THE POOR LAW AND THE LABOR MARKET
Smith’s discussion of the poor law initially appears to be only an economic one, as he refers to the law as part of a discussion in chapter 10 of Book I of
Wealth of Nations about the advantages and disadvantages of employments of labor and stock. These advantages and disadvantages tend toward equality, in his language, if there is “perfect liberty.” However, Smith recognizes that there is not perfect liberty in the market for labor and he has two sections to explain why. The first section argues that there are inequalities that arise from the nature of the employments, such as their difficulty, how much training and education is required to practice them, and how much trust is required of the employee. In the second section, on the other hand, he argues that there are some policies of Europe that occasion inequalities in the advantages and disadvantages of different employments of labor and stock and in doing so, impede the liberty of the market: “But the policy of Europe, by not leaving things at perfect liberty, occasions other inequalities of much greater importance” (WN I.x.c.1). There are three types of such policies: (1) policies that unnaturally restrain competition in some employments, (2) policies that unnaturally increase competition in employments, and finally (3) those that obstruct the circulation of labor. The poor law falls into the third category and is the main subject of Smith’s discussion in the third part. Other kinds of distortions of the labor market discussed in the section come as the result of the laws that protect corporations and monopolies. Smith’s discussion of the poor law focuses on England and the ways in which the government’s attempts to provide relief are failing precisely because the requirements of the poor law impede the liberty of laborers by preventing them from finding work.
As is typical in Smith’s accounts of various events in WN, he first provides his own history of the poor law. My purpose in reproducing Smith’s account here is not to suggest that it is historically authoritative. Unlike most historians, Smith does not seem to be concerned about how efficient the law was as far as administering aid to the most deserving. My argument does not turn on whether or not Smith’s account is perfectly accurate. I aim to illuminate how Smith’s analysis of the law shows that when the labor market is restricted, there are both economic and moral consequences for the poor and their fellow countrymen.11 Moreover, Smith’s history is fairly consistent with historical and modern accounts, as he details the problems with the old poor law and the steps taken to remedy its problems, focusing especially on the Settlement Act. However, there are a few exceptions; Sir George Nichols’s classic (1856) history seeks to remedy previous accounts, including the account of Dr. Burns that Smith used, by providing a comprehensive overview of the law instead of arguing for changes to be made. The economic historian, Mark Blaug (1963), like many modern historians, focuses on the poor law as the precursor to the modern welfare state. He argues against Smith’s ideas here, saying that while most historians have focused on the issues of maladministration and inefficiency, the poor law was actually solving the legitimate problem of “structural unemployment in the countryside.”12 Smith’s discussion of the law focuses on how it was administered. But like other historians, he shows how the poor law was revised over time to strengthen its administration to ensure that only the truly deserving would receive relief. He tells the reader that the poor law was established to replace the charity that had been previously administered by local monasteries before they were destroyed. It was passed by Queen Elizabeth I in 1597 in an attempt to continue this tradition by ensuring “that every parish should be bound to provide for its own poor; and that overseers of the poor should be annually appointed, who, with the churchwardens, should raise by a parish rate, competent sums for this purpose” (WN I.x.c.46). However, Smith is less concerned about the efficiency of administration than the limitations the law put on the circulation of labor. From the beginning of his description, we see that the two components of the law with which Smith is most concerned are that local parishes need to provide for their own poor, and that there are overseers responsible for raising funds to pay for relief.
Because of his concern with how the administration of the law affected the liberty of the laborers, he details how the law was revised several times to improve its efficiency. First, it was revised by Charles II, who required
that forty days undisturbed residence should gain any person a settlement in any parish; but that within that time it should be lawful for two justices of the peace, upon complaint made by the churchwardens or overseers of the poor, to remove any new inhabitant to the parish where he was last legally settled; unless he either rented a tenement of ten pounds a year, or could give such security for the discharge of the parish where he was then living, as those justices should judge sufficient. (WN I.x.c.47)
This provision of the poor law was known as the Settlement Act. Here again, Smith emphasizes the important role of the overseers and wardens, who could determine if a poor person deserved to be in the parish. In fact, there were eventually revisions to this Act because of the corruption of the parish officers who were responsible for determining settlement. James II and William III, therefore, required laborers to give notice to the parish in which they were settling, and eventually added that this notice could only be given in church on Sunday to ensure that it would be heard by the whole parish. In a later development of the Settlement Act that was supposed to restore the free circulation of labor, William III and later Queen Anne declared that the parish where the laborer had resided was to provide them a certificate to allow them to work in a new parish, and if they should need relief, it would be the responsibility of their original parish to provide it.
Yet, Smith is not convinced that these new provisions, passed over time, successfully restored the free circulation of labor; he argues instead that these revisions merely encouraged the granting parish not to give certificates at all, and when they did, the receiving parish to be strict in its requirement of certificates (WN I.x.c.56). The Settlement Act and its revisions did not improve the functioning of the market.13 It only made the situation for the poor laborers trying to find work more difficult.