Tuesday, October 27, 2009

moral economy of competition

See here for an interesting paper by Jason Opal on the moral economy in New England immediately after the Revolution.

I've always been intrigued by the moral economy model as it is applied to New England economic history. The model addresses the economic nature of the society that spans the time of the Puritans' settlement of Massachusetts in 1629 up until the first few decades after the Revolution. It has been the one constant theme of interest of mine since I read E.P. Thompson's classic paper "Time, Work-Discipline and Industrial Capitalism" in my Intro to Economic History class my first semester of grad school. A moral economy is an economic system wherein production and distribution are regulated by the community; work, wages, and prices are also socially regulated; and finally, production is generally for self-sufficiency and not for profit. It can be contrasted with capitalism or a market economy which is governed by individualist market forces of self-interest guided by competitive markets towards the accumulation of capital/profits. In this system, free markets "regulate" work, wages, prices, production and distribution.

I like the moral economy model for a number of reasons. First, it's a heterodox view of economic history because neoclassical economic historians and conservative historians of this period like to argue that since the first settlements, colonists have been inherently profit-driven and capitalist. Second, it's an evolutionary view of history (as opposed to determinist) that gives theoretical weight to the possibility that a variety of economic systems may have coexisted in the colonial era/Early Republic. Finally, I think that even today you can find examples of these "moral economies", or at the very least, traits of them.

Many people have worked on how one would construct a theoretical model of a moral economy. Much of this work has come from Marxist historians, and more recently from the "New Left" historians who emerged in the 1960s and 70s, each group has set out to show either theoretically or historically how features of the moral economy model can, or have, expressed themselves. For example, Michael Merril shows how farmers in colonial Massachusetts used money in a very different way from how we use it today: cash never really exchanged hands (it was generally only used as a store of account) and was seen on the same level as food or other goods which could be bartered. Sean Wilentz and others have shown how workers in the Early Republic reacted against the changing labor laws and the rise of capitalism in urban areas by pushing for their traditional workplace institutions.

And in the new economic history, historians such as Winifred Rothenberg have set out to demonstrate empirically the rise of the market economy. It began, according to her work, in the late 18th century. She is able to argue this by showing how prices for agricultural goods converged over the period 1750-1850, suggesting the presence of market forces conforming to the standard model of microeconomics (which most of us here are familiar with: rational, self-interested economic agents competing in free markets). Another example is Gordon Wood, who argues that what makes America exceptional is the value we placed on economic autonomy gained through hard work, and this led naturally to a unique brand of democratic capitalist institutions in the Early Republic.

The central tension in these two literatures is this: Rothenberg's evidence of an integrated market economy beginning in the early 1800s is strong and it conforms to other historical studies of this period. Few would doubt that this market economy existed -- and was, therefore, guided by profit motives which leads to capitalism. On the other hand, the evidence also confirms the existence of moral economies during this period. How can we reconcile these views?

A lazy way is to say that both systems existed simultaneously. Indeed, this is probably true: in the Early Republic there were most likely pockets of moral economies existing around networks of market economies. But this leaves important questions unanswered: how did some societies evolve from one system to the other? How did some societies resist/accept the intrusion of market forces from the outside?

A more interesting way of reconciling these views is to take the route Jason Opal embarks on in the paper I linked to above: what precisely were the motivations behind the development of the market economy? Were they really, as Rothenberg and others assert, defined by market forces of self-interest and competition? Or alternatively, was there still an essentially communal element to economic development, where wealth-producing "capitalist" enterprises were undertaken by and for the good of the community?

Opal identifies a historical example of this alternative view which reconciles the moral and market economists by saying that the market economy in this case was a result not of market economy forces but of moral economy forces of the public good and public regulation. The example he uses is of turnpikes in a Massachusetts town in the Early Republic. Turnpike projects were developed by towns in order to facilitate the transport of goods to and from markets, in other words, promoting the development of the market economy. When outside competition threatened to build roads that were uncomfortably close to the town's own roads, the autonomy of the community to use the roads without being economically bound to these new turnpike developers (in the form of tolls, etc.) was compromised, and thus these projects were resisted by the town.

Of course these groups, when they expressed opposition to the new turnpikes in the 1790s and the first decade of the 19th century, were against both dominant political parties of the era and indeed against the whole transformation in the legal conception of property in this period (see Horwitz on this) when public works projects were consistently given protection by the law against people suing over damage to their property. Opal states that during this period "[c]orporations became, not public entities funded by private means, but fictive individuals who used tax money to build bridges, canals, and then railroads" (16). Here is a good quote from the paper exemplifying the general situation:

"In this way, turnpike opponents echoed common law restrictions on competition as a public nuisance and an invasion of property rights, yet the dominant tenor of the anti-turnpike 'rage' was not a defense of older, static view [sic] of property or harmony but a vivid sense of local autonomy" (12).

Thus, in a way Opal blends the market economy and moral economy stories. In the end, Horwitz' narrative takes over to explain the burst in public works projects and their protection by law in theearly 19th century. But here we see precisely where this spirit of compromised property rights in the name of economic development came from: bourgeois attitudes that were not shared by the population at large -- that is, decidedly undemocratic.

More work needs to be done in this model. For example, Tomlins has done work on the changing conception of police in legal history in the U.S. Essentially, the difference is on the one hand between an older conception of the police as regulating the public good, public happiness and on the other hand the beginning of the centralization of the law partly as a product of the constitution and legal battles which ensued thereafter. The professionalization of law enforcement is a central part of 19th century legal and social history. How did communities deal with this development in the law? How and why did things eventually change? Can we find hybrid models of law enforcement/traditional understandings of police in this period?

These are all very important questions which chip away at the entire institutional edifice upon which early American development is based. What were the moral, economic, political mechanisms driving growth? How was the market policed/regulated to maximize growth?

We are getting there, slowly but surely...

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