The Life of the Working Population in the Age of Depressions

This new way of representing and reflecting on economic activity, in terms of the cyclical fluctuation of business activity, was not merely an academic pursuit. It emerged as a pressing policy issue against the backdrop of the social problems provoked by economic crises and depressions, especially unemployment. The concern about business cycles, thus, was directly related to their impact on the welfare and cohesion of society under the relatively new conditions of mature industrial production. In this section, I draw out in greater detail how the aforementioned attention to the new problem of business cycles was an economistic response, or a response framed in economic terms, to the social problems of the late nineteenth and early twentieth centuries.

The spurt of industrialization and urbanization at the end of the nineteenth century had created new conditions for many wage workers in the United States and Western Europe, such that an ever-growing proportion of the population had become dependent on money wages earned in the productive economy rather than the fruits of their own subsistence labour, which still succoured many rural and working-class families late into the nineteenth century. This growing dependence on the formal, capitalist economy for survival created a new moral panic around the problem of crises and business fluctuations, which impoverished working people by depriving them of outlets to sell their labour power. In the United States, for instance, the inaugural report of the first Commissioner of Labor, Carroll D. Wright, investigated the causes and extent of the economic depression of 1882-1886, during which, he estimated, a million men were unemployed (Wright 1886: 65).

The social costs of depressions were explicit in many early twentieth- century works on business cycles. As Beveridge pointed out, “[c]yclical fluctuation means discontinuity in the growth of the demand for labour” (Beveridge 1910: 65). Thus, from early on, unemployment is frequently mentioned as a central element of the cycle (Wright 1886; May 1902; Hobson 1969 [1910]; Hull 1911; Pigou 1967 [1927]). As Pigou pointed out as late as 1927, periods of unemployment led to the moral decay of workers, making him conclude that industrial fluctuations were a social evil (Pigou 1967: 246). Citing Alden, Pigou notes that “[d]uring the long spell of idleness any one of these men invariably deteriorates [...]. The man becomes less proficient and less capable [...]. [N]othing worse has a worse effect upon the calibre of such men” (cited in Pigou 1967: 242). Despite these costs, as Alchon (1985) points out, this did not yet lead to a programme of state-directed economic management. Indeed, the programme to render business cycles visible as an object of administrative action was, in the United States at least, conceived as an alternative to planning. Certainly, resolving the problem of business cycles had practical economic advantages for business owners and large corporate shareholders, since the social problems caused by business cycles were never far from the surface. For instance, in Veblen’s work, these were secondary but nonetheless important: “while it is true that depression is primarily a business difficulty and rests on emotional grounds, that does not hinder its having grave consequences for industry and for the material welfare of the community outside the range of business interests” (Veblen 1965: 238). “Hard Times”, as Veblen put it, were a new consequence of machine production in an industrial society. More systematic and statistical studies of business cycles drew attention to the same problem, and drew even greater inspiration from the social problems provoked by depressions. As W.C. Mitchell’s study of business cycles pointed out,

[...] business cycles get their economic interest from the changes which they produce in the material well-being of the community. This well-being depends upon the production and distribution of useful goods. But the industrial and commercial processes by which goods are furnished are conducted by business men in quest of profits. Thus the changes which affect the community’s well-being come not from the processes which directly minister to it but from the process of making money. (Mitchell 1913: 26)

The appearance of a new problem of business cycles and depressions at the end of the nineteenth century, and particularly in the first decades of the twentieth century, marks a new economistic discourse, one which conceives of economic flows detached from the social relations that produced them and which is aimed at problematizing and marking out fields of action which could be changed or optimized in order to alleviate or mitigate the impact of business on the life of the population. As Patterson pointed out in his review of contemporary business cycle theories, these issues were a result of new relations of dependence: “[t]he employee participates in the risks of modern industry and suffers from a business derangement far more severely than his employer” (Patterson 1915: 135). W.C. Mitchell’s later work with the National Bureau of Economic Research (NBER), under the direction of Republican US Secretary of Commerce Herbert Hoover (see W.C. Mitchell 1923), centred on the same problem: business cycles were an important line of research because of their connection to unemployment and, therefore, to the well-being of the working population.

Economic depressions stimulated not only relief efforts but also the creation of new categories of subjectivity (the unemployed) and new objects of government (unemployment) between the 1880s and the 1930s, which have already been the focus of genealogical study (Salais 1985; Topalov 1994; Walters 2000). As Walters (2000) pointed out, these new attempts to account for and measure the number of unemployed led to new administrative practices, many of which were aimed at mitigating the causes of unemployment, even as these attempts led to new claims by working people and the unemployed to state protection from loss of work. The state’s responsibility towards economic or industrial depressions stemmed from their effect on the workforce. The losses to the material well-being of “the community” or of workers provoked by business cycles were consistently mentioned in the literature on cycles and industrial crises in the early twentieth century (Beveridge 1910; Hobson 1969 [1910]; Jones 1900; Tugan-Baranowsky 1913 [1894]; Veblen 1965: 177-267).

Unemployment was not the only problem that business cycle theorists had in mind when they began discussing this new problem warranting new administrative measures. Social strife and class struggle were just as present and important. Thus—as in Oliver and Tasson’s discussion in this volume of administrative measures adopted against the spread of HIV/ AIDS in Uganda, or as in Christensen’s argument about the US domestic precursors to democracy promotion—competing social groups play a significant role in the formation of new management techniques, which are not merely positivistic representations of reality as such, but rather a particularistic configuration of a socially constructed objectivity. The emergence of business cycle theory was almost simultaneous with the growth of managerialism in the private economy, pioneered by professional engineers in the United States (Alchon 1985; Chandler 1977). The social problems of organizing and disciplining this work force—of prime importance to the managers and engineers—were also oriented to social pacification, especially in the context of the first Red Scare period during and immediately after World War I. A managerial orientation to social problems contributed to the formation of several research institutes in the United States (the NBER, in New York City, and the Cowles Commission, housed at the University of Chicago) which sought to both uncover the causes of cyclical fluctuations and make their movements increasingly visible to economic actors (Barnett 1998: 5; Alchon 1985, Morgan 1990: 64-68).

Crises and depressions became an important political problem to the extent that new social and moral problems were identified in the i ndustrialized countries of Western Europe and North America—particularly around the category of involuntary unemployment—and workers had begun to make new claims on the state and the factory system (Beveridge 1909; Castel 2003; Walters 2000). They were also increasingly demanding social planning to ensure adequate levels of employment. Working people were capable of exerting pressure on the state for reforms—and sometimes even threatened revolutionary action—when faced with destitution. Indeed, one early theorist of industrial crises (Tugan-Baranowsky 1913 [1894]) attempted in part of his study to correlate the revolutionary activities of the working classes with the outbreak of depression. Moore also mentions the “friction and strife” that result from the struggle to maintain a declining share of production, which disrupts industry (Moore 1914: 1). Business cycles were a threat to the cohesion of industrial society and threatened to augment class struggle.

The problematization of business cycles, however, was not intended to disrupt the social relations of industrial society, but instead aimed to create devices and techniques that might render the fluctuations of the market actionable, so as to reduce their negative effects. Indeed, this was the very point of the “modern” approach to the business cycle. By admitting that the cyclical recurrence of crises was normal, economists such as W.C. Mitchell also sought to alleviate, “palliate”, and diminish their intensity and impact on the welfare and cohesiveness of the community. This was a marked departure from Marxist attempts to rectify the cycle by direct state planning of the economy, thus eliminating capitalist competition. In the United States, in particular, business cycle theories sought to make economic fluctuations visible to business actors so that they might avoid over-speculation and investment in projects that would not ultimately provide returns. As the economist T.N. Carver argued, the periodicity of depressions could “only be removed by such a complete knowledge and understanding of the situation as would enable the business world to foresee the tendencies and take measures to overcome them” (Carver 1903: 499). Price indices, business barometers, and time-series measurements all constituted a new domain of visibility of the economy, where the subjective experiences of unemployment and “hard times” could be objectified by statistical devices intended to show business actors where the economy was moving (Morgan 1990, 2001, 2003; Klein 2001).

The composition of economic life as an intelligible field (Rose 1999: 33), through which certain statistical inscription devices (Latour 1986) sought to order the business calculations of market actors, was a key preoccupation, but it was always directed towards the problem of economic fluctuations and their social consequences. Statistical time-series that attempted to visualize economic fluctuations are consistent with the predominant biopolitics theorized by Foucault (2008), that is, that business cycles posed a danger to the welfare, health, and moral standards of the population and therefore invited special modes of regulation. As Timothy Mitchell (2006) has theorized, the early twentieth century saw a shift in the mode of governmentality, away from a focus on the life of the population and towards the optimization of the economy. Yet, if an analysis of early business cycle theory is indicative, this shift had not yet occurred by the 1920s, as business cycle theory was beginning to solidify its hold over the American economic imagination, and where the contradictions between the life of the population, on the one hand, and private ownership and control of the means of production, on the other, were most clearly visible. Mitchell is surely right to point out that the economy, and not the population, is now the predominant mode of governmentality, perhaps globally, but certainly in Western Europe and North America. However, action on the economy was initially intended as a way to reduce social tensions and address social problems so as to limit claims against private economic calculations. These latter, without being restrained by state intervention, could, it was hoped, nonetheless be optimized and controlled in the interests of society.

 
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