Classical economy has been a typical child of enlightenment. In this vein, main convictions of enlightened philosophy, like rationality, liberty and autonomy as cornerstones of enlightened thinking, have been transferred to economic conceptions and have been re-labeled as economic liberalism, economic rationality and strong methodological individualism as premises of economic thinking. Adam Smith’s idea of “natural liberty” shaped an economic understanding where the individual knows best about his purposes and his capabilities to reach them. He, therefore, should be “left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of man” (Smith 1981 , IV.ix.51). In this line of thought, industry and individual efforts became basic preconditions for achieving prosperity and attaining a decent living. Adam Smith believes that a liberal economic system is a means of “liberating the poor from desperate need” (Schmidtz 2016, 208) and helps to increase the standard of material comfort of the laboring class (Winch 1978, 87). However, Smith is aware that such opulence is not shared equally, and he is “deeply concerned about the inequality and poverty that might survive in an otherwise successful market economy” (Sen 2016, 287–288). Thus Smith admits that the “division of opulence is not according to the work. The opulence of the merchant is greater than that of all his clerks, tho’ he works less; and they again have six times more than an equal number of artisans, who are more employed. The artisan who works at his ease within doors has far more than the poor laborer who trudges up and down without intermission. Thus he who, as it were, bears the burthen of society has the fewest advantages” (Smith 1982, 213). Nevertheless, Smith remains optimistic concerning the long-term effects of growing opulence and believed that also the working poor would profit from the overall economic development (Smith 1982, 211–212), and that attaining some comfort would also raise their moral and educational level (Smith 1981 , I.viii.43; 1982, vi.6–7). On the long run, thus the belief of Smith, economic development would also lead to social justice and grant the laborers a fair share of the national product since “[n]o society surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed and lodged” (Smith 1981 , I.viii.36).
However, not all classical economists shared this optimistic view about the economic and social development based on the system of natural liberty. Starting with Joseph Townsend’s pamphlet “Dissertation on the Poor laws. By a Well-Wisher to Mankind” (1971 ) a discussion about the “moral” conditions of the laboring poor has been initiated. By and large, the argument brought forward by Townsend was that lacking morality of the poor will doom them to a life in poverty and misery. Also other pessimists like Thomas Malthus, David Ricardo or John Stuart Mill identified lacking discipline of the laboring class with regard to their own reproduction as the key problem for stabilizing wages at a level that would allow laborers a decent living (Malthus 1999 ; Mill 1965 , Book II, chap. XI-XII). In this vein, governmental social programs like the British poor laws have only negative effects and, as David Ricardo criticizes, “instead of making the poor rich, they are calculated to make the rich poor” (Ricardo 2004 , 96). Since the poor laws are rather based on a philanthropic ideal than on realistic assumptions, they are inappropriate to halt the unrestraint growth in population of the laboring class. Although several authors raised concerns about the validity of such an “iron law of population” (e.g. Whewell 1831, 160–168) as the main cause to depress wages to the subsistence minimum (e.g. Longe 1866; Thornton 1869), the growth in population became the main point in the discussion of how to remedy the social misery of the poor. To prevent the descent of wages to the level of starvation the only way would be to change the habits of the working poor regarding their reproduction rate by means of education and instruction, followed by gradually granting rights of political participation and, thus, creating a class of independent and self-reliant people (Ekelund and Tollison 1976).
However, the ideas how the laboring poor should be educated to become useful members in the new commercial society varied according to different authors. Especially the earliest writers, like John Locke (1997 ) or Bernard Mandeville (1988 ), recommended sometimes radical—and in the eyes of the today’s beholder—inhumane means to accustom the poor to labor. To teach them second order virtues, like temperance, punctuality, cleanliness or industriousness, they recommended to send the poor to working schools and houses of correction and to force them to labor by corporal punishments. The means chosen by the authors of the nineteenth century sound comparatively tame. Beside schooling and moral education, it is the central idea that workers should join in workers’ cooperatives where they take on the responsibilities for their own affairs. Such increased independence would create moral awareness and a sense of virtue on its own accord since workers’ cooperatives will function as „a course of education in those moral and active qualities by which alone success can be either deserved or attained “ (Mill 1965 , 793). In his chapter “On the Probable Futurity of the Labouring Classes” in his “Principles of Political Economy” Mill develops a picture of fair and peaceful competition between capitalist enterprises and workers’ cooperatives organized by the workers themselves according to democratic standards and with fair shares of profit for each member (Mill 1965 , Book IV, chap. VII). Notwithstanding the differences concerning the answer to the question of how the living standards of the working poor could be elevated, it was the common conviction of most political economists that a reasonably educated workforce would be able to find a decent living for them and their families. Changing the habits of the working poor and teaching them second-order virtues like punctuality, temperance, cleanliness, or industriousness would make them better citizens and enable them to reach a “state of affluence and some degree of reputation” (e.g. Franklin 1998, 3).
While modern economic theories focus especially on technical aspects like marginal productivity or marginal costs of labor to explain the wage level on the labor market and often ignore the social aspects in their economic theories, classical economists like John Stuart Mill saw economy also as a social and moral science (Mill 1965 , 20f.). Seen from the perspective of the political economists of the eighteenth and nineteenth centuries, the later on so-called Social Question was social by nature and less an economic question. From their point of view, the knowledge of economic laws was useful as a precondition for viable social reforms (Hollander 1983), but economic laws could not determine the social goals of a society. For Mill the laws of the distribution of wealth in a given society are human institutions, “since the manner in which wealth is distributed in any given society, depends on the statutes or usages therein obtaining “ (Mill 1965 , 21). For authors like Mill it was a matter of social justice that governments evolve the economic welfare of all citizens by enacting prudent social reforms.
Although the situation differed from country to country, the idea that social peace in the capitalist societies depends on the settlement of the Social Question and that prudent state reforms with regard to fair wages, employment security, social protection or workers’ rights will bridge “the fierce and eternal conflict” (Robinson 1826, 513) between laborers and capitalists became a common conviction. At the end of this process, a self-motivated and industrious workforce has become the backbone of the industrial society. At this point we can leave aside the question of whether this self-motivation to work was influenced by a protestant work ethics, as Weber (1993 [1904/5]) believed, or whether this was simply the result of the fully developed commercial society and the system of “natural liberty”, as it was the vision of Adam Smith. In the course of time, the self-motivation to work became a central part of the working ethos of the laboring class and was awarded by stable income and material security in the emerging industrial economy.
Following the ideas of the theorists—but also in reaction to the increasing pressure of unions and workers’ movements—with the beginning of the twentieth century, governments of nearly all industrialized countries enacted new legal regulations aiming at the emancipation of the working class by bestowing workers with rights of political participation and granting them co-determination rights at their workplaces. Simultaneously, workers profited from increases in productivity by raised wages and cheapened consumer goods. Although this development has been interrupted by two world wars and the economic crises of the 1920s and 1930s, the advancement of the working class did not halt in general. After WWII, the emancipated industrial workforce became the cornerstone of economic upswing and enabled Western countries to reach unprecedented economic success. At the same time, increased prosperity was spread across all layers in society, even, as Smith has predicted, not equally. However, in such work-centered societies “being employed” became the precondition for participating in the general upswing of the economic development. Thus, poverty has been replaced by unemployment as the new great threat of the working class in the industrialized countries, and it became the great challenge of governments to provide work for all by means of labor market policy and the establishment of social security systems for times of crisis. In a society where “being employed” is the ultimate proof of success and a precondition for social participation, unemployment endangers those affected to lose social status and to become ostracized from their former social community.
It was the promise of the Western economic system that education, individual efforts and disciplined work would lead to occupational advancement, foster individual career and increase personal material wealth, even for the lower classes in society. Consequently, labor has become the ultimate orientation of life in, as Hannah Arendt has called it, a laboring society (Arendt 1998, 4). In contemporary society, as Handy (2002, 26) has put it, we “seem to have made work into a god and then made it difficult for many to worship.” If every activity— from education over family to housekeeping—has to be labeled as work since this is the only valuable form of occupation, the absence of meaningful work is not only an economic but first of all a social problem endangering societal peace by disabling the unemployed to identify with central values of a work-based society. Hannah Arendt has addressed this in “The Human Condition” and critically asks the question what will happen in a society of laborers if people are freed from labor “and this society does no longer know of those other higher and more meaningful activities for the sake of which this freedom would deserve to be won” (Arendt 1998, 5).