In the nineteenth century, thelaissez-faireapproach became encom-
passing. Starting as an argument against the excessive interventions of
the mercantilist state, it developed into a full-fledged vision of society,
favorable to a free labor market, to a monetary system governed by
the gold standard, and to free trade.^55 The promotion of a market
for labor proved particularly critical because it concerned the very
organization of society. Jean-Baptiste Say in France and David
Ricardo in the United Kingdom advocated the “fair and free compe-
tition of the market” for labor, so that wages could rise and fall with
demand and supply. If demand proved insufficient and wages fell
below subsistence levels, some of the poor would “perish,” but the
labor supply would then decline and, as a consequence, wages would
rise again. It is certainly “a great unhappiness to be poor,” observed
Say, “but it is an even greater unhappiness to be surrounded by people
as poor as oneself.”^56 In this perspective, it was in the interest of the
poor to let the rich progress, since only the rich could employ them.
In 1834, the parliament of the United Kingdom adopted the Poor
Law Amendment Act, which abolished previous forms of relief for the
poor and left them with a choice between market wages and forced
labor in workhouses. In 1844, the Bank Charter Act granted the Bank
of England the exclusive power to issue banknotes and demanded that
new banknotes be backed by gold, a measure that introduced an
automatic, market-like mechanism for monetary regulation. In 1846,
the Corn Laws were repealed, signaling the victory of free trade over
protectionist arguments.^57 “By the middle of the nineteenth century,”
notes Eric Hobsbawm, “government policy in Britain came as near
laissez-faireas has ever been practicable in a modern state.”^58 Else-
where in Europe, transformations were less radical but they proceeded
along similar lines.
On the left, of course, industrial capitalism,laissez-faire, and the
“invariable laws of nature” were not perceived as positively. Over a
century, wages and working-class living standards would rise with
(^55) Karl Polanyi,The Great Transformation: The Political and Economic Origins
56 of Our Time, Boston, Beacon Press, 1944, pp. 135–36.
Jean-Baptiste Say,Cours complet d’e ́conomie politique(1828–29), quoted in
Michel Beaud,A History of Capitalism 1500–1980, New York, Monthly
57 Review Press, 1983, p. 78.
Polanyi,The Great Transformation, p. 138.
(^58) Hobsbawm,Industry and Empire, p. 233.
The rise of the modern state system (1776–1945) 97