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Misreading the Industrial Revolution

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Those of us who are advocates of the spontaneous order of an unfettered market are forever stomping out the fires of fallacious reasoning and anticapitalistic bias. It seems that as we set one record straight, opponents of the market manage to pervert ten others.

We spend as much time explaining the workings of the market as we do debunking myths and cliches about it. Socialists spout an endless stream of put-downs and one-liners that pass as thorough critiques of the market, each one requiring a time-consuming, painstaking response and appeal to reason. We are constantly rewriting prejudiced accounts of history to match what really happened in history.

No better example of this exists than the ceaseless controversy that surrounds the early years of the British Industrial Revolution — roughly the economic and commercial events that transformed Great Britain in the century after 1750 and served as a model for much of the world in the 19th century. The enemies of capitalism have cast this remarkable era in which standards of living soared and life spans doubled as a shameful blot on humankind.

Any one of the countless fables of the period could consume pages of rejoinder, but two in particular come up again and again. They deserve more detailed responses than space permits here, but at least friends of the market will have a place from which to start.

1. Industrialization and the factory system jolted workers from a life of ease into one of drudgery. In the words of Frederich Engels, Karl Marx’s collaborator, the typical worker of pre-industrial times led “a righteous and peaceful life in all piety and probity, and his material position was far better than that of his successors.”

Propaganda, unadulterated — that ‘s the only way to characterize such nonsense. In the thousand years of feudalism from the fall of Rome to the 16th century, men, women and children were routinely sold at auction, forced to work long hours at arduous manual labor and compelled to toil under whatever conditions and for whatever compensation pleased their masters. The mercantilist system that followed feudalism was not much better: on the eve of the Industrial Revolution — the twenty years between 1730 and 1749 — 74.5 percent of English children died before the age of five.

The evidence is so overwhelming as to be indisputable that workers lived far better in 1850 than they did in 1750. The population of Great Britain nearly tripled in that period, not only because people were living longer, but also because of a tremendous migration from the European continent. Workers flocked from the farms to the cities to take jobs in the factories. It is not an exaggeration to say that workers voted for industry with their feet!

In his treatise on economics, Human Action, Ludwig von Mises explained the secret of industrialization’s material success:

“The outstanding fact about the Industrial Revolution is that it opened an age of mass production for the masses. The wage-earners [were] no longer people toiling merely for other people’s well-being. They themselves [were] the main consumers of the products the factories turned out.”

2. Child labor was a particularly harsh feature of industrialization and, therefore, a damning indictment of free-market capitalism.

Historians — both pseudo and those who should know better — usually fail to draw a sharp distinction between free-labor children and parish-apprentice children. The former were those who typically lived at home but worked during the day in factories at the insistence of their parents or guardians. Private-factory owners could not forcibly subjugate free-labor children; they could not compel them to work in conditions their parents found unacceptable, and there is no credible evidence to suggest that parents of the 19th century cared any less for their offspring than do parents of today.

Parish-apprentice children, on the other hand, were another story. These youngsters were under the direct authority and supervision not of their parents in a free-labor market, but of governmental officials. Most were orphans; a few were victims of negligent parents or parents whose health or lack of skills kept them from earning sufficient income to care for their families.

When historians write of the evils of child labor and actually cite real examples, with few exceptions they are citing examples of parish-apprentice children. As Robert Hessen points out in his chapter in Ayn Rand’s Capitalism: The Unknown Ideal, these children “were sent into virtual slavery by a government body . . . bound by officials into long terms of unpaid apprenticeship in return for bare subsistence.” Hessen points out that Parliament’s first act applying to child labor was passed to protect these children, not free-labor children.

To be sure, conditions for working children in the early days of the Industrial Revolution were far from ideal. It is important to understand, however, that child labor was even more common and arduous in the days preceding industrialization and that in those days, children were fortunate if they survived to the age of five. Furthermore, for free-labor children at least, factories represented improvement and opportunity, and in time, the steady increase in the productivity and incomes of their parents made it possible for the children to stay at home or in school. The free market, in other words, should be credited with taking the children out of the mines and factories, not forcing them to work for the first time, as the myth would have us believe.

When, in pre-industrial times, deplorable conditions were universal, apathy amid squalor was the order of the day. As technology and production raised the general level of living, many people’s sensitivities of the poverty that remained increased. Those who chose to fight that poverty by reducing tax, regulatory and other barriers to capital formation, entrepreneurship and free markets were right on track. Those who chose to fight it through anticapitalistic diatribes and restrictive legislation may have satisfied their own impulses to “do something” but they were not responsible for bettering the lot of the masses.

The bottom line is this: standards of living can only rise and working conditions can only improve on net balance through the application of capital and the production of more and better goods. That is precisely what the Industrial Revolution was all about.

And that is why what is needed in poverty-stricken, anticapitalistic nations like Bangladesh and Somalia (where everybody works as hard and for as little as our pre-industrial ancestors) is an honest-to-God industrial revolution of their own.

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    Lawrence W. Reed is President of The Foundation for Economic Education. Reed holds a B.A. degree in Economics from Grove City College (1975) and an M.A. degree in History from Slippery Rock State University (1978), both in Pennsylvania. He taught economics at Midland’s Northwood University from 1977 to 1984 and chaired the Department of Economics from 1982 to 1984. He has authored over 1,000 newspaper columns and articles, 200 radio commentaries, dozens of articles in magazines and journals in the U. S. and abroad, as well as five books. His articles have appeared in The Wall Street Journal, Christian Science Monitor, USA Today, Baltimore Sun, Detroit News and Detroit Free Press, among many others. Mr. Reed was previously president of the Mackinac Center for Public Policy in Midland, Michigan (www. mackinac.org), and chairman of the board of trustees of the Foundation for Economic Education in Irvington, New York. He also serves on the Board of Speakers of The Future of Freedom Foundation.