In February, 1917, thousands of women stormed the streets in the poorer parts of Brooklyn, New York, overturning pushcarts and setting them on fire. It took police hours to restore order. The women were protesting rapid increases in the prices of food staples and decried the injustice of hungry children.
Congress was soon in debate. One senator warned that the disorders showed that “the country is dividing into two great classes – the very poor and the very rich.” In fact, the U.S. had had many earlier commodity riots, going back to the founding of the nation; it was a frequent response to market pressures.
In 1779, Philadelphia artisans mobilized to demand that merchants’ prices on “necessaries” be restrained. A free market was dividing the city into rich and poor, they charged, and they wanted “a just and regulated price.”
The merchants association replied that “the limitations of prices is … unjust … by compelling a person to accept less in exchange for his goods than he could otherwise obtain, and therefore acts as a tax upon one part of the community only.” Moreover, they argued, allowing the market to dictate prices meant less hoarding and more efficient distribution of necessities.
The debate over price justice continued in Philadelphia that year (more below), but it largely ended in America over a century ago – the housewives’ riot of 1917 notwithstanding. The merchants won.
What Is Unjust
To the Philadelphia merchants’ reply in 1779 that price limitation was unjust, the artisans answered, “claiming a right to an unlimited extortion, … because the … necessaries of life are in the hands of a few … is a principle far more unjust ….” They furthermore rejected the idea that “the limitation of prices is in the principle unjust” (emphasis in original), pointing out all sorts of price controls that had been common in colonial America – for example, limiting fees of certain occupations, such as ferrymen, “who would take an unjust advantage of the immediate necessity of others.” The principle, they claimed, should be that “every right or power claimed or exercised by any … set of men should be in subordination to the common good.” While we all support the principle of free trade, they went on, the merchants’ “idea of a free trade is, for every man to do what he pleases; a right … repugnant to the very principles on which society and civil governments are founded.”
Early American towns often set price and, for that matter, wage controls. Even the Continental Congress declared in 1774 that “all manufactures of this country be sold at reasonable prices” and that if shortages arose, merchants had to keep prices at levels that “we have been respectively accustomed to do, for twelve months last past.” If courts would or could not enforce low prices, protests and public shaming sometimes did. And sometimes vigilantes did. For example, in 1779, “a mob of 100 women raided the [Boston] store of Thomas Boylston and marched away with coffee he refused to sell for less than 6 shillings a pound.”
To be sure, price controls typically failed miserably, were subject to political manipulation, and were quickly dropped by the authorities. Price controls generally create great distortions. The issue I address here is not the utility of price controls, but how the moral debate changed in America after these years of debating justice in the market.
The laissez-faire ideology of the free market spread rapidly in the commercially booming America during the early nineteenth century. In part, changes in ideas followed changes in transportation. Controlling prices and wages, whether to keep them down or to keep them up, became more difficult when buyers and sellers outside the community were now so easily and cheaply reached. Legal changes also spurred Adam Smithian views.
Across a range of fronts, politicians and courts increasingly supported the right of free enterprise over other sorts of rights, one kind of justice over another. For example, farmers’ rights to the streams flowing through their lands and the fish in those streams succumbed to mill- and factory-owners’ right to dam up those streams for power. Communities holding out for market controls, like the Moravian town of Salem, NC, gave up by mid-century. By the end of the nineteenth-century, courts were ruling that any kind of public interference in the market – say, a minimum wage or a law barring child labor – was an injustice.
Today, Americans are the least likely, among the citizens of affluent nations, to support price controls or generally any interference in the market. We and our laws seem to be bothered more by limitations on property-owners’ use of their property or business owners’ decisions than by the “externalities” of those uses and decisions — over, say, how industrial discharges affect drinking water or how the sudden shutdown of a plant can devastate a community.
Of course, we have in fact interfered with the market in many ways. Environmental rules, for example, impinge on business decisions. And we have even controlled prices: rationing during wars, government purchasing of agricultural surpluses to keep up crop and dairy prices, laws limiting “cut-throat” pricing, stipulating what Medicare will pay hospitals, and so on.
Each of these steps, however, seemed a practical compromise, a necessary evil, to handle a particular circumstance. Each was just an exception carved out of a “free market” system. What Americans have not done in many generations is widely debate the principle of whether markets in general ought to be controlled, whether there ought to be, say, a price ceiling on food and other staples. The discussion over what was the greater injustice largely ended in the nineteenth century.
The Berkeley Blog
Thursday, 18 April 2013