Goats, Dogs and Market Fundamentalism: An Introduction to Ann Pettifor

Dr Ann Pettifor is a director of PRIME Economics and a leading figure in the Jubilee 2000 debt campaign. She will be speaking to Christians on the Left at Wednesday's Tawney Dialogue on 'Business in Brexit Britain'. Below is a piece from her introducing the history of classical economics and her views on deregulated finance.

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by Ann Pettifor

Back in the 1770s a story circulated about two families of “beasts” – goats and dogs – placed on a remote Pacific atoll, Juan Ferdinand island, by Spanish and English sailors. In a natural condition of scarcity, the goats and dogs fought viciously over food, but ultimately learned to live in harmony – without political interference – or so we are led to believe. The author of an influential dissertation on the Poor Laws used this experience as an incentive for the alleviation of poverty.  Hunger he argued,

“will tame the fiercest animals, it will teach decency and civility, obedience and subjection, to the most brutish, the most obstinate, the most perverse." 

In this tale, and in the political economy that emerged from it, lay the origins of a theory that underpins classical and neoliberal political economy to this very day. Namely that without government interference, self-regulating markets in money, trade and labour may become vicious and unsettled, but can ultimately be expected to reach a state of equilibrium. The author of the pamphlet was one Rev. Joseph Townsend and the 1786 publication was his Dissertation on the Poor Laws. Despite its relative obscurity, the Dissertation’s contribution to political economy represented a decisive episode in the history of economics, as Philipp H. Lepenies explained in a 2014 paper.

Townsend made the “scientific” case that hunger, or scarcity, represented a ‘natural law’ that governed human appetites and markets for food:

“There is an appetite, which is and should be urgent, but which, if left to operate without restraint, would multiply the human species before provision could be made for their support. Some check, some balance is therefore absolutely needful, and hunger is the proper balance; hunger, not as directly felt, or feared by the individual for himself, but as foreseen and feared for his immediate offspring. Were it not for this the equilibrium would not be preserved so near as it is at present in the world, between the numbers of people and the quantity of food.”

In other words, it was not men, but the natural fear of hunger that governed markets for scarce food. Polanyi noted that:

“Hobbes had argued the need for a despot because men were like beasts; Townsend

 insisted they were actually beasts and that, precisely for that reason, only a minimum of government was required.”

Lepenies believes that Malthus plagiarised Townsend in his famous Essay on the Principle of Population – which is “similar” to Townsend’s Dissertation,

“not only in their argument, ideas and structure but in their use of the device of scientific abstraction and generalisation. It is therefore not Malthus alone who should be revered as the father of modern economic logic and market fundamentalism but also Townsend.”

Townsend was also a close friend of Jeremy Bentham who quoted at length the example of goats and dogs in his Pauper Systems Compared of 1797 (Quinn, 2001).

For Townsend, society, as fundamentally biological, was best left as a self-regulating system that when untouched by political intervention, will tend toward equilibrium and order. His crude and brutish conception of self-regulating markets – previously understood as embedded in regulated social and political institutions – was to inform much of classical and neoclassical economics, and has persisted to this day in market fundamentalism.

More recently Townsend’s theory was extended from labour and trade markets and applied to markets in money – with devastating economic and political consequences. It was the application of this flawed theory to the monetary system that led, I will argue, to recurring and catastrophic financial market failures, and ultimately to the election of President Donald Trump.

Ann contributed to our 2017 Tawney Dialogue in April. She will participate in our programme of events at the Labour Party Conference later this year.

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