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Poverty in Britain: From feudalism to neoliberal capitalism

A review of Jim Silver’s new book examining the relationship between capitalism and poverty in England since the 12th century

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“The Payment of the Tithes (The tax-collector),” by Pieter Breughel the Younger, between 1617 and 1622. Image courtesy Bonhams/Wikimedia Commons.

For a response to this article, see “Can social democracy solve poverty?” by Jim Silver, published in Canadian Dimension on August 3, 2023.


The sixteenth century saw the beginnings of capitalism in England. The capitalist relation—employers buying labour and workers selling their labour power in exchange for wages—more and more became the norm looked upon by the upper classes as, among other things, the solution to the growing problem of poverty and vagabondage.

Certainly charity was offered to the poor. But the poverty of the destitute was held to be their own fault. Therefore, accompanying such charity, a series of Tudor parliamentary statutes including the comprehensive Statute of Apprentices of 1563 forced those without property to find work rather than to remain idle. They were forced to enter labour contracts which lasted for at least a year. Backing up these statutes was a system of punishment and workhouses forcing the so-called idle poor to become wage workers.

Moving the clock forward to the UK Labour Party government of Tony Blair (1997-2007) we note that the policy toward the poor reflected in its first budget was to put an end to dependency, or in other words to move from welfare to work. Under Blair, Britain became a leading workfare state forcing those on welfare to accept low-wage and dead-end jobs in response to the needs of the capitalist labour market.

After more than 400 years it seemed that little had changed in government policy and in the attitude of respectable public opinion towards the poor. Most informed observers would not have predicted this outcome. Rather, given the struggle of the poor and working class over centuries and the creation of the welfare state in 1945, it was a reasonable expectation that at the beginning of the new millennium poverty in Britain would have become a distant memory and the working class as a whole would enjoy the benefits of a comprehensive system of social security. That this did not happen was the result of the failure of the Labour Party to transform its mandate of 1945 from a reform of capitalism into a real transition to socialism based on a planned economy.

This is the story that Jim Silver tells us in Scoundrels and Shirkers, his new history of capitalism and poverty. His account begins with the gradual emergence of capitalism out of the bowels of feudalism from the 12th century onwards. The dominant attitude under feudalism at a time when the medieval church was in the ascendant was that the poor deserved to be supported out of the surpluses of society provided they respected those who ruled over them. Poverty was regarded as part of the natural order of things and charity was an opportunity for those with wealth to do good works. The collapse of feudal relations and the development of capitalism in the 16th century dispossessed many of the poor rural producers and multiplied the number of poor and vagabond. They were now seen as a threat to the social order who had to be pushed onto the labour market. The labour market was itself a system of permanent insecurity for workers and has remained a permanent feature of the capitalist system ever since. The Poor Relief Act of 1601, popularly known as the Old Poor Law, codified the ramshackle Tudor system of relief and workhouses into a national system of parish relief which supplied the labour needs of an expanding agrarian capitalism.

Based on the latest scholarship in the field Silver tells the story of early modern poverty with due attention to questions of child poverty, the condition of women, slavery and colonialism with illuminating examples of upper-class cruelty visited on those without means who were considered responsible for their own fate.

Which raises the question of why a Canadian professor of political science would be interested in the history of English poverty. The answer is that Silver has spent decades fighting poverty in the inner city of Winnipeg. He helped transform a rundown inner city housing project into a model community and neighbourhood community centre. He was instrumental in creating a learning centre and student residence out of derelict hotel and vacant lots in one of Winnipeg’s most down-trodden neighbourhoods. And he has been instrumental in establishing an independent left-orientated research centre: the Canadian Centre for Policy Alternatives-Manitoba. But however successful these local initiatives have been he has concluded that resolving the question of poverty requires addressing it at a national level. He thus embarked on writing a history of poverty in the United Kingdom, the place where capitalism originated and where he finds that poverty developed as an intrinsic feature of the profit system. What made such a history more intriguing is that it was in England that after centuries of struggle a welfare state was created by the social democratic Labour Party which for all intents put an end to poverty. But in an ironic and surprising twist, rather than flourishing, this welfare state withered on the vine. For Silver, explaining this failure becomes a key to understanding the global crisis of social democratic reform in the 21st century.

Having dealt with poverty during the early modern period Silver turns to the industrial revolution which saw capitalism revolutionize the means of production through machine driven factory production. The more intense disciplining of the poor and the creation of an enormous industrial working class were necessary features of this higher order system of production. Alongside electoral reform and free trade, the Poor Law Amendment Act, known widely as the New Poor Law, was enacted in 1834. The old locally administered was swept aside and a new national bureaucratic system took its place. Yet, as before, the poverty of the destitute was held to be their own fault. By the early 20th century the eugenics movement, spurred by Social Darwinism, even came to the conclusion that those at the bottom of society were there because of feeble-mindedness or another inherent deficiency and should be prevented from reproducing.

By then, too, the Fabian Society, led by Beatrice and Sidney Webb, began to assert that the poor were not poor as a result of some hereditary taint but because of poor housing, insufficient wages and precarious working conditions. The appearance of more progressive views on the causes of poverty were but part of an increasing public interest in socialist thought, a growing and militant trade union movement, the establishment of universal male suffrage and the rise of the Labour Party which stirred a movement toward an interventionist state. The abandonment of laissez-faire was accelerated by growing unemployment and the outbreak of riots, strikes and hunger marches, and then an ongoing series of labour protests that lasted until the outbreak of the First World War. In response the Liberal Party introduced free school meals, established old age pensions and unemployment and health insurance. Yet nothing was done for those at the very bottom of society and poverty levels remained persistently high as the British economy fell into the doldrums in the 1920s and 1930s.

From the point of view of the working class and the poor those were wasted years. But they were also years in which popular protest, Labour Party organizing and the work of many progressive intellectuals laid the foundation for the post-war welfare state. Particularly important was the thinking of economist John Maynard Keynes who developed the idea of a new capitalism based on the interventionist welfare state. Just as important or even more important was the mobilization of the working class during the Second World War which created an irresistible movement towards fundamental change.

The culmination of Silver’s story is then reached with the election of a Labour government in 1945 which in the next six years comprehensively attacked poverty and unemployment with the creation of the National Health Service, massive amounts of public housing and the National Insurance Act and National Assistance Act, which put a floor under the lives of the poor and working class. The nationalization of the key sectors of the economy and the expansion of government services led to a dramatic decline of poverty and unemployment. Silver applauds the determination of this Labour government in pressing ahead with these measures in the face of fearsome opposition from right-wing politicians, intellectuals and businessmen. For Silver this episode is crucial for he argues that these changes laid the foundation for what could have been a lasting end to poverty. Yet he admits that exactly the reverse took place as step-by-step Conservative, and more significantly Labour governments, dismantled the welfare state in the decades that followed.

Tony Blair and Gordon Brown at New Labour’s party conference in 1996. Photo by David Rose.

Silver claims that there was nothing ineluctable about this demolition of the welfare state. Rather it was fundamentally a problem of a lack of ideas, politics and will on the part of the leaders of the Labour Party and a failure to organize from below which accounts for the destruction of the project of constructing a society based on collectivism, redistribution and equality. Yet his own account of the rise of Thatcherism and of the so-called New Labour of Tony Blair which followed demonstrates that the leadership of the Labour Party and social democratic parties in general were not fundamentally interested in ending capitalism. Rather their interest was in taming capitalism, hoping to use its profits to the benefit of workers and the underprivileged.

The last 100 pages of the book describes this process of retrenchment, pointing out the importance of the decline of the traditional industrial working class and the rise of individualism and consumerism as a background to what ensued. Post-1951 Labour moderated its policies in the face of these trends, bidding for middle class votes and pursuing piecemeal social reform within the framework of capitalism. Better paid workers themselves argued for spending less on social services in favour of higher wages, as most of the funds allocated for redistribution to the less-better-off came not from the middle class but from the more affluent workers. Welfare costs multiplied in the face of Britain’s industrial and commercial decline during the 1960s and 1970s, which neither Labour or the Conservatives addressed. Indeed, the attack on the welfare state began in the late-1970s under a Labour Government. In the parliamentary election of May 1979, Margaret Thatcher led the Conservative Party to a thumping majority. Over the next 11 years of her mandate she carried out an intellectual and ideological revolution which enabled her to largely dismantle the welfare state and indeed destroy the social democratic consensus which never was restored. The goal of Thatcherism was to restructure the social and political apparatus of society to restore the conditions for capitalist accumulation. But it largely failed to restore the health of British capitalism and led to an explosion of poverty and inequality. Yet it must be counted a huge success because the Blair Labour regime which ultimately took power pursued more or less the same policies calling itself the “Third Way.”

This is the story that Silver outlines and analyzes in the sobering concluding chapters of his history. As he shows, Britain has retreated into a not-so-splendid isolation and an impoverishment which recalls the morbid days of 19th century capitalism. And yet Silver concludes that this situation is reversible and that social democracy could regain its confidence and repeat Labour’s post-war successes. It is noteworthy that Silver fails to recall the experience of Jeremy Corbyn who as leader of the Labour Party from 2015-2020 actually tried to bring back ‘Old Labour’ and was summarily destroyed by the party establishment.

We see his view as merely wishful or wistful thinking about the social democratic past. The fact is that social democracy originated from the premise that capitalism could be reformed, could be made to work for the whole of society, and that revolution could be avoided. But these beliefs were founded on the continued ability of Europeans to benefit from exploiting their colonies in the Global South, something that Silver avoids discussing. Moreover, he barely touches on the fact that the US Marshall Plan (1948) was premised on the UK Labour government abandoning its resort to nationalization and economic planning and commit to “modernizing the economy” and minimizing trade barriers. Indeed, Labour and social democracy pursued its reform projects while fully committed to the Cold War against communism. The foreign policy of a government seemingly is divorced from social policy but it can actually illuminate a government’s real intentions overall. The Cold War was somehow about the defense of parliamentary democracy rather than the rivalry between two economic systems. Placing ultimate value on parliamentary democracy served as cover for avoiding the choice between capitalism and socialism and above all dealing with the question of imperialism. The class system and establishment control of the state bureaucracy, the police and army, and the media remained intact. None of these matters are really addressed in Silver’s work. However he does admit that the very “logic of capitalism is such that it produces poverty,” yet he does not draw appropriate political conclusions from this observation (which is repeated at various points in the book). Several times he alludes to Marx’s concept of the reserve army of labour but he needs to engage with it more deeply in order to explain why social democracy under the regime of capitalism can never eliminate poverty.

Capitalism is a competitive system that measures success by profitability. Under capitalism the cost of the commodity labour power is the main element in determining the overall cost of commodities and the degree of profitability. Hence keeping the cost of labour as low as possible must be the central concern of capitalists and the governments supported by them. The continued existence of a permanent army of the poor available to enter the labour market is thus essential to the profitability of capital. Hence reducing or eliminating poverty under capitalism is an illusion. Thatcher understood this but ‘Old Labour’ did not. This explains the failure of social democracy to eliminate poverty and its irrelevance in a globalized neoliberal economic system.

Henry Heller is a Professor of History at the University of Manitoba. He is the author of The Birth of Capitalism: A 21st Century Perspective (Pluto Press, 2011), The Cold War and the New Imperialism: A Global History, 1945-2005 (Monthly Review Press, 2006) and The Bourgeois Revolution in France (Berghahn Books, 2006).

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