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Our search takes us back to the seventeenth century, for in its course, and in the early years of the eighteenth, the foundation of modern economics was laid.

We have compared Great Britain with itself at various points of time, and witnessed the great enrichment of job options open to its inhabitants. The descendants of the agricultural labourers, mill workers and domestic servants of the last century have advanced and diversified into jobs that spare the muscles and exercise the mind. Of course, as I write, over three million would-be workers have no jobs at all, and are condemned to a life of boredom and frustration, while a majority of the rest still have jobs that use little of their intellectual potential. None the less, generation by generation advances have been and are being made, with sons and daughters entering fields beyond the reach of their parents. To conclude our investigation we should examine data from some other countries against which Britain’s achievements may be assessed. I refer to ‘partners and competitors’, for the world is today much more of an economic entity than in earlier times. The establishments of the multinationals support one another across national boundaries, while their subsidiaries abroad may compete with their rivals at home. Scientists, technicians and managers move to and fro about the world to extend their training. Ideas and techniques cross and re-cross national frontiers.

One of the distinguishing features of capitalism, as we have just noted: is its instability. Another is the paradox of deprived people co-existing with unsaleable goods. A third is its cumulative concentration of productive power in giant corporations. This is not a new phenomenon — the Anti-Trust Act was passed in the United States in 1890, promoted by John Sherman, a Republican senator.

Firms, with their workers, their organisation and command of material resources, create the goods with which the shops are filled, and disseminate the purchasing power by which those goods may be bought. So now we see the worker, with his or her household, turned consumer, confronted by the shopkeeper who constitutes the frontline of the productive process.

Seen from a safe distance, over a gap of forty or fifty years, the world of the thirties has a certain fascination. Aspects of its atmosphere have been captured in films — The Sting, Paper Moon, Cabaret. A time of dissolution, destruction, despair, but, as well, of moral issues so plain that the agonies of indecision and alienation that afflict our modern youth were unknown. If you were unemployed, the issue was survival; if you had property, to defend it; if you had heart, to transform the world. In Germany, Communists, Social Democrats and National Socialists fought in the streets; in the United States, Huey Long, Father Coughlin and the German-American Bund were offering their brand of salvation while radical movements flourished; in France, Spain and Britain, the forces of reaction, reform and revolution were in confrontation.

The World Bank, in its annual development reports, divides the world into five: Percentage of world Population Area Low-income countries 30.5 20.1 Middle-income countries 20.6 25.3 Industrialised countries 15.7 23.3 Centrally planned economies 1.4 4.6 Capital-surplus oil exporters 31.8 26.7 All 100 100 The World Bank’s projections postulate some fall in the rates of population increase for China and India, but all the same by the year 2000 they would between them account for 37 per cent of world population. The Indian Government continues to make strenuous efforts to reduce the birth-rate, though they have retreated somewhat from their more drastic policies, but indications are that the Chinese will succeed in reducing theirs. Their present policy of only one child per married couple that will take them below zero-population-growth (ZPG) would be ineffective in any other country, but might succeed in China. The precept is reinforced by financial sanctions: withdrawal of free education and family allowances from couples with more than one child.

In the thirteen years since this book was first published, orthodox economics has continued unperturbed along its accustomed way. If anything, it has become even more obscure and irrelevant so that we might validly echo Sismondi’s regret of 170 years ago, to see political economy ‘every day adopting a more sententious language, enveloped in calculations increasingly difficult to follow, losing itself in abstractions and becoming, in every way, an occult science’.1

The theories we have examined have been at best over-simplifications, at worst products of ‘bad conscience and the evil intent of apologetic’. They were conceived in isolation from the world, developed in vacuo and, when applied by governments, had effects disconcertingly different from those anticipated.

The absolute monarchs put down the feudal barons, unified countries through war and marriage, and created a civil service through which the unified countries could be governed. They also disposed of the parliaments that had given some protection to the individual citizens, and had first been instituted as an aid to taxation and to give the king some measure of popular support. For several centuries Europe was dominated by despots who ran countries, through cumbrous bureaucracies and armies, as if they were their personal property.

We have now reconstructed the national pay and occupational structure for various years between 1906 and 1978, but this tells us nothing of the functional relation between changes in numbers and changes in pay. A rise or fall in the numbers in any occupation may go along with a rise or fall in its relative pay, perhaps because their causal factors are not connected or, in traditional economic terms, because both the demand and supply schedules may have changed, thus changing the shape or position of the curves that depict them. We have a series of snapshots for each class and its principal occupations showing pay and employment in various years; but to interpret the changes (or failures to change) we need a moving picture of the years between in which we can glimpse in action the forces whose conflicts have determined the course of events.

If at the end of Chapter 3 the theories seemed confused, at the end of Chapter 4 the confusion was surely worse confounded, the contrast of views even more bewildering. At the end of 1984, the economies of OECD countries continued to falter, with only the United States and Sweden showing clear signs of improvement. On the records of past trade cycles, improvement is long overdue. This may not be the fault of the economists, for much of their advice is ignored. But the varieties of advice tendered enable governments, as Lord Bauer observed, to select as advisers those economists that they know will advise them to do what they intend to do anyway (Bauer, 1984, p. 153).

Although it was not until 1831 that any detailed return of the occupations of the people was attempted, there had been in the earliest censuses a rough and ready method adopted of dividing the population into three or four large groups, with a view of distinguishing those who obtained their support directly from the land from those engaged in manufacture, trade or the learned professions. Thus in 1801 we find returns under three headings: (1) persons chiefly employed in agriculture; (2) persons chiefly employed in trade, manufacture, or handicraft; and (3) all other persons not employed in the two preceding classes. This return, it will be noted, is of individuals, but in 1811 and 1821 the number of families is substituted for individuals. The occupations are given in the same form, but it is the number of families chiefly employed in agriculture, or otherwise, that are stated. The principle on which the returns are based is, however, the same, and it is one on which I should wish to lay stress, viz., to ascertain the total number supported by each of the great branches of industry.

This is an appropriate point to examine the ideas of Karl Marx (1818–83) and Friedrich Engels (1820–95).1 By the time they began publishing, the soporific doctrines of the popularisers had reached their zenith, while those of the marginalists had not yet begun. Marx and Engels were fond of polarities and contradictions, and this led them to turn other people’s theories upside down. It is a cautionary discovery that many theories are improved by this treatment.

We have retraced the steps of homo sapiens over a couple of million years: hunter-gatherers, herdsmen and cultivators, citizens, soldiers and slaves; lords, churchmen and serfs; conquerors and vassals, absolute monarchs, landlords, farmers and bourgeoisie; through the age of imperialism down to the present day.

Occupation is what a worker does; industry is defined by the final product. The occupations of fitter, clerk, typographer and packer, for example, are followed in a multitude of different industries. The two main agencies for the compilation of manpower data are the Department of Employment and the Office of Population Censuses and Surveys (in conjunction with the General Register Office, Edinburgh). The Department of Employment collects data from employers, on a monthly or annual basis, the Census Office from heads of households in the decennial census of population.

There was a time, not so long ago, when it was thought that all that was needed was the removal of the imperial yoke, and then all good things would follow. This was a plausible view, for Hobson and, following him, Lenin, had taught us that the imperial powers were drawing great wealth from their colonial empires.2 Once this process were ended, this wealth would surely be freed for the betterment of those from whose land and labour it was drawn?

By the end of the eighteenth century, laissez-faire had triumphed in Western Europe and the United States of America. Capitalists now had political power with which to defend and promote their wealth. It is true that the break with feudalism and monarchy had not been a clean one and that, in varying degrees, kings and landlords still had the power to impede and irritate those bent on the accumulation of fortunes from industry and trade. But before the kings and lords had laid down their arms and joined their victors, a new threat had arisen. Capitalism, it appeared, was not welcomed with universal delight despite the blessings the economists predicted it would bring, and there were those who regarded it as so little of a blessing as to want to get rid of it and replace it by some or other system based on equality and the brotherhood of man. Economics was now consolidated into a set of dogmas which, in Pigou’s words, ‘furnished forth for the ungodly blunt instruments with which to bludgeon at birth useful projects of social betterment.’1

Why study theories of unemployment, you may ask, when none of them has produced a formula to end it? Or, if it has, it is a cure unacceptable to governments and electorates, or perhaps neutralised by counter-cures propounded by other theorists. But despite the fact that there is none that we can point to and say, ‘This is demonstrably true’, the theories must still be studied. From them we derive the vocabulary and systems of classification that are necessary preliminaries to thinking about the subject. To a critical mind they offer warnings, too, of the fallibility of the human mind and its susceptibility to theoretic blight (Walker, 1943) in its enthusiasm to escape, as Adam Smith put it, the jarring and discordant appearances of unexplained phenomena. Since the theories conflict, they challenge our critical faculties to distinguish between truth and error, and so construct a higher synthesis. I devote this chapter to propounding the basic theories, the next to presenting their modern counterparts, and Chapter 5 to bringing them to judgment.

The time has come to say farewell to the labour theory of value. It is about to be cast out and will soon become an object of derision, its acceptance a mark of perversity or subversion. By one of those curious coincidences in the development of ideas, Marx was engaged in installing it as the centre-piece of his economic doctrine while Jevons, Menger and Walras were exorcising it in favour of something that would be as unlike Marx’s doctrine as unlike could be.1 While Marx taught the inevitability of revolution and called in a voice of thunder for the expropriation of the expropriators, Jevons, Menger and Walras laid bare the mechanism by which economic molecules placidly pursued their maximising course through tiny increments of economic change.

The question, ‘What is work?’ may seem too obvious to merit consideration. There must be very few people who have never done any. But, because it is at the very foundation of economic systems, one of the main (if not the sole) determinant of exchange value, it is worth spending a little time to get it into focus. And, as Yves Simon wrote, ‘The daily life of man is composed of things whose meaning is hidden in the mystery of familiarity. Work is one of these.’ (Work, Society, and Culture, ed. Vukan Kuic, New York: Fordham University Press, 1971, p. 1.)