi gives a substantial hint as to his thought processes in one of the book's long endnotes, entitled "Speenhamland and Vienna" He begins:

"The author was first drawn to the study of Speenhamland and its effects on the classical economists by the highly suggestive social and economic situation in Austria as it developed after the Great War. Here in a purely capitalistic surrounding, a socialist municipality established a regime which was bitterly attacked by economic liberals."

After contrasting the Speenhamland intervention with the socialist measures pursued in Vienna, he notes: "What we wish to stress here is the enormous difference in the cultural and moral effect of the two types of intervention: the attempt of Speenhamland to prevent the coming of market economy and the experiment of Vienna trying to transcend such an economy altogether. While Speenhamland caused a veritable disaster of the common people, Vienna achieved one of the most spectacular cultural triumphs of Western history."

Hence, Polanyi's specific goal was to reinterpret Speenhamland so that it could no longer be used by economic liberals as the "poster child" against any forms of economic intervention. There were two steps to this argument. The first was the idea that Speenhamland had its disastrous consequences because a market economy was not yet in place. This made it completely different from efforts to improve the position of workers once a fully functioning market economy was already in place. The second was to offer a more specific explanation of why the Speenhamland intervention failed.

While the classical economists had suggested that any form of poor relief interfered with the market mechanism, Polanyi identified the specific problem as aid-in-wages which he thought had such negative consequences for labor discipline. Polanyi even notes that if the system of aid-in-wages had existed without the Combination Law--that criminalized all trade union activity--the negative consequences for wage rates would not have occurred. (Piven and Cloward drew attention to this qualification in Polanyi's argument.) Since Polanyi elsewhere speaks very positively of Tudor and Stuart policies that slowed the pace of economic change to facilitate adjustment, he at least opens the door to a counterfactual in which the squires might have adopted a different intervention whose costs were not as high as the Speenhamland bread scale.

But there is something else in the comparison between Vienna and Speenhamland that also had a significant impact on Polanyi's thinking about Speenhamland. When Polanyi arrived in England in the 1930's, he quickly became invoved in adult education for working class people. He had had considerable experience with such efforts in Budapest and Vienna, and he was immediately struck by the contrast between the thinking of English workers and those urbanized workers in Central Europe. In a rarely cited passage in the GT, he seeks to explain this contrast in terms of the different experiences and timing of industrialization.

But the conclusion to this section in which he is initially speaking of Central Europe is most relevant: "Marxian ideologies crystallized the outlook of the urban worker, who had been taught by circumstances to use his industrial and political strength as a weapon of high policy. While the British workers developed an incomparable experience in the personal and social problems of unionism, and left national politics to his 'betters', the Central European worker became a political socialist, expected to deal with problems of statecraft, though primarily with those that concerned his own interests."

The puzzle for Polanyi is why Marxist ideas had so little impact on English workers and why they appeared to share so much of the anti-statism of other groups in the society. Why was it so difficult to imagine the English working class emulating the achievements of municipal socialism in Vienna ?

Given that this puzzle weighed heavily on Polanyi, it seems possible that he was predisposed to the story of the Speenhamland incident because it provided an additional explanation for the alleged anti-statism of English workers. If a little more than a century ago, English workers had suffered a horrible social and economic tragedy as a consequence of efforts to use state policy to protect people from the maket, is it implausible to believe that a great wariness towards the state had been passed down through three or four generations of workers ? This would also help to explain why the Speenhamland story is given such weight in a text that is trying to cover a century and a half of political and economic developments. By focusing on the Speenhamland episode, Polanyi is hoping to exorcise the demons, so that the English working class would finally be ready--like their Continental counterparts--to deal with "problems of statecraft".

Reconstructing Polanyi's Argument

But whatever led Polanyi to emphasize the Speenhamland episode, it creates problems for his overall argument. The most poignant instance is the difficulty of reconciling two key claims that Polanyi makes. The first is that the end of Speenhamland marked the real beginning of market society by creating a modern labor market in which labor was treated like any other commodity. The second is Polanyi's argument that land, labor, and money are "fictitious commodities" because they were not produced for sale on a market. As he states repeatedly, the ideal of a self-regulating market system is a utopian vision precisely because these fictitious commodities cannot be organized by the market alone. As he states on the first page of the book:

"Our thesis is that the idea of a self-adjusting market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physcially destroyed man and transformed his surroundings into a wilderness."

It is difficult to understand why protecting workers from becoming commodities before 1834 produced disaster when such protection was clearly needed after 1834 to prevent human annihilation. This tension is part of a larger problem. Polanyi objects strenuously to the determinism of market liberalism; its proponents are always insisting that all of human society has to be subordinated to the logic of the market and efforts to regulate or "interfere" with the market will inevitably undermine the economy's rationality and vitality. Against this view, he insists that the reality is exactly the opposite--without the efforts to protect society from the market, there would be both social and economic disaster. Market liberals insist that there is an autonomous and analytically distinct economy that has to be allowed to follow its own logic. Polanyi argues instead that the economy--even in market society--remains embedded in larger social, cultural, and political institutions and its ability to function depends on that embeddedness. The thrust of his argument is that once societies rid themselves of the vision of market self-regulation, they can have considerable leeway in constructing their economic institutions.

But this general direction seems inconsistent with the argument that the efforts of the squires to help the rural poor had the inevitable consequence of contributing to their immiseration. Even if this was a period before market society was fully institutionalized, it is difficult to see why the options were so restricted. In fact, Polanyi points out that mercantilist policies of the English crown in earlier centuries had quite positive social and economic consequences precisely because they slowed the overall rate of economic change to a pace to which people could adjust. Why couldn't the Poor Law have been administered in a way that had the same benign consequences?

1. An Interpretation.

An examination of the evolution of Polanyi's thinking from the 1930's to the early 1940's suggests a way to resolve this tension. Much of the writing of The Great Transformation was done at Bennington College in Vermont while Polanyi was supported by a fellowship from the Rockefeller Foundation from 1941 to 1943. But Polanyi had conceived the project while living in England from 1933 to 1940. In England, he taught a series of courses for the Workers' Educational Association--the extramural outreach arm of the Universities of Oxford and London (Mendell 1994). It was in developing these courses--many of them focusing on the history of England--that Polanyi carried out extensive research into English economic history. Since Polanyi's extensive notes for these courses have survived and are held in the Karl Polanyi Archive at Concordia University in Montreal, it is possible to trace the role of the Speenhamland argument in Polanyi's thinking.

In the lecture notes and in some of Polanyi's published writings of this period, it is clear that his theoretical framework is Marxist. While Polanyi had rejected Marxism as a young man in Budapest, he embraced a Hegelian Marxism in the 1930's. One stimulus to this reconsideration was Polanyi's reading of Marx's long lost Economic and Philosophical Manuscripts when they were finally published in German in 1932. The second stimulus was the global depression and the rise of fascism that persuaded Polanyi that the only hope for humanity lay with the working class movement. But Polanyi's Marxism was quite distinct from the "scientific marxism" of the Second and Third Internationals; it was a "critical marxism" that placed emphasis on the fact that "men [sic] make their own history." (Gouldner 1980)

In this reading of Marx, the central contradiction is between the development of the productive forces and an existing system of social relations that has become an obstacle to the further development of those forces. Hence, the French Revolution occurred when bourgeois productive forces developed within the womb of feudalism, could no longer advance without a radical transformation of property and political arrangements. In a parallel fashion, the proletarian revolution would come when the increasingly socialized productive forces set in motion by capitalism could no longer develop within the existing set of property relations.. At that point, the working class would take direct control of the factories and machinery and begin producing to meet human needs rather than the imperative of profit.

In his writings and his lecture notes, Polanyi is explicit in elaborating this framework for understanding English history. In discussing current events, he saw the world depression of the 1930's as the evidence that the system of private property had become an obstacle to further advances of the productive forces; instead of utilizing those forces, the logic of profit meant that millions were thrown out of work and thousands of factories lay idle. In the historical argument, the Speenhamland period became a kind of English equivalent of the French Revolution; the new bourgeois productive forces had emerged, but their full development was blocked by the continuing political power of the old landed groups who struggled to keep the rural population in place. The logjam was broken by the Reform Act of 1832 that enfranchised the rising middle class and by the New Poor Law of 1834 that made possible the full commodification of labor. With these measures, the productive forces of capitalism were now able to develop fully.

This was the way that Polanyi conceptualized Speenhamland as his book manuscript was taking shape in England, but when he was actually writing the book in Vermont, his theoretical perspective changed. The shift is encapsulated by the concept of embeddedness that is central to the book, but which had not been emphasized in his English lectures. The idea that the economy--even in capitalism--must be embedded in social institutions is in tension with Marxism's view of the economy as autonomous and determinant in the last instance. Moreover, Polanyi's critique of capitalism is quite different from Marx's. For Marx, the capitalist mode of production is irrational because it is so vulnerable to crises, as exemplified by the falling rate of profit; the necessary response of individual capitalists to the pressure of the market increases the organic composition of capital and drives down the collective rate of profit. For Polanyi, the irrationality comes much earlier in the process; the system is irrational because it requires treating land, labor, and money as though they are commodities when they are obviously not. This contradiction means that market self-regulation cannot possibly work and market societies are continually dependent on the regulatory actions of the state which has been defined as having no legitimate regulatory role.

The main thrust of The Great Transformation is towards the elaboration of a post-Marxist understanding of the relationship between economy and politics. But since this theoretical shift occurred while he was writing, the text includes elements of both the older and the newer theoretical position. It would have been logical to rewrite the manuscript to resolve these theoretical tensions, but Polanyi was writing against a self-imposed deadline. He wanted the book to be published before the end of World War II, since his purpose was to influence debates about the organization of the post-War world. In a letter to Robert MacIver written after the War, Polanyi acknowledged the impact of time pressures:

"In spite of deficiencies of presentation--war conditions forced me to rush it to conclusion- -the book has not been overloooked...." (Polanyi 1946) In short, the weight that Polanyi gives to Speenhamland in the book is a reflection of the Marxist framework in which the book was first conceptualized, but it is in tension with the post-Marxist view that characterizes much of the rest of the manuscript.

2. Towards a Reconstruction of Polanyi's Argument.

If this interpretation is valid, it suggests that Polanyi's Speenhamland argument could be reconstructed to make it both consistent with the historical evidence and with his post-Marxist theoretical project. The foundation for doing this is the part of the Speenhamland argument that has stood the test of time. Polanyi was certainly correct that contemporaries firmly believed that agricultural wages were falling during the Speenhamland period and this belief had a decisive influence on classical economics. In their efforts to explain these apparently falling wages, Malthus and Ricardo introduced into political economy a significant element of "naturalism"--a belief that economies were governed not by social mechanisms, but by nature. For example, Ricardo and Malthus thought it was inherent in a market society that wages would fall to the level of subsistence. If the poor were to be paid above the level of subsistence, they would be tempted to have large families and population growth would soon outstrip food supply with the consequence of either famine or an eventual labor glut that would force a reduction in wage levels. For Polanyi, this type of argument that relied on a completely asocial version of "rational economic man" was likely to be wrong in both its diagnoses and its prescriptions.

Polanyi knew, of course, that the iron law of wages had been discarded as early as the era of John Stuart Mill, but his point was that certain core modes of argument in economics retained the earlier naturalism. This is most obvious in the belief that processes of market self-equilibration can be assumed to automatically bring an economy to a full employment equilibrium. This belief has been the enduring foundation for arguments that government "interventions" will invariably do more harm than good because they inevitably disturb the "natural" workings of the market. For Polanyi, it seemed obvious that the economy did not and could not exist independently of government's extensive role and that there was no grounds for imagining that something as complex and fundamentally social as an economy could be assumed to always tend towards equilibrium.

This enduring line of argument provides one of the parameters for reconstructing Polanyi's historical argument. A second parameter is that a reinterpretation has to be consistent with Polanyi's core claim that the effort by economic liberals to create a fully self-regulating market society is always doomed to fail since nature and human beings would be destroyed if they were fully commodified.

The reconstruction begins with the idea that the Speenhamland bread scale was emblematic of a more assertive effort by rural elites during the Napoleonic Wars to use the Poor Law to protect the rural poor from rising prices and the pressures generated by urbanization and industrialization. While the use of aid-in-wages tended to be limited to years of particularly bad harvests, Poor Law outlays in the wheat growing counties were on an upward trajectory through increases in the use of poor relief against seasonal unemployment and to supplement--through child allowances--the wages of mature workers. These were mechanisms designed to reduce the discontent of the rural poor, offset some of the economic consequences of enclosures and the decline of rural crafts, and to slow the rates of rural outmigration. In the context of the rising demand for wheat and labor during the Napoleonic Wars, these were prudent social policies that worked to buffer the rural poor from social and economic change.

When Malthus published the early editions of his Essay on Population, his critique of the Poor Law was completely off the mark. Malthus generalized incorrectly from the near-famine of 1795 and the wartime conditions that limited emergency grain imports to create an ineluctable law of population growth exceeding food supply. Instead of recognizing that the use of poor relief had successfully saved many of the poor from starvation, he improbably blamed the lifepreserver for causing the near drowning. But Malthus critique of the Poor Law did not have wide popular resonance during the relative prosperity of the Napoleonic Wars; that would only come later.

The key turning pont was the agricultural downturn at the end of the Napoleonic Wars. An economic downturn at the end of a war is to be expected, but in this period, the severity of the downturn was greatly intensified by England's decision to restore the pre-War value of the pound in relation to gold. What happened in this period is remarkably similar to the decision by England to restore the pre-war relationship between the pound and gold after World War I. Keynes ([1925 ]1932) had famously denounced this policy as deeply misguided and insisted that it would produce a period of intense deflationary pressure. But it is seldom recognized that Keynes' prescience derived from his knowledge of economic history and the history of economic theory. He realized that English statemen in the post-World War I era were simply repeating the mistake that had been made--at the urging of David Ricardo--a century earlier. Ricardo argued forcefully for restoring the pound to its pre-war parity. Ricardo's articles on gold were among his first published pieces--written while he was still primarily a financial trader. He argued that the wartime inflation was a direct consequence of the suspension of gold convertibility and that the only way to return prices to their proper level was to restore the pre-war parity. He confidently predicted that the return to gold would cause prices to fall by only about 10% (Fetter 1965, Hilton 1977). In actuality, as can be seen from Feinstein's (1998) price index, the cost of living reached its peak in 1813 of 204.8 and fell dramatically to 129.7 in 1822. Even after this severe price deflation, prices stabilized at this low level until the mid-1830's.

The actual timing and implementation of the return to gold is quite complex and Ricardo insisted at the time that he was not responsible for the actual deflationary consequences because the Bank of England failed to follow the procedures that he had recommended (Fetter 1965, Hilton 1977) . Nevertheless, it is clear that the decision to restore gold convertibility in 1819 had disastrous consequences for the wheat growing regions of the country. The period from 1813 to 1818--with the brief interruption when the War resumed--had been a period of agricultural depression marked by falling prices and a contraction of credit. The decision in 1819 meant that farmers were faced with new twin shocks--a further fall in price levels and a renewed contraction in available credit. Restoration of the gold parity required a significant tightening of credit which, in turn, bankrupted many of the country banks that ordinarily provided loans to farmers. As some farms failed and planting of less fertile land diminished, farm employment was further reduced. On the surviving farms, farmers had no choice but to cut the wage bill by reducing wages and by reducing employment levels.

"The operation of agriculture were carried on by a skeleton staff which was reinforced when necessary by a body of labourers taken off the parish for some weeks and put back there as soon as they had completed their work." (Gash 1935, p. 91) Moreover, even though 1822 was probably the low ebb in terms of wheat prices, farm wages, and probably unemployment, recovery from this nadir in the years up to 1834 was quite modest. The continuing discipline of the gold standard blocked any inflation in price levels even as industrial production began to expand. The ongoing pressure of low wheat prices meant that as the more successful farmers had profits to reinvest or were able again to borrow, they put increasing resources into labor saving technology such as the threshing machine. Since hand threshing of wheat could represent as much as one quarter of the whole year's quantity of farmwork (Gash 1935, pp. 92-93), mechanization had a huge impact on the rural demand for labor in the winter months. Dissatisfaction with these high rates of unemployment ultimately produced the machine smashing in the Captain Swing riots of 1830 (Hobsbawm and Rude 1968) .

Two points follow from this argument. First, in the absence of Ricardo's eloquent pleas for a restoration of the pre-war parity, policymakers might well have chosen a less deflationary set of policies. Had the economy not suffered an additional shock in 1819, the wheat growing areas might have experienced a recovery and an earlier rebound of wheat prices. Moreover, without the ideological commitment to laissez-faire policies, the government might have embraced policies that helped to cushion the economy in periods of contracting demand. To be sure, farm employment was still unlikely to return to its levels at the peak of wartime demand, and farmers would have eventually invested in threshing machines. Under any set of policies, there would ultimately have been a problem of a rural labor surplus that could only be solved by more rapid rates of outmigration. But the Ricardian policies dramatically intensified the problem; so that this massive readjustment had to be handled over twenty years rather than forty. As Polanyi emphasized government policies can help protect ordinary people simply by slowing the rate of change. The Ricardian policies did exactly the opposite; they vastly accelerated the problem of rural surplus population.

The second point is that the role that the gold standard played in exacerbating the rural crisis places the intensifying campaign against the Poor Law in a new light. As the agricultural crisis deepened, efforts were intensified to blame the crisis--not on an agricultural depression or on the potential consequences of gold--but on the bad behavior of the rural poor that resulted from the perverse incentives of the Poor Law. The new edition of Malthus' Essay published in 1817 and the Parliamentary Report on the Poor Laws (1817) in the same year provided new fuel for this campaign that gathered steam as the price deflation intensified (Henriques 1979).

The campaign was an exercise in blame shifting, but it was also important because it gave the government an actual policy direction to pursue. Within the narrow limits set by laissez-faire, successive English governments were extremely constrained in their ability to respond to the rural crisis. Ministers were in the extremely awkward position of doing nothing as rural distress intensified. The overhaul of the Poor Law--even if it represented a response to the wrong problem--helped bolster the government's legitimacy by showing that it could take positive action to make the economy work.

But the most critical legitimation was of classical economics itself. Since gold standard restoration could easily be counted as the first policy triumph of the new science, the severity of the agricultural downturn might well have undermined the whole belief in laissez-faire and self-regulating markets. Classical political economy was in its infancy in this period, and its ultimate maturation and worldwide influence was hardly a foregone conclusion. While it is difficult to think through such a radical counterfactual; an alternative and more pragmatic strand of economic thinking might have become institutionalized in the place of the Malthus-Ricardo tradition. Instead, the intensifying campaign against the Poor Law, and the ultimate policy triumph of the New Poor Law diverted attention from the new science's failures and solidified the hold of the faith in market self-regulation on the society's imagination. While much has been written on the theoretical disagreements between Malthus and Ricardo, the critical link between gold standard restoration and the campaign against the Poor Law demonstrates their joint indispensability for classical economic thought.

The last step of this reconstruction is to eliminate Polanyi's emphasis on 1834 as the turning point when market capitalism was fully established in England. Since Polanyi insisted that labor can only be a fictitious commodity because human beings were not produced to be sold on a market, it follows logically that the full commodification of labor has never happened--not even in England in the years immediately following 1834. This is consistent with the historical evidence that the impact of the New Poor Law was gradual and the process of withdrawing assistance from prime age male workers in rural areas took yearss to accomplish (Williams 1981).

To be sure, the New Poor Law was extraordinarily important on three levels. It helped to restore the prestige of classical economics, it represented a powerful effort to institutionalize the commodity status of labor, and it did initiate a strong downward trend in total poor law outlays (Lindert 1998). But the critical point is that what Polanyi termed the double movement--the conflicting pressures of the movement for laissez-faire and the counter movement to protect society from the market were at work both before and after 1834. Polanyi's theory--unlike both Marxism and market liberalism--does not need to identify a radical break in social arrangements at the dawn of market society. What it emphasizes instead is that there was a radical break in conceptual framework in market liberalism's unprecedented belief that human social arrangements should be subordinated to market forces. It was that mistaken belief and the resulting commitment to such impersonal mechanisms as the gold standard that produced disastrous consequences.

Conclusion

In this paper, we have sought to show that Polanyi's influential analysis of the social consequences of Speenhamland is not supported by historical evidence. Yet we have also tried to show that Polanyi's critique of market liberalism can be stated even more powerfully without the Speenhamland analysis. Moreover, Polanyi was prescient in his argument that the circumstances under which classical economics was founded has had an enduring influence on the entire subsequent history of economics.

The major theoretical lesson that we learn from this case study is hardly novel; it is a renewed appreciation for the power of narrative to influence how history is experienced and why certain theories about the world triumph over others. What is so interesting about the specific case is that the narrative of the disastrous consequences of Speenhamland was produced before the fact. In Malthus' Essay on Population, first published in 1798, all the elements of the storyline are already in place. An overly generous system of poor relief destroys the work incentives and the limits on fertility of the rural poor, producing both a fall in productivity and a rapid growth of population. The combination results in a catastrophic decline in living standards and the complete moral degradation of the poor. The only way to return the poor to their natural state of self-discipline in both work and procreation is to abolish the system of poor relief.

In subsequent years --particularly after 1813--this story was repeated so frequently by political economists and the clergy that it gained the quality of truth. When the Royal Commissioners produced their report in 1834, they elevated it from ordinary truth to Social Scientific Truth. It then took almost 130 years before there was a serious scholarly effort to show the shallowness and distortions of that document. But even after years of detailed scholarly work had effectively debunked the Speenhamland legend, contemporary social welfare theorists were successful in mobilizing precisely the same storyline to discredit current welfare institutions.

Charles Murray's influential 1984 book, Losing Ground simply updated the old story to argue that an excessively generous welfare system in the U.S. had undermined both the work ethic and sexual restraint among the poor. Moreover, the work of Murray and likeminded scholars played a critical role in creating the climate for the 1996 Personal Responsibility and Work Opportunity Reconciliation Act that eliminated the entitlement of poor children to government assistance.

The triumph of this kind of questionable narrative can easily lead to despair about the very enterprise of social science. Why bother to engage in rigorous data collection and theory construction, when the best of social science can be trumped by fanciful but familiar storytelling ? The answer is to recognize that social science has to be constructed not just of facts and theories, but on the terrain of narrative itself. The only way to finally break the hold of these old stories is to construct new and more powerful stories that include as part of the plotline the ways in which the lies of past storytellers have led us astray. The present paper is intended as part of that new story.