Foxwell on Periodic Mismatches, Speculation, and Welfare

Herbert Foxwell’s agenda for social reform arose as the outcome of his critical view of the liberal doctrine and the repeated emergence of unemployment when that doctrine becomes policy. During the 1870s in England, belief in the infallibility of the market came under severe attack on methodological, historical, and moral grounds. The English Historical School, represented by, among others, William J. Ashley, John K. Ingram, and Thomas E. Cliffe Leslie, claimed to have developed a new basis for economics in which science would be built from the facts of social life instead of being constructed from an individualistic philosophy underscoring alleged universal laws arrived at by deductive introspection (Koot 1977; Coats 1954).

In the article ‘The Economic Movement in England’ (Foxwell 1887), Foxwell largely took the side of the Historical School and presented a wide- ranging picture of the troubled state of economics in Britain at the time, claiming that the success of liberalism across the country had been motivated by the economic prosperity that had taken place after the repeal of the Corn Laws in 1846. The downfall of the competitive laissez-faire dogma, as Foxwell saw it, came with the economic depression of 1874 and the startling growth of monopolies and big corporations. Moreover, along with the progressive rise of labour as a significant political force, a renaissance in socialist literature and in Christian social doctrine was beginning, awakening people to the social catastrophe of poverty and the urgency to properly tackle it (ibid.).

Foxwell had already published the essay ‘Irregularity of Employment and Fluctuations of Prices’ (Foxwell 1886), where he pinned down the uncertainty of employment as the paramount evil afflicting the British working classes. The alleged smooth displacement of labour and capital from one activity to another during economic dislocations, as claimed by the supporters of laissez- faire, had been historically marked instead by real suffering and immeasurable waste in terms of both skills and wealth. To avoid the recurring misfortunes of free competition, observed Foxwell, it needed to be controlled as a force of nature. Otherwise, all attempts at welfare improvement would be doomed from their very start: ‘The condition of a large mass of people is so precarious and the state of industry so unsettled that social reforms, which must be gradual and slow, have no time to mature; and the situation alters before the proper remedy can be applied’ (ibid.: 21).

Foxwell put forward two broad kinds of state intervention conceived to address the ultimate causes of unemployment, that is, speculation and the periodic mismatches between supply and demand. The first type of measure, which he called organization, required public control of the market through decentralized agencies (trade boards, municipal authorities, and voluntary associations), along with some kind of modern guilds of trade to stabilize economic activity by means of production quotas, quality control, and the prospecting of new markets. In addition, a Bureau of Labour should be created to assist working people during their productive life, while long-term wage contracts were to be expanded in number and, in times of crisis, public works implemented to fight off unemployment. The second form of intervention projected by Foxwell consisted of making known to the public the country’s relevant economic data in order to curb speculative frenzies. This particular goal could be achieved by the state’s regular compilation of statistics relative to aggregate production, national income, consumption, employment, general prices, and banking (Foxwell 1886: 70-96, 1888 [1919]).