How Empires Fall

Globalization is not new, and neither is its repercussions.

A little over a hundred years ago England stood at the center of the first truly globalized economy.  The British navy and the East India Company had conquered nearly a fifth of the world’s land mass, and Queen Victoria ruled over roughly a quarter of the world’s population.  Raw materials and raw wealth flowed into England from all over the world, and at any time somewhere in the world backs were bent in sweatshops and fields laboring in England’s behalf.  It was truly said that “The sun never set of the British Empire.”  

Such great empires require complex organizations, and it wasn’t enough to send out agents from England.  Local bureaucrats and managers had to be trained to read and write in English.  As the bureaucratic infrastructure became increasingly complex new center of power emerged in the colonies.  A new middle class appeared, raised to think of themselves as citizens of the English Empire.  In time, they began to wonder why they should not also share in the rights of Englishmen.  Pressures for self-rule became protests for independence as local leaders began to emerge in the colonies.

At the same time similar questions were arising at home.  Increasingly the wealth of the empire was flowing into the pockets of investors, insurers and merchants while nearly a quarter of the English population lived at or below the poverty line.  With the industrial revolution many workers lost their jobs to mechanization, and major industries like mining and ship building saw periodic cycles of unemployment.  While nineteenth century reforms gave householders and farmers the right to vote many of the poor were still excluded, as were all women, and an arcane electoral system resulted in unequal representation.

Through the end of the 19th century the two main political parties traded the government back and forth with relatively little disagreement over foreign policy or free trade.  Then in 1901 disagreements over the Boer War brought the conservatives back into power on a wave of nationalist sentiment, but the war proved expensive.  It soon became clear that Britain could no longer act unilaterally, but long decades as the world’s only superpower had left British politicians ill prepared to negotiate with allies.  As news spread of Boer women and children dying in unsanitary “concentration camps” the public turned against the war.  The conservative defended their actions as military necessities, but the elections in 1905 saw a liberal victory.

The start of the twentieth century saw the rise of progressive issues.  Women demanded the right to vote, and working parents demanded better education for their children.  The poor demanded better living conditions, prison reform and reform of the poor laws, and the public demanded higher taxes on the rich and tariffs on imports.  The liberal party introduced national insurance and unemployment support, but the party began to fracture over its embrace of free trade and its willingness to compromise with conservatives.  Radical progressives formed a socialist “labor” party, and by the 1920s they had replaced the old liberals.  

Faced with declining influence overseas and an insurgent working class at home, those in power struggled to maintain their hold.  Politics became increasingly volatile as old answers no longer met the new realities.  This is how empires fall—not because those at the top become soft and weak but because those who have labored to build the foundations become lean and hungry.  To resist their demands, or to capitalize on them, only widens the cracks in the social infrastructure.

From the Bay to the Corner

Before the Pilgrims arrived, the people living along the shores of Massachusetts Bay were semi-nomadic.  They moved with the season from place to place where food was most abundant.  In the summer they might pick berries and in the autumn hunt for deer or game bird.  Whole families would travel together along the same circuit every year.  Every autumn they would meet the same neighbors at the hunting grounds, and in the winter each family would go their separate way.  Then they would join the same neighbors they had known the previous winter fishing along the rivers or bays.

In this way families would maintain networks of friends who they could turn to in times of need.  If one autumn the hunting was poor, then they could send word to the families they fished with in the winter.  Each family had incentive to help one another because they knew that next year they might need help in return.  The best defense against a precarious food supply was a reputation as a reliable neighbor—a good person to know when you need a friend.

This was something the English colonists never understood.  They also built strong communities, but centuries of agriculture had taught them a different relationship with the land.  They built farms, homes and cottage industries—all of which meant staying in one place, which in turn meant they could store food for the winter and accumulate material goods.  They saw that their lifestyle meant physical comfort and a reliable food supply, and they couldn’t understand why the native people wouldn’t just settle down.

The English couldn’t understand that the native people were dependent on a network of alliances that could only be maintained through constant movement—that they were asking the natives to abandon the only security they had known.  If one farmer is struck by a bad harvest, then the farmer’s neighbors will likely be struck as well.  Who could they turn to then?  The English had more material comforts, but they couldn’t see the assumptions implicit in their own way of life.  Their emphasis on self-reliance and independence stood in contrast to the native people’s interdependence.  They thought the natives were just lazy and lacked ambition.  

Roughly three hundred years later this same misunderstanding arose again as the descendants of the English colonists encountered new waves of immigrants from Europe.  At the end of the Great Depression, William Whyte described the difference between “college boys” and “corner boys” in Boston’s North End:

“The college boys fit in with an economy of saving and investment.  The corner boys fit in with a spending economy.”  A college boy must save his money to pay for education; “In order to participate in group activities, the corner boy must share his money with others.  If he has money and his friend does not, he is expected to do the pending for both of them.”

Like the colonist storing food for the winter, the college boy saves his money to achieve independence.  The corner boy spends his money to build a network that he can rely on in times of need.  This distinction can affect all aspects of their social lives.  For example, the corner boys were criticized for gambling what little money they had despite the low chance of winning.  However, there’s little incentive to save money if one is expected to share it, but a sudden windfall, however small, creates an opportunity for public displays of generosity.

Of course, this does not mean that Depression-era Italian immigrants were a hunter-gatherer culture.  The strategy of interdependence has been used throughout history and around the world to deal with periods of unreliable resources.  Rather, the feature that has remained consistent over all this time has been the mutual misunderstanding.  The corner boys saw the college boys as selfish and unreliable while the corner boys were seen as lazy and impractical.  Neither group fully recognized their own assumptions, so they couldn’t understand each other’s way of life.

Regulating the Supply of Labor

There has been a growing movement to reinterpret Adam Smith and his book The Wealth of Nations.  Smith has long been heralded by libertarians and neo-liberals as the father of free market capitalism, but in recent years he has been cited in support of such progressive issues as raising the minimum wage, increasing taxes on the wealthy and limiting the rates of interest on loans.  As the many young people have begun to doubt the virtues of a capitalist system these arguments suggest that the worst features of a capitalist economy—unemployment, poverty and its effects—were not inherent in Smith’s original vision, and that it’s possible to imagine a more benevolent form of capitalism that is more sympathetic to the working class. 

But is that what Adam Smith really intended?

Smith certainly would not have supported a minimum wage since he opposed any attempt to regulate the price of goods or labor believing the free market was always more efficient.  He even denied that it was possible to determine what proper wages should be.

“Where wages are not regulated by law, all that we can pretend to determine is what are the most usual; and experience seems to show that law can never regulate them properly, though it has often pretended to do so.”

One passage, in particular, has often been quoted in support of a living wage, or at least a subsistence minimum.

Immigrant Family, Jacob Riis

“A man must always live by his work, and his wages must at least be sufficient to maintain him.  They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.”

However, people who quote this passage overlook a caveat that Smith offers later on:

“But one half the children born, it is computed, die before the age of manhood.  The poorest labourers, therefore, according to this account, must, one with another, attempt to rear at least four children, in order that two may have an equal chance of living to that age.”

At first glance this passage seems to advocate for sufficient wages to support a family, but according to Smith, wages should be low specifically in order to promote a high rate of childhood mortality.

“[I]t is only among the inferior ranks of people that the scantiness of subsistence can set limits to the further multiplication of the human species; and it can do so in no other way than by destroying a great part of the children.” 

This is how the free market determines a minimum wage—through supply and demand.  If the number of workers competing for jobs exceeds the demand, then wages will go down until the supply of labor is reduced through attrition.

“It is in this manner that the demand for men, like that for any other commodity, necessarily regulates the production of men.”

In smith’s vision unemployment, poverty and mortality were not flaws in the capitalist system; they were design features.