Cooking the Books: The ‘Engels pause’

‘Engels pause’ is the name given by an economic historian, Robert C. Allen, to the period in Britain when Engels wrote his Condition of the Working Class in England in 1844. It was brought up by David Smith, the Economics Editor of the Sunday Times, in an article in the Times (4 October) discussing the flurry of defences of private enterprise capitalism provoked by Corbyn’s speech at the Labour Party Conference.

Corbyn was reported as saying that capitalism was in crisis. Actually what he said – and he was just quoting the Financial Times – was that capitalism was facing a ‘crisis of legitimacy’ (which it is, and a good thing too). He wasn’t opposing capitalism, only the so-called ‘neo-liberal’ policies pursued by governments over the past decades, and was merely calling for more state intervention to stimulate private capitalist investment. Even the Times (28 September) recognised that he couldn’t be opposing capitalism, not even private enterprise capitalism:

‘Labour aides could not say whether Mr Corbyn’s new economic model would be capitalist, hinting only that a majority of assets would be privately owned. ‘

Smith’s argument was that capitalism was currently in the same sort of situation of rising profits and stagnating wages that it had been when Engels wrote:

‘Engels bemoaned the plight of the “propertyless millions who own nothing and consume today what they earned yesterday”. Industrialists, he said, were growing rich on the “misery of the mass of wage earners”.’Economic historians, Smith went on, have confirmed that in the first half of the 19th century ‘real wages stagnated’ and ‘profits rose strongly and the profit share of GDP increased’, but

‘Capitalism adjusted, almost as soon as Marx and Engels published the Communist Manifesto in 1848, and well before Marx’s Capital two decades later. In the second half of the 19th century, rising real wages and rising productivity went hand-in-hand. The Marxist diagnosis of permanently downtrodden workers was replaced by one of rising living standards.’

Did Engels argue that the conditions he described in Manchester in 1844 – people living in hovels sometimes alongside pigs, no sewage system, rampant adulteration, no limitations on the hours of work, employers swindling workers by obliging them to buy from the company store – were the permanent lot of the working class under capitalism? Was this really the ‘Marxist diagnosis’?

In a word, no. Engels lived to see what happened in the second half of the 19th century (he died in 1895) and described what and why in the Preface he wrote to the 1892 publication of the English translation of his book:

‘The state of things described in this book belongs today, in many respects, to the past, as far as England is concerned.(….) The revival of trade, after the crisis of 1847, was the dawn of a new industrial epoch. (…) …England has thus outgrown the juvenile state of capitalist exploitation described by me …’

In other words, Engels recognised that the conditions he had described in 1844 were those of an early stage of capitalism. He listed the changes as the introduction of Factory Acts (which improved conditions for factory workers), the acceptance of trade unions (which pushed up the wages of skilled, engineering and building workers), and sanitation improvements (to prevent the spread of cholera, etc).

Marx’s Capital, published in 1867, takes into account these changes. By then the bigger capitalists had come realise how short-sighted and counter-productive it was to underfeed and overwork the geese that laid the golden eggs. The workers were still exploited – in fact they produced more surplus value than before – even though they were not as ‘downtrodden’ as in the 1840s. They still are. There has been no pause in that.

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