Ned Ludd, Adam Smith & Fred Argy

Hugh Stretton

There's a library of recent books by us chatterers journalists and academics complaining about Australian inequalities. Here now is a rare stranger to the business: an expert, experienced, distinguished public service leader who explores the practical possibilities of greater equality in the novel global circumstances in which we find ourselves. It's a joy to celebrate his work. But I'm not sure how I got into the party, a relic nudging eighty, long retired, and professionally backward looking: a historian nostalgic for a distant past when a nanny state disciplined the rich and cosseted the poor. Twenty years of adventurous government have since convinced our political and business leaders that it is more productive to discipline the poor and cosset the rich. But if Fred wants to reverse some aspects of that revolution, a historian can at least recall the first time reactionaries tried to stop our productive revolution a couple of centuries ago. So, as I remind you of those original Luddites, don't blame the organisers, they couldn't know about my secret neoliberal sympathies.

Invention is a dangerous nuisance as well as a glory of our social life. It makes theory an unreliable guide to how our systems work, and forecasting an unreliable guide to what we'll do next. Theory and forecasting nevertheless prosper as means of persuasion. A main defence of changes for the worse - such as increasing inequality is that they are inevitable, or irreversible, or necessary costs of real benefits. So before hostile book reviewers dismiss Fred Argy as another Luddite, spare a few minutes for his famous forerunner.

The brilliant material and intellectual revolution that troubled the destructive followers of the real or fictitious Ned Ludd had its double beginnings half a century earlier in the University of Glasgow. The Professor of Natural Philosophy employed an instrument maker who had a bright idea one day in 1763. Early steam engines were hoisting coal from mineshafts and towing truckloads up slopes too steep for horses. The engines were heavy, immovable, and needed a big, continuous supply of water to boil. What if they had condensers, and could re use their own steam ? The young metal worker used his spare time for seven years perfecting a design before he left the public sector, found a business partner, and Boulton and Watt sold their first engine.

For some centuries before that, English merchants had been buying, enslaving, transporting and selling Africans to North American colonists, who used many of them to grow cotton. Most of the cotton was shipped to England and spun into thread by farm labourers' wives in their country cottages. In the course of the eighteenth century their cotton earnings allowed their landlords to lower their husbands' pay for farm work without starving their households. The magistrates who fixed farm wages and levels of local rates and poor relief were landowners themselves. But the rates they fixed had to be good enough to keep their labour alive, and they were as upset as their workers when water powered spinning machinery was invented. It shifted the work from peasant cottages to powered mills in a few well watered regions, and farm work lost its cotton subsidy.

The new mills were small, and scattered along country streams. Their water supplies limited most of them to working single daily shifts. Boulton & Watt's coal fired engines allowed continuous work around the clock in factories of any size. Two eleven hour shifts became the norm, in big new factories in and around the cities, with hot bed dormitories for a lot of their labour.

Farm families went hungry when they lost the cotton spinning. In town the big mills got labour where they could. Men were expensive, women were nimbler and cheaper, children could be had by the dozen or the hundred from the nation's crowded poorhouses for nothing but bed and bread. The first generations of steam driven textile work employed about one third each of men, women and children. About half the children survived to age fourteen.

There were thus big historical changes in progress. New industries with fast growing export markets shifted the demand for labour from region to region, country to town and adults to children. There could be sudden local unemployment and insecurity. The towns had no ready housing for the newcomers. They crowded the existing slums and the new dormitories. They left behind the traditional regulation of pay and safety in the country to find none of it in town. Long hours, poor food and the first generation of the new machinery were together dangerous enough to kill and injure quite a lot of them.

Over time the workers would gain from the rising productivity. But in the short run there was plenty of misery and nothing much that they could do about it. Most kinds of organisation and collective bargaining or public protest by workers were criminal offences. Some traditional avenues of reform survived. Petitions to parliament were lawful. Some employers had decent principles, got better work that way, and wanted their cut throat competitors to be disciplined. Some church leaders and civil reformers argued for reforms. There were parliamentary investigations and reports. But those virtuous voices didn't trouble many of the offending employers.

So the Luddites decided to trouble them. Secret groups of textile workers attacked their employers' stock and machinery. The employers couldn't catch or identify them, but knew well enough why they were doing it and what sort improvements they wanted. At first they wanted to restore lost jobs, by doing without the machines if necessary. As expanding markets caught up with the rising productivity and the jobs returned, the conspirators turned to issues of pay, hours, conditions of work, and physical safety from the new machines. More employers took heed. Parliament's investigators found grounds for complaint. They didn't excuse the machine breakers, because reforming abuses was government work, not workers' work rebellious workers and ruthless employers were both wrongdoers. But employers were the only ones the politicians could do much about, and they were slow to act against members of their own class while the economy prospered and its cruelties were mostly out of sight.

Thus the Luddites publicised the new conflicts and intensified concern about them by perceptive employers, independent reformers and eventually parliament. They had invented a method of industrial bargaining when, and because, all the better methods were banned. They risked their lives. Machine-breaking was a capital offence. But they were humane, clever and effective. They were careful not to hurt people, and clever enough not to be caught. One of the first political reformers of the inequalities which they publicised, the future prime minister Robert Peel, was a son of one of the employers who had pioneered the mass purchase of children from the poorhouses.

Back in the University of Glasgow while James Watt was economising steam, the Professor of Moral Philosophy was reflecting on the complexities of our human nature: the instincts and impulses we discover within ourselves and recognise in others' natures. His Theory of Moral Sentiments explored relations of two kinds. We are capable of care and cruelty, love and hate, concern and indifference, greed and generosity. First, how are those confusing impulses related to each other in our individual natures? Second, what possibilities do they offer in our relations with one another? Adam Smith focused on our instinctive sympathy with others. We feel others' pain, enjoy their happiness. Cruelty sickens us, courage inspires us. We can be ambivalent in particular cases: some do gooding can be self defeating; some cruelties can have good effects. But most of Smith's attention was on the feelings concerned. His message is as convincing as ever. To cite some examples close to home: why did Basil Hetzel and Fred Hollows spend decades patiently taking the products of their research around the poor third world, instead of earning twice as much twice as comfortably by practising specialist medicine at home? They clearly enjoy the work they do, are content with the moderate pay, and rejoice in their effects on the health and happiness of some billions of poor people they'll never know but with whose suffering they sympathise. On less heroic scale, sometimes with more mixed feelings, those sentiments operate in most people's working and family lives. When they choose how to earn and save or spend what they earn there is no reason to suppose that their earning and spending freedoms are valuable to them for selfish material reasons alone, or to imagine that Adam Smith thought that market relations served those selfish purposes alone, or ought to do so.

In The Wealth of Nations Smith applied those lessons to economic life. Just as most people vote, politically, with some respect for others' as well as their own concerns, and for the quality of the social life they all share, Smith expected most of them, most of the time, to do their work and earn their livings in considerate ways. Nothing in his work suggests that he expected economic activity to be any more or less selfish, or to need any less government, than the rest of our social activity does. Like free speech and the right to vote, individual market choices allowed people to balance shared concerns for order and productivity with diverse individual needs and values.

When Smith acknowledged that he owed his dinner as much to the interests of his baker as to his own, he could perhaps be read as meaning material self interests only, without much mutual sympathy. But when he observed that 'people of the same trade seldom meet together but the conversation ends in a conspiracy against the public, or in some diversion to raise prices', his words were harder to misunderstand. None of our modem business scandals would have surprised him. But The Wealth of Nations is a long and complicated book. Selective quotation can misrepresent it as insisting that ruthless material self interest in our economic activities serves us all better than any other element of our human nature could do, and does best with least interference by government. And of course we encourage the neoliberal celebration of selfishness by tendentious language. The Companies Act that creates the powers of the private firm is helpful infrastructure. Regulating the use of the powers is intervention. Regulating labour is law and order.

Caring for losers is all right, within reason, if we can afford it. But sympathy, mutual concern, generosity, ideas of fairness can be written off by the hard hearted party as self indulgent pretences which would anyway be self defeating in our economic life. To justify increasing inequality as a condition of economic growth for nearly everybody's benefit, you can now cite two centuries of selective misquotation from Adam Smith. Also, of course, biased measures of efficiency and inequality and other spin.

The purpose of this Luddite interlude has been to make two familiar points. Big historical changes in the society which our economic system exists to serve can call for radical changes of principle and policy. And one use of history is the reverse of backward looking: it is to remind us how much we owe to radical innovations, how unexpected they have often been, and how critical for good and ill some of the collective choices, or factional victories and defeats, have proved to be. Our society is not short of compassionate liberals who would welcome a fairer, less unequal society. But many insistent voices, many of them with expert qualifications, are persuading the politicians that very little could actually be done in that good cause without crippling economic costs and political resistance. Don't ask the Australian people if they would welcome some reduction of inequality. Sixty percent or more of us, including many of those who would lose by it, have been telling pollsters for twenty or thirty years that they would welcome it. But neither party has offered them an opportunity to vote for it.

Today we celebrate a true believer in the benefits of the liberal economic strategy who tells his fellow liberals, as Adam Smith might have told them, that their strategy of production is right enough, but they are wrong in thinking either that the strategy would necessarily work worse in a fairer society, or that global bullies could wreck the attempt if we had the guts to try it.

Fred Argy has spent his working life in the distributive system that he wants to reform. He knows the difficulties that face subordinate public servants who speak out against their seniors, and seniors who speak out against the ministers they serve or the policies they are employed to manage. It was dark nights that freed Ned Ludd's mates to let the world know that something should be done to civilise their new productivity. It's retirement that has freed a co designer of our national financial system, an Ambassador to the OECD, a senior Treasury officer and a Director of EPAC to tell us what should and well could be done to civilise our advancing productivity.

I think Ned and Fred would share some fundamental values, recognize each other as practical men for their times, and sympathise with each other's local difficulties, much as Adam Smith would too.


Hugh Stretton is one of Australia's most gifted and influential public intellectuals. Historian, economist and thinker, his major books include The political sciences: general principles of selection in social science and history (1969), Ideas for Australian cities (1970), Capitalism, socialism and the environment (1976), and Economics: a new introduction (1999). This is the transcript of his presentation to the Evatt breakfast seminar on "Australia's retreat from egalitarianism" held on 8 July 2003.


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Suggested citation
Stretton, Hugh, 'Ned Ludd, Adam Smith & Fred Argy', Evatt Journal, Vol. 3, No. 5, August 2003.<http://evatt.org.au/papers/ned-ludd-adam-smith-fred-argy.html>