All language subtitles for The Age of Uncertainty.s01e01.The Prophets and Promise of Classical Capitalism

This programme contains
discriminatory language

"The ideas of economists
and political philosophers,

"both when they are right
and when they are wrong,

"are more powerful
than is commonly understood.

"Indeed, the world is ruled
by little else.

"Practical men who believe themselves

"to be quite exempt
from any intellectual influences

"are usually the slaves
of some defunct economist.

"Madmen in authority,
who hear voices in the air,

"are distilling their frenzy

"from some academic scribbler
of a few years back."

These lines,
perhaps not surprisingly,

were written by an economist -
John Maynard Keynes.

These are his rooms at King's College
in the University of Cambridge,

or this is our picture of them,

a theatrical impression.

The illusions of the theatre and film
have long been used

to give substance to abstraction,
visual form to ideas,

and we'll use them here to give form

to the march of economic ideas
and institutions.

And here are some of
the participants in the parade.

This is capitalism -
its justification, how it works.

The Marxist dissent.

The politicians who use,
and sometimes misuse, the ideas.

The age-old institutions
of colonialism and imperialism.

There's the carnival
of boom and slump,

inflation, depression, unemployment,
much of it centred around

the ancient and highly unreliable
institution of money.

These are part of the show.

Some things are even more
durably present.

Food and famine,
land and hunger for land -

they always march
in the economic parade.

MUSIC: Joyeuse Marche
by Emmanuel Chabrier

If all else fails,
I can always explain the idea.

Let's never forget that one word
is worth a thousand pictures.

In looking at
the controlling economic ideas,

there isn't much doubt
as to when we should begin.

In the last half of the 18th century,
the Western world was transformed

by a succession
of mechanical inventions.

Along with the Industrial Revolution
went another in economic ideas.

MUSIC: Gymnopedie
by Erik Satie

This was a world of agriculture,
and the reason was simple -

everything the average citizen had
or used came from the land.

Food - mostly bread grains.

Leather, wool, flax -
all for clothing.

Transport was by horses,
as it had been for a thousand years,

so most people remained
close to home.

Men have remembered it
as a golden age,

better perhaps remembered than lived.

The question of food,
whence the next meal would come,

occupied most people
most of the time,

as, unhappily, it still does.

It was with this problem that
economists were first concerned,

and it's where we begin.

Until 200 years ago, all economics
was agricultural economics.

We will, on occasion, use a computer
to animate and illustrate this world.

Computers are adaptable machines

and they can be made
to reach back in time.

Houses will serve us
as the index of power and wealth.

That's the way
we usually measure these things.

The castle of the ruler will
symbolise the power of the state,

and the house of the landlord
the power of landed wealth,

and that of the capitalist
his position and power.

The cottage of the farm worker

shows his lowly position

in the scheme of things,

and likewise the houses
of the industrial workers.

Here, we see the houses
assembled on the landscape

as a teacher might put them together
in the nursery -

to show the place of the occupants

in the general scheme of things.

Do not be alarmed by simplicity.

This was a simple world,

and complexity is often a device
for proclaiming sophistication

or for evading simple truth.

The power came from draught animals,

and, above all, as we see,
from the muscles of men and women.

There being no machinery, no capital,

the capitalist had
no appreciable claim on the product.

Without these classically wicked men,

this surely was
an age of innocence and love.

Unhappily, it wasn't so.

Farm workers were numerous,
land scarce,

and this, plus social position,
education, and the law,

greatly favoured the landlord,
so he was the social ogre.

And above the landlord -

sometimes frivolous,
often oppressive,

usually belligerent,
and invariably expensive -

was the state.

The state, in turn,
levied a heavy claim

on both landlord and worker.

The heavy and expensive
hand of the state

was the concern of
the world's first great economist,

and the scene was
this wet and disenchanting latitude

from which my own ancestors,
I think wisely, departed.

In the second half
of the 18th century,

Edinburgh,
despite or because of its climate,

was one of the great
intellectual centres of Europe,

and its greatest claim to eminence
was in economics.

It would be reckless
in these sensitive days,

maybe even a trifle dangerous,

to offer an ethnic theory
of economics.

All races have produced
notable economists,

except the Irish.

They're too artistic,
or possibly too civilised,

or so it will be said.

But no-one can question
the eminence of the Scotch,

as, in other times,
they - we - were often called.

The only really dangerous competition
to the Scotch is from the Jews,

and we shall see
the principal such competitor,

David Ricardo, in a moment.

The greatest
of the Scottish economists,

perhaps the greatest of Scotsmen,
was Adam Smith.

Economists differ on many matters.

Indeed, if they agreed,
they might all be wrong.

But they do agree on one thing,
which is that

Smith was the founding father
of their subject.

He was born, or anyhow baptised,

in the small port town of Kirkcaldy
on the Firth of Forth in 1723.

Smith went to the good local school
and then on to Balliol.

His impression of Oxford was adverse.

Some professors -
the public professors -

were paid a fixed salary.

Smith believed that,
as a result, they did no work.

These professors were a metaphor
of Adam Smith's economic system -

people do their best work

when their reward
depends directly on their effort

and when they are free
to seek the highest possible reward.

Smith thought
professors should be paid

according to the number of students

who thought
their lectures worth attending.

Let the market decide.

There are still a few economists
who espouse the ideas of Adam Smith,

some of them with real passion.

They tend to be less passionate

about his system
of professorial compensation.

They don't advocate it
for themselves.

After Oxford,
Smith returned to Scotland,

and, at 27, he became professor,
first of logic,

and then of moral philosophy,
at the University of Glasgow.

In Scotland,
Smith also began his friendship

with the celebrated philosopher
David Hume.

They met for companionship,
to share information and ideas,

in Hume's house
in James' Court in Edinburgh.

After teaching for some 15 years,

Smith was asked to be tutor
to the young Duke of Buccleuch,

one of the great landed families
of the border.

The post had a fixed salary
with a pension at the end.

It was an arrangement that was
very much in Smith's interest.

It was also the very kind
of secure salary

that he disapproved of.

But self-interest triumphed
over abstract principle,

and, in 1764,
he resigned his professorship

and set off for the Continent
to take his pupil on the Grand Tour.

One of the men Smith visited
lived here,

exactly on the border
between France and Switzerland.

The location was chosen

because the police
had shown previously

the need for
rapid international movement

across international frontiers.

The occupant was
Francois-Marie Arouet,

called Voltaire.

For Smith,
as for modern pilgrims to Ferney,

Voltaire lighted the end of a tunnel.

Few men in history
have taken more pleasure

in the free pursuit of thought,

or in the outrage
of those who stand guard

for caution, conventional wisdom,
or prejudice.

And these were also
the values of Adam Smith.

He, too, was richly informed,
amused, and amusing.

Voltaire had another attraction -
he spoke excellent English,

and Smith had been having
a wretched time with his French.

Voltaire had lived in England after
one of his recurrent collisions

with outraged authority.

He regarded England, quite literally,

as an island of political liberty,
freedom of thought and expression,

a place where the different,
exceptional, or dissenting view

would always have a hearing,

and where reputable orthodoxy
did not enforce its will.

Voltaire was a man -
THE man - of reason,

a word scholars hesitate to define.

For Voltaire, as for Smith,

it meant avoiding conclusions
based on religious faith,

fear, prejudice, or passion.

Decision came from
the fully informed mind.

Too soon, we may guess,

Smith left to continue
his journey over France.

As he travelled over France,

Smith saw the intelligent,
patient, good-humoured men

who worked the rich French land.

They're still the basis
of its agricultural mystique.

This special role of agriculture

was the principal strand
of French thought

to which Smith was exposed.

But markets like this one,

still occasions of much gaiety,
colour, and amusement in France,

were a reminder to him
of his own faith -

the market is the great regulator
of economic life.

It rewards those
who produce good things cheap,

and it punishes those
who produce bad goods at high cost.

Lurking just back
of the market stalls

is a very stern master.

Perhaps the fun is
to help people forget this presence.

At the time of Smith's odyssey,

the agricultural faith of France
was reflected in the ideas

of a remarkable group of men
whom we call the physiocrats.

The physiocrats held that
all wealth originated in agriculture.

Only in agriculture,
as the gift of nature,

did productive effort
yield a surplus over cost.

Trade and manufacture
yielded no such gain.

They were necessary,
but they were sterile.

The surplus produced in agriculture,
its produit net,

supported everybody else.

Agriculture, for the physiocrats,
was truly the basic industry.

As Keynes said,
no economic idea is ever truly dead.

Many years ago, I worked for
the American Farm Bureau Federation,

the great farm organisation
and lobby of the United States.

It was then at the height
of its power.

Each December,
our members met in convention,

and the voice of physiocracy -

the claim that agriculture
is the source of all wealth -

rang through the halls.

I expect that,
at Farm Bureau meetings,

Farmers Union meetings,

the voice of the physiocrats
is still being heard.

With this unique role
for agriculture,

Smith did not agree.

Nor did he approve
of the despotic extravagance

of the French state,

neither the splendour
of the old monarchy

nor the taxes that sustained it.

He might not even have paused

to admire this modern reminder
of past glories -

the Garde Republicaine.

On one matter, Smith and
the physiocrats did agree -

public expenditure,
and therewith the burden of taxation,

must be kept down, and to do this,

you must limit
the power of the state.

MAN SHOUTS IN FRENCH

This was not a thought

that had occurred strongly
to Louis XIV.

Nor was it ruling doctrine
at Versailles

when Smith and his protege
arrived there,

although the physiocrats did enjoy
the high patronage of the court.

SHEEP BLEAT

The state was idealised, glorified,

and so was the rural France
of the physiocrats.

One manifestation,
the kind of elaborate novelty

that goes well
with insufficient occupation,

was the Hameau -

Marie Antoinette's idealisation
of the French village,

here in the park at Versailles.

Another elaborate novelty was
a pioneer effort in econometrics,

in reducing economic relationships
to hard, measured quantities.

This was it, the Tableau Economique.

It attempted to show what
each participant in the economy -

farmers, landlords,
the so-called sterile classes -

received in income
and passed back in product.

The inventor
was physician to Louis XV

and the protege
of Madame de Pompadour -

high distinctions for an economist.

He was Francois Quesnay.

Smith met Quesnay
but, like later scholars,

he was not much impressed
by the Tableau.

In 1973, Wassily Leontief
won the Nobel Prize

for his great table showing
what each part of the modern economy

gives to and receives from
every other part.

It's an idea that is
in distant dissent from Dr Quesnay.

Today, the Leontief-type system
is a vital tool of planning

in the Soviet Union
and the other socialist economies.

The setting of Versailles
was frivolous, romantic,

but, in economics,
its arm was very long.

In Versailles,
Smith met another physiocrat,

Anne Robert Jacques Turgot.

Turgot believed
that public expenditure,

and therewith the burden
of taxation on enterprise -

or as the physiocrats saw it,
on agriculture, on the produit net -

should be kept to a minimum.

And in 1774, he became
Comptroller-General of France,

and his immediate task

was to curb the expenditures
of the French court.

He failed.

A firm rule operated against him -

people of privilege almost always
prefer to risk destruction,

total destruction,

rather than surrender
any part of their privileges.

Intellectual myopia,
often called stupidity,

is a reason.

There's also the invariable feeling
that privilege,

however egregious, is a basic right.

The sensitivity of the poor
to injustice is a small thing

as compared with that of the rich,
and so it was in the Ancien Regime.

And when reform from above
became impossible,

then revolution from below
became inevitable.

Long before Turgot was dismissed,

Smith had taken the lessons
of his travels back to Scotland.

He was at work on his great book,

and his friends had come to wonder
if he would ever finish it.

Perhaps he was one of
that great company of scholars,

still very much extant,

for whom work on a forthcoming book
and conversation about it

is a substitute
for ever publishing it.

Eventually, in 1776,

the year of American independence,
he published it.

The acclaim was immediate,

and the first edition of
The Wealth Of Nations

sold out at once.

The basic argument was simple,

again illustrated by our landscape
and its occupants.

It was naturally buried
in the great mass of information,

which, as a man of reason,
Smith brought to his support.

The wealth of a nation
results from the diligent pursuit

by each of its citizens
of his own interest.

In serving his own interest,
each individual will be guided

to serve the public interest,

as though, said Smith,
by an unseen hand.

The state need not
and should not interfere.

The wealth of the nation
is the result

of the free exercise of effort
by each individual.

These included the capitalist,
whose mills now began

to attract workers
from the countryside to industry.

The factory became the setting, then,

of Smith's second
great source of wealth.

This was the division of labour.

The gains from specialisation,
in the largest sense of that term,

was, for Adam Smith,

a source of productivity
of the greatest importance.

Smith described
a primordial production line.

It was for the making of pins.

One man draws out the wire,
another straights it,

a third cuts it, a fourth points it,

a fifth grinds it at the top
for receiving the head.

To make the head requires
two or three distinct operations.

To put it on is a peculiar business.

To whiten the pins is another.

It is even a trade by itself
to put them into the paper.

Ten men so dividing the labour,
Smith calculated,

could make 48,000 pins a day.

One man by himself
would make maybe 1, maybe 20.

The capitalists
who owned the machines

did not altogether inspire
Smith's trust,

nor did any other businessmen.

Here is Smith on merchants.

People of the same trade
seldom meet together,

even for merriment or diversion,

but the conversation ends
in a conspiracy against the public,

or in some contrivance
to raise prices.

Devout free enterprisers in our day

who genuflect at the mention
of Adam Smith's name

rarely base their sermon
on this particular text.

Benjamin Franklin
was one of Smith's contemporaries,

and maybe he was the source

of one of Smith's
more mordant passages.

Here is Smith on slavery.

The late resolution
of the Quakers of Pennsylvania

to set at liberty their Negro slaves

may satisfy us that
their number cannot be very great.

Smith had very little faith

that righteousness
could triumph over self-interest,

but he was wholly content with the
motivating power of self-interest.

In the very year of
The Wealth Of Nations,

the American colonies,
in which Smith had a great interest,

were lost.

Many Englishmen thought
the sugar islands of the West Indies

more valuable,
and these, of course, remained.

Still, Smith would have kept
the mainland colonies,

accorded them full representation
in Parliament,

faced, when it came, the day
when the population of the Americas

would be greater
than that of Britain.

When that day came, the capital
would be moved across the Atlantic.

Indianapolis, say,
would be the new Westminster.

Britain's trade
did expand wonderfully.

Smith deplored
the dead hand of feudalism,

its manner, symbols, and constraints.

However, to the London merchants
who flourished under his system,

the old style was thought, as always,

to add respectability
and distinction to the new wealth.

In a budget speech,
Pitt was to say of Adam Smith that,

"His extensive knowledge of detail
and depth of philosophical research

"will, I believe,
furnish the best solution

"of every question connected
with the history of commerce

"and with the system
of political economy."

An economist could ask
no more than that.

Adam Smith died in 1790 in Edinburgh.

The great prophet of free trade

had been made
commissioner of customs there -

a sinecure - but he was
much too practical to refuse.

Smith lies here
in a small burial ground

just off the Royal Mile in Edinburgh.

Scholars come to visit,
but not very many.

Economists, I would judge,
are rather negligent of their heroes.

By the time Smith died,
the changes which his ideas foretold,

the changes
of which he was the prophet,

were becoming evident in Scotland
as well as in England,

and in both the countryside
and the towns.

The Industrial Revolution
was not a sudden, violent thing,

but it was a revolution
that people could actually see.

From the countryside, as I've said,

people were being drawn
to the new factories,

and they were also being expelled
by the rising demand

for one of the great
industrial materials of the time -

wool.

The most spectacular expulsion
was here in Scotland,

in Sutherland in the far north.

In the 15 years after 1807,

the Duchess of Sutherland
and her husband, Lord Stafford,

threw out between
5,000 and 10,000 inhabitants

to make room for sheep.

They had the right -
they owned two-thirds of the county,

the largest in Scotland.

Perhaps the demand for wool,
and the resulting higher rents,

was not the only reason
for the expulsion.

It was said at the time that
the Cheviots moving over the hills

were far more beautiful
than the Highlanders.

This could have been so.

In 1814, on the narrow strip
of arable land

that borders the Strathnaver,

the Clearances had
some of the aspects

of what would one day be called
a Final Solution.

The agents of the laird
moved in with fire and dogs,

and the roof timbers were burned
as a special precaution,

because the Highlands being treeless,
the houses could not then be rebuilt.

On one or two occasions,
it seems, the houses were burned

without bothering to remove
the more aged inhabitants.

The Clearances were cruel,

but they brilliantly illustrated
a problem in economic development

that persists unsolved
to the present time.

It is possible
to have such a bad relationship

between people and land -

so many people
and so little usable land -

that development
is really impossible.

There can be no change
if the people are to live.

That was true here

and it remains the problem
in India, Bangladesh,

Indonesia, and other
densely populated countries.

The Highland technique
that was used here

for reducing population
is no longer recommended.

Birth control lends itself
very well to speeches,

but only very slowly,
when at all, to results.

There's no more land to be had.

This is a problem, obviously,
to which I'm going to have to return.

Where could these people go?

The expanding factories
were the obvious answer,

but they didn't exist
in this part of Scotland.

Canada was
a far more attractive prospect,

except for the cost of getting there.

Land was allotted to the tenants

down along the coast,
on Pentland Firth.

It was thought
that they would learn to fish,

and no-one could imagine
even a Highlander

would be a blot on that landscape.

It was, in fact,
an invitation to starve.

The people could go
to the factories, in England

or farther south in Scotland,

but the Highlanders were not thought
good industrial material.

They conformed badly
to the discipline

and rhythm of the machine.

Women were more malleable,

and children even more so
if they were caught young.

New Lanark,
south and east of Glasgow,

was the scene of
the most famous experiment

in adjusting people, mostly children,
to the discipline of the machine.

The mills were turned
by the waters of the Clyde.

It had been a noted beauty spot,

and early industrialists
taken to see it

saw not the beauty,
only the wasted power.

He was David Dale,

the Scottish capitalist
and philanthropist.

In recent times,
his face has graced the notes

of the Royal Bank of Scotland.

Dale's idea was
to go to the orphanages

of Glasgow and Edinburgh

and rescue, in a manner of speaking,
the occupants.

Work in the mills for the orphans
was then combined with schooling

in an atmosphere
of the highest moral tone.

The orphanages were saved the cost
of feeding the children,

and the children earned their keep

in productive
and compassionate surroundings.

Compassion was occasionally extended
to adults.

In 1791,
a ship loaded with Highlanders

en route to North America
was driven ashore at Greenock.

The passengers were disenchanted
with ocean travel,

and they probably had no money
with which to proceed, in any case,

so Dale brought them to New Lanark.

After a shipwreck, it appears,
even a Highlander

could adjust to the rhythm
and discipline of a machine.

Philanthropy at New Lanark
was not allowed to interfere

with the practical need
to return a profit.

Only after a solid 13-hour day
in the mills

did the children go to this school

for an hour and a half
in the evening.

You shouldn't be too shocked.

By the standards of the time,
New Lanark was a place

of compassion and culture,
if not exactly of rest.

This was even more the case
after 1800,

when Dale's son-in-law Robert Owen -
the great Robert Owen - took over.

Owen was a philosopher,
utopian socialist,

religious sceptic, and spiritualist,

and reformers now came
from all over Europe

to visit New Lanark
and to see for themselves

this proof that
industry could have a humane face.

Under Owen, the Institute for
the Formation of Character was built.

It offered lectures for adults,

singing and other recreation
for the orphans,

and a nursery school
for the very young.

The workday for the children
was now reduced to 12 hours,

and children under ten
were never employed.

It's an indication
of how things were elsewhere.

New Lanark didn't really satisfy
the utopian vision of Owen,

so there was a sequel.

This was New Harmony, Indiana,

which was to be a cooperative Elysium
on the banks of the Wabash.

It would be
a completely fresh beginning,

a new community
with no capitalist genesis,

no acquisitive taint,

and its principle would be
not Smith's self-interest,

but service to others.

Idealists came to New Harmony,

and so did
a really historic collation

of misfits and misanthropes
and freeloaders,

and once they were there,
they devoted themselves

more or less exclusively
not to service, but to argument.

New Harmony didn't work.

Adam Smith was upheld.

The mills at New Lanark
flourished under Smith's system

and, like Smith's ideas,

they were eventually overtaken
by change.

Capitalism both creates and destroys,

as Joseph Schumpeter,
many years later, was to affirm.

But Smith's ideas
lasted longer than the mills.

In Smith's system,
as I've noted, the state,

hitherto large,
oppressive, expensive,

would shrink in size.

The unseen hand - self-interest -
would now rule.

Landlords, farm workers
would enjoy the income they received,

also the new capitalists,

over on the right.

Prices set by competition

would reflect the cost of production.

That would be the cost
of rearing, feeding,

sustaining the labour
that went into the product.

This was the labour theory of value.

This, and the tendency of wages
to fall to subsistence levels,

would concern
the next generation of economists,

who would be much less optimistic
than Smith.

In the 25 years
following Adam Smith's death,

both ideas were taken up in London
by two close friends.

One was David Ricardo,
Adam Smith's only serious rival

for the title
of founding father of economics.

With Ricardo,

the great ethnic rivals
of the Scotch arrive.

Ricardo was Jewish.

He was a stockbroker,
a member of Parliament,

a man of superb clarity of mind,

and of deep obscurity of prose.

His friend Malthus,
a nonpractising clergyman,

was unquestionably English.

Malthus, for much of his life,
taught at Haileybury,

the staff college,
as we would call it,

of the East India Company.

His wife was famous
for her tea parties.

In the last century,
the East India Company

employed three
of Britain's greatest economists -

besides Malthus, James Mill,

and his prodigious and luminous son,
John Stuart Mill.

None of these, I might note,
was ever in India,

nor was this thought
to be a handicap.

James Mill produced
a powerful critique

of the Hindu epics,
which he deeply disliked.

He could not read them
in the original,

and they had not then
been translated into English.

The Mills, needless to say,
were also Scotch.

Malthus held that,

given the passion between the sexes -
a most inconvenient thing

that he sometimes thought
might be subject to moral restraint,

and against which he believed
ministers should warn at marriage -

population would always increase
in a geometric progression -

one, two,

four, eight, and so on.

At best, the food supply
would increase only arithmetically -

one, two, three, four.

From this came the inevitable result,

with which his name
has ever since been associated.

In the likely absence
of the moral restraint,

population would have
a persistent tendency to explode.

It would be checked
only by war or by famine.

Adam Smith had
a generally optimistic view

of the prospects for man.

No-one has ever thought
Malthus an optimist.

Ricardo's mind extended to industry,

although he was still
deeply influenced by agriculture.

Malthus's population
became his workers

in field and factory.

They grew in number, competed for
the nearly static food supply.

They paid for this competition
in high rents, high prices,

low wages to get jobs.

The result was that workers received

only the minimum necessary
for survival.

This was the iron law of wages.

It also nurtured
the distinctly pregnant thought

that since labour
set the value of things,

the product belonged to labour.

Voiced by Marx a half a century on,

this proposition
would shake the world.

But under Ricardo's system,
the workers did not get the product,

nor did the capitalists.

The wealth went to the landlords.

The same pressure of people on land
that reduced wages shoved up rents,

and so the poorer the people,
the richer the landlords.

Nor could anything be done about it.

This was still the lesson
of Adam Smith.

Things might be bad,

but intervention by the state
would only make them worse.

David Ricardo was not,
by his own lights, a cruel man.

In a cruel world,
he merely urged the least cruel.

I've said that
the Industrial Revolution

was the kind of revolution
that could be seen.

So was the response to Adam Smith
and his followers,

and nowhere more clearly
than at the London Dock.

This was started in 1800,
opened in 1805,

and through it
passed the basic elements

of the new British living standard -

wine, brandy, tobacco,
as well as rice.

The warehouses could hold
nearly a quarter of a million tons.

After Waterloo,
trade receded for a time.

Then it grew, reached higher levels
than ever before.

But while trade grew
and business expanded,

after the Napoleonic War,
wages fell -

the iron law, wages always tending
to subsistence levels.

Ricardo seemed to be affirmed.

Once, 212 ships were in London Dock
at one time,

and 1,000 men employed.

The London Dock, like New Lanark,
is now deserted.

Tankers, container ships,
do it better somewhere else.

Joseph Schumpeter called it
creative destruction.

What about the ideas of Malthus?

And how rigorously in practice were
those of Smith and Ricardo pursued?

The best answer to these questions
was on John Bull's Other Island.

Irish population
was increasing geometrically,

just as Malthus held.

In the 60 years from 1780 to 1840,

it doubled,
and it very nearly doubled again.

In 1840,
there were eight million Irishmen.

As earlier in the Highlands,

land and people were in
an equilibrium of poverty,

expanding population absorbed
any and all increase in food supply.

Food supply had been increasing.

The potato had made
an Irish Green Revolution,

and when yields were good,
nothing fed so many people so well.

Grain was also grown, but it was
a cash crop to pay the rent.

Even starving people paid the rent.

As the population increased,

so did the competition for land,
and so did the rents.

As Ricardo foretold,
the landlords prospered,

the tenants became
ever more numerous, ever more poor.

The Malthusian climax
is no gradual thing,

as now, in India or Bangladesh,
it comes suddenly

when the rains fail
or something else goes wrong.

In Ireland, the Malthusian disaster
came in 1845.

The potato blight was nurtured
by the warm Irish rain.

It damaged the crop that year,
and the next year it destroyed it.

The blame has always gone
to the blight.

We see that it should have gone
to the population increase,

to the resulting competition for land
that the landlords exploited.

In London, this was understood.

The resulting application
of principle to practice

would be remembered bitterly
for 100 years.

Few things in life
can be so appalling

as the difference between a dry,
antiseptic statement of a principle

by a well-spoken man
in a quiet office,

and what happens to people

when that principle
is put into practice.

We've often seen this
in our own time.

In the Pentagon,
it was a protective reaction,

and in Asia, it was a screaming,
thunderous death

from planes
that could not even be seen.

This difference exists
also in economics,

and there was, in these years,
a very good example -

the response of
the British government

to the potato blight was
according to Ricardo and Malthus.

The dry antiseptic principle
was enunciated here

in these offices
by Charles Edward Trevelyan,

who was then assistant secretary,

which is to say
the permanent head of the Treasury.

He advised that
trade would be paralysed -

that was his word -

if the government
gave food away to the Irish,

and so interfered with the profits
of business enterprises.

His cabinet minister,
Charles Wood, agreed.

The important thing, Wood said,

was to leave
as much liberty as possible

to those in the grain trade.

It was in accordance with principle
to try to reduce prices,

so Indian corn - corn to Americans -
was imported

and the Corn Laws were repealed.

Though good in principle,
these actions did nothing whatever

for people who had no money at all,

and this was a category,
unfortunately,

that included all
who were starving in Ireland.

While grain was imported,

exports of grain
from Irish ports continued,

frequently under armed escort.

That was the grain that paid the rent
for the blighted potato fields.

The death toll from the Great Hunger
has never been exactly established.

By 1851, the Irish population
should have been around nine million.

It numbered six and a half.

A million emigrated.

Perhaps a million and a half died
of hunger and resulting disease.

On the whole,
Ricardo's ideas had had a fair test.

I doubt that
he would have liked the proof,

but others were less sensitive.

Trevelyan was well-pleased
that he had adhered to principle.

The laws of classical economics had,
he felt, justified themselves.

In a reflective letter in 1846,
he stated his conclusion.

"The problem of Ireland," he wrote,

"being altogether beyond
the powers of men,

"the cure has been applied

"by the direct stroke
of an all-wise Providence

"in a manner as unexpected
and as unthought of

"as it is likely to be effectual."

There had always been debate

as to the nature
of Adam Smith's unseen hand.

Trevelyan settled that issue -
it was the hand of God.

A rather vengeful god,
it must be said,

who couldn't have been too fond
of the Irish.

Trevelyan, however,
was not exceptional.

Men who take a stand
on high principle with cruel results

have very frequently seen themselves
as the instruments of divine will.

If, as Trevelyan held,

heaven wasn't on the side
of the Irish in 1848,

where was salvation to be found?

It was to be found,
but not in Ireland.

There was an escape hatch
from the Great Hunger,

as there had been earlier
from the Highland Clearances,

and that, of course,
was the emigrant ship to America.

It wasn't an escape from death,
because that, too, was a passenger.

Many people never made it

on the crowded,
typhus-ridden vessels.

This hospital is on Grosse-Ile,
in the St Lawrence,

a few miles below Quebec.

5,294 people died of the fever,
died of typhus,

after they arrived on this island.

This is the hearse on which
they completed their journey.

The place names on Grosse-Ile
recall the history.

This placid stretch of water
is Cholera Bay.

But there was a brighter side.

The principles of Adam Smith,
Ricardo, Malthus

might still be valid
in the New World,

but the setting was very different,

and so, in consequence,
were their results.

Here, land was abundant and free,

and this being so,
it conferred no power

and no monopoly income
on the landlord.

No-one could exploit a tenant,
or, for that matter, a farm worker,

if one or the other of them
could leave the next day

and get a farm of his own.

In America,
population might multiply,

as Malthus said,
but more men were always needed,

so the pay was better
for that reason,

and if it wasn't good enough,
there was again the frontier.

In the treeless Highlands,

families had seen
the precious roof timbers burned

when they were told to go.

Now, a few months later,

they were hacking farms
out of the forest,

and now trees were the enemy.

Soon, they would be producing
more food in a year

than their parents had produced
in a lifetime.

And the refugees
from the Great Hunger -

the Great Irish Hunger -

the Irish construction crews,
would be building the railroads

that made this food
available to the world.

Here was the remarkable thing -

Malthusian pressure of population
on the food supply

set in motion the great migration,

and the migrants then solved
the world's food problem.

Food would now be abundant
for a century.

Self-interest,
freedom of enterprise -

these were a secular faith
in the Old World.

In the New World, they came
very close to being a religion.

The unseen hand - self-interest,
enlightened and otherwise -

settled the endless
American and Canadian space.

Ricardo and Malthus
remained in abeyance.

Wages rose. Population did not press
on the food supply.

Railroads reached out everywhere

to bring the food to the cities,
and to the Old World, as well.

In 1893,
Americans gathered in Chicago

for the great Columbian Exposition.

It was a celebration
of economic success,

and they were right to celebrate.

For them, the promise and prophecy
of classical capitalism,

for some so dismal, had taken
a wonderfully favourable turn.

But even by 1893, some aspects of
the triumph were a little in doubt.

1893 itself was a year of depression.

Maybe the fair
screened a harsher reality.

Much less now remains
of that certainty.

The open spaces no longer reassure,
promise wealth to all.

Thus our journey -
it is through the world

that lies between
the wonderful security of Adam Smith

and our own age of uncertainty.

The journey,
especially for a professor,

is marked also by the uncertainty

as to the salvation
through education.

50 years ago at Cambridge,
such salvation seemed assured,

but not now.

Our journey will include the rich

and their reasons for believing
that theirs was a divine right,

that the poor were meant
to serve and stand and wait.

And of those
who attacked this world -

the certainty of Karl Marx
and his followers

was no less than that of Adam Smith.

And the disappearance
of the age-old certainty

that some people were meant,
by colour,

state of civilised progress,
form of government,

to rule, and others to be ruled.

And the New World that missed
the Industrial Revolution,

that cannot take the path
prescribed by Adam Smith,

and for which the alternatives
are also deeply uncertain.

In Switzerland,
there are still a few doubts

about the ultimate wisdom
of democratic decision.

But in Switzerland,
there is much doubt

as to how much of the Swiss destiny
in this world the Swiss control.

There is even less certainty
in the United States -

has government by the people

given way to government
by the corporations,

the trade unions,
the public bureaucracy,

the Pentagon?

What of that uncertainty,
the greatest of all,

which justifies itself
as defending the way of life

it might bring to an end?

Uncertainty cannot be dissipated,

but we can understand its dimensions,

and, in the last of these programmes,

we hear it discussed by those
who live with it, contend with it.

They seem to be more convinced
that one superpower may attack them

than concern that
the two superpowers

may cooperate with each other,
although they have both concerns.

That programme is a long way off.

Next time, we continue with
the certainties of the last century,

the belief of the favoured
that they were the favoured forever.