THE MORAL AND MATERIAL CONSEQUENCES OF THE POOR LAW: ON THE MARKET ORDER AND MARKET PROCESS
In this chapter, I have shown through the example of the poor law that Smith both argues for the potential moral benefits of commercial society and cautions against its potential moral harms. By reading his account of the poor law in WN together with his theory of sympathy in TMS, I have shown that Smith argues against the poor law on both economic and moral grounds. The poor law is economically problematic because it prevents labor mobility and thus a free market. Smith focuses on how the requirement of a certificate of settlement to live in a particular parish prevents the poor from freely following the market for labor between parishes. Parishes are reluctant to take on new workers, as each parish is responsible for the care of their poor. This causes several problems for the market process, among them the difference in the price of labor between neighboring parishes. The poor law is morally problematic because it plays upon our propensity to approve of the rich and ignore the poor as people worthy of our sympathy. The rules of the Settlement Act that required the poor to carry certificates from their parish to move between parishes reduced them to their social rank. Therefore, the overseers in charge of judging these poor laborers treated them not as other people deserving of sympathy, but as objects to be administered that they often deemed harmful to society. The problem of the extent of sympathy in this case also encouraged the rest of society to overlook the corruption of the wardens and to take their moral judgments of the poor as true because of their high social rank. These two problems with the poor law demonstrate how the distortion of the market by one rule actually furthered the morally problematic nature of the market and prevented the market from improving the situation of the least well-off.
Smith’s comments about this law are also important for understanding the market process and market order. Hayek ( 1978) argued that the market order does not seek a particular end, but is characterized by the science of catallaxy, in which people coordinate their ends under a set of rules (107-9). Smith’s argument about the poor law shows how one particular rule distorted the process and made the conditions of the market less fair, namely because it prevented laborers from following the market for labor, especially men with families who arguably needed work the most. This is turn caused parishes to have even more laborers on their relief rolls, and it artificially raised wages in certain parishes and depressed wages in others.
Further, the poor law also prevented individuals from seeking information from the market. Kirzner talks about the market as a process characterized by ignorance and discovery (1992, 44), where people are constantly engaging in information seeking. However, this information can be misleading if the process has been interfered with by a centralized administration. He puts it: “Not only is it the case, as traditional economics has demonstrated since Adam Smith, that market efficiency can prevail in spite of the absence of centralized direction. It turns out, as it happens, that the market process approach shows that such absence of centralized direction is in fact necessary, if the kind of co-ordination (we have seen to be achievable through the market process) is to be attained at all” (Kirzner 1992, 51). This is exactly what Smith explains has happened in the case of the poor law. The law caused vastly different prices for labor in neighboring parishes, which distorted people’s information and therefore their ability to act as entrepreneurs who find opportunities in the market—namely through finding work. Like Smith, Kirzner links this disruption of the market process back to liberty: “Individual liberty is that ingredient in that definition upon which the success of the market process depends. Individual liberty is not a circumstance in spite of which markets work; it is the crucial circumstance which permits the market process to work” (Kirzner 1992, 53). In other words, people can coordinate their efforts if they are receiving the right information through the market process. The poor law expanded the propensity of individuals to treat one another as objects.
It is important to note that for both Hayek and Kirzner, the market order and market process require treating other people as equal if we are to coordinate our ends with them. That is, we do not view others as less than ourselves. Smith’s work in WN, and as I have argued here, TMS, was also predicated on this idea of “analytical egalitarianism.”17 In his famous street porter and philosopher example, Smith shows that in terms of the market, we are all on equal footing. That is, for the purpose of analysis, Smith treats people as fundamentally equal. The market process shows us how we both need one another and can be a help to one another. Smith explains how the market shows us our mutual dependence:
Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconvenience to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds, make up the far greater part of every political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged. (WN I.viii.36)
The poor law encourages viewing the poor laborers as “other,” as different and undeserving, but Smith argues that they are essential to the flourishing of society as a whole and therefore ought to be treated as equals. In this way, the market should extend our ability to sympathize with others.18 However, as his arguments about the poor law demonstrate, interference in this process can play upon our proclivity not to see one another as equals and people deserving of fellow-feeling. The English masses were “jealous of their liberty” because they feared the laborers; therefore, they sought to secure their own interests by limiting the mobility of the laboring poor, rather than working with them through the market process. The distortion of the market caused by the law cultivated a morally undesirable outcome, viewing distant others as unequal.
Smith’s goal was to allow the market to do its work of improving the situation for the least well-off, while mitigating its potential to prevent people from engaging in sympathetic relationships with one another. While Smith praised the division of labor for including more workers in the market, he also acknowledged that some laws would be necessary to uphold justice. The market order is governed by certain rules. For example, he acknowledged the government should provide the laboring poor with an education so that their ability to participate in sympathetic relationships with others would not be impeded. It is not a complex education that Smith calls for, but one that would be sufficient enough to improve faculties of judgment, so that the laborer could participate more robustly in his private life, namely “rational conversation,” “sentiment,” and judgments about the actions of his country (WN V.i.f.50).
In Smith’s effort to show both the economic and moral dimensions of the problem of the poor law, he demonstrates how the market could work if people were given the liberty to pursue their ends. In the case of the poor law, laborers would have a better chance of finding work if they could follow the market for labor. Further, they could follow the circulation of labor with dignity and could interact with and be judged by their fellows as objects worthy of sympathy, rather than merely as objects.