[A-List] Globalisation: Henry Liu's analysis

[Keaney Michael]

Big money and the Corn Law
By Henry C K Liu
Asia Times, 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 against 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.

Full article at:
http://www.atimes.com/global-econ/DE01Dj01.html

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney at mbs.fi