Bernard Shaw and the making of Fabian economics

Bernard Shaw e a construção da economia Fabiana

ABSTRACT

In its origins, economic science was marked by an intense dialogue with other areas of knowledge. As it developed, however, the so-called “scientific” model of economics came to predominate, whose scope was characterised by a formalist methodological perspective, which restricted the audience for discussion in economics. To reach the majority of the population, economics had to adapt its methodological format, giving up its analytical refinement. The “popular” model of economics thus emerged. The aim of this article is to analyse a point of intersection between these two models in the economic formulations of the first generation of the Fabian Society, in particular, the contributions of George Bernard Shaw. Known mainly for his literary texts, Shaw also wrote the articles on economics in the influential book Fabian Essays in Socialism. The article is divided into three sections: an introduction; an exposition of Bernard Shaw’s formulations on economics in the Essays and a conclusion. The main conclusion of the paper is that, in seeking an intersection between the scientific and popular models of economics, Shaw ended up developing an eclectic formulation of economics, sometimes juxtaposing elements of both neoclassical and Marxist economics.

KEYWORDS:
Fabian Society; marginalism; marxism; literature

RESUMO

Em suas origens, a ciência econômica foi marcada por um intenso diálogo com outras áreas do conhecimento. À medida que se desenvolveu, porém, passou a predominar o chamado modelo “científico” de economia, cujo escopo era caracterizado por uma perspectiva metodológica formalista, que restringia o público para discussão em economia. Para atingir a maioria da população, a economia teve de adaptar o seu formato metodológico, abrindo mão do seu refinamento analítico. Surgiu assim o modelo “popular” de economia. O objetivo deste artigo é analisar um ponto de intersecção entre estes dois modelos nas formulações econômicas da primeira geração da Sociedade Fabiana, em particular, as contribuições de George Bernard Shaw. Conhecido principalmente por seus textos literários, Shaw também escreveu artigos sobre economia no influente livro Fabian Essays in Socialism. O artigo está dividido em três seções: introdução; uma exposição das formulações de Bernard Shaw sobre economia nos Ensaios e uma conclusão. A principal conclusão do artigo é que, ao procurar uma intersecção entre os modelos científicos e populares de economia, Shaw ­acabou por desenvolver uma formulação eclética da economia, por vezes justapondo elementos da economia neoclássica e marxista.

PALAVRAS-CHAVE:
Sociedade Fabiana; marginalismo; marxismo; literatura

1. INTRODUCTION

Some years ago, a leading Brazilian economist published a newspaper article about economic science. The first two sentences of the text were: “Economics is not literature, where good stories are enough. Science requires method: precise arguments that can be countered with empirical tests”¹. The conclusion is straightforward: economics is a science and literature is not. The rigid boundary that separates them is the method, which means, above all, submitting ideas to empirical tests.

Economic science, particularly “mainstream” economics, has historically shown little openness to dialogue with other areas of knowledge, particularly the social sciences and humanities. This has led to economics being seen as a “cultureless science”. This was, however, a major departure from the economic science that was born in the 18th and 19th centuries from the confluence of areas such as philosophy and law.

This argument, presented as a natural fact, is coherent with the current format of economics. Seen from its historical evolution, however, the separation between economic science and literature is much less rigid than the author of the newspaper article above would have us believe. One could speak, for instance, of the influence of literature on the very emergence of economics: Bernard Mandeville’s The Fable of the Bees influenced Adam Smith’s formulations; Daniel Defoe, besides his “Robinson Crusoe” fame (a recurring character in microeconomics), wrote extensively on international trade and the regulation of economic activities; Antoine de Montchrétien, the author who first used the expression “Political Economy” was a French theatrologist².

The fact is that until the end of the 19th century, the social sciences were not rigidly separated into disciplines as we know them today (Tribe 2022: 5). The long process of formatting economic science as an autonomous and hermetic body of theory and, therefore, the emergence of the professional economist as the embodiment of this science was only consolidated, approximately, in the 1930s³.

Unfortunately, marginal in the training of economists, the discipline “history of economic thought” is generally seen as a compilation of the main concepts developed by the major authors of economics. Thus, the construction of this discipline is that of a science that evolved from rudimentary forms of understanding economic phenomena to the state of the art in which formalisation guaranteed the place of economics as a science.

The set of great male economists who marked this evolution in the understanding of economics is viewed as composed of individuals of great intelligence who synthesised the advances of economic science and moved it a step forward. A history of thought was thus retrospectively constructed that ratified the current model of economic science, conceived by the wise and which the uneducated must accept. The resistance in doing so would be a proof of the ignorance of those “from below” in accepting “scientific” economic truths.

Yet what this view of economic thought misses is precisely history. Far from being a linear road that brought us to the current development of economic science, the history of economic thought has witnessed a constellation of interpretations. If today only one of them is taught in the majority of universities, this is less a natural fact of a supposed scientific evolution than of a certain formatting of economic science, which ended up erasing other interpretations and reducing the list of those that were accepted as scientific.

For the path of economics that links Adam Smith to the most recent Nobel Prize winners in economics to be accepted as normal and natural, many others had to be forgotten and outlawed. In opposition to the model of scientific economics, hermetic and disconnected from “non-economic” issues, it is nonetheless possible to speak of a popular model of economic science. The content of both models took different forms over time. In the 18th century, before the official birth of economic science, with the publication of Smith’s The Wealth of Nations, the nascent discourse on economics in England actually shaped, and was shaped by, religious, literary, and economic ideas and practices (Kitch 2009: 5).

Indeed, there is a characteristic of the production of economic science that should not be ignored by the history of economic thought: its writing process. The authors who gradually began to analyse economic phenomena had a certain audience in mind for their works. The elaborate treatises on the nascent discipline of Political Economy could only be accessed by a small portion of the population. Add to this the assumed methodological refinement of the nascent economic science, especially after the works of David Ricardo, who developed a hypothetical-deductive method, and we may see why it did not have a popular vocation (Blaug 1992: 53). It should be noted that the slow process of the transformation of economics into a main social science was marked by a paradox: to assert itself as a scientific discipline, it needed theoretical and methodological refinement, which made it difficult for the majority of the population to understand; to become popular, it had to give up part of its refinement and include moral elements again (Klaver 2003: XIV).

At the end of the 19th century, the scientific model gained theoretical reinforcement from French positivism, leading to the argument that the popular model could hardly be considered scientific or worthy of dialogue by economists. Faced with the growing exclusion from a field socially accepted as scientific, the popular model had two choices: either accept its perception as being anti-scientific or bring its formulations closer to scientific methodology and the state of the art of economic theory.

The novelty of this formative period was the Fabian Society, composed of people mostly from the English middle classes, who adhered to the social arguments of socialism, critiquing the concentration of income and wealth and low wages, and basing their analyses on elements of the economic theory of marginalism (Mirowski 1984: 362). In this way, the first generation of Fabians ended up contributing to the emergence of a third model of economy, a hybrid: both scientific and popular.

One of the first leaders of the Fabian Society, responsible for the formulation that embodied this third model, was the renowned Irish playwright and literary critic, George Bernard Shaw. The fact that economic science was the object of reflection of an “a priori” figure linked to culture indicates how the rigid barriers that currently separate economics from the other sciences had not yet been completely established.

Literature was the main form of development of the popular model of economics. The fact that, today, a discipline on “Economics and Literature” is almost unimaginable in university courses demonstrates the consolidation of the scientific model of economics. Although marginal in the study of formal economics, however, literature can be an important means of understanding the economy and “economics” (Williams 1985: 2)⁴.

Novels, for example, gave political economy something it ordinarily lacked: a sustained encounter with the states of vitality and sensation it invented but failed to fully explore (Gallagher 2006: 6). The literature of Victor Hugo and, later, Émile Zola presented a panorama of the changes in sociability that occurred with the Industrial Revolution. Drawing on their real-life experiences, newspaper accounts and popular works, men of letters created a kind of intersection between economics and literature. We could define this type of relation between economy and literature as indirect, however, because the content of economics appears in novels in a nuanced way. Even if economic aspects are present in the content of their works, it is not their central focus.

A direct influence would therefore be the formulation of certain aspects of economic theory by literary writers. The theoretical works of the 19th and early 20th century British writers John Ruskin, William Morris and George Bernard Shaw are examples of this direct relationship between literature and economics. In the eyes of today’s economics, with its highly refined analytical and mathematical tools, the formulations of authors from literary backgrounds may seem rudimentary. However, it is necessary to interpret these economic ideas in the light of the period in which they were developed. At that time, the segmentation of intellectual training was less profound, and thinkers from different backgrounds were trying to formulate explanations for the rapid material and ideological transformations that societies were undergoing.

As a Fabian socialist activist, Shaw studied economics, particularly the work of Karl Marx, but also that of William Stanley Jevons, the leading exponent of the “marginalist revolution” in England. One particular episode marked his involvement in debates on political economy. In 1884, the Unitarian minister Philip Wicksteed published a critique of Karl Marx’s work, particularly his value theory of labour using William Stanley Jevons’ theory of utility value. Wicksteed’s article soon sparked a minor controversy with Bernard Shaw, then a young student, who published a critique in To-Day, A Monthly Magazine of Scientific Socialism in 1885, a publication that featured texts from a range of early British Marxists such as Eleanor Marx, William Morris and H.M. Hyndman (Shaw 1933).

If, in 1885, Shaw, who by then identified himself as a Marxist, defended the German thinker’s theory of value, shortly afterwards he switched his opposition and carried out a combination - in fact, a juxtaposition - of marginalism with socialism. In the appendix he wrote for historian Edward Pease’s book on the history of the Fabian Society, Shaw mentions that at the end of the polemic “... the upshot was that I put myself into Mr. Wicksteed’s hands and became a convinced Jevonian” (Shaw 1916: 261). This was one of the few polemics that Shaw admitted to actually having lost (Hulse 1970: 113).

Some years later, after the publication of the first volume of Capital in English, Shaw wrote a review of it in three articles, in which he explicitly reveals his conversion in terms of economic theory. However, while his theoretical perspective on the economy shifted from labour-value to utility-value theory, his political attachment remained socialist. It was, however, a socialism whose precise contours would only be defined in 1889 with the publication of the Fabian Essays in Socialism.

An analysis of Shavian⁵ economy theory sheds light on three relevant aspects of economic science in the British fin-de-siècle. First, there was not yet an economic science, monopolized by economists⁶. In other words, the scientific model had not yet been consolidated. Secondly, it highlights the pressure that the scientific model exerted on the popular model, which had to seek to refine itself to occupy a relevant space within economic debates. Finally, the concept of socialism was heterocyclite, with various groups competing for its “correct” definition and precise economic content. The sui generis combination of marginalism and socialism that emerged at the end of the 19th century exemplified these three points (Steedman 1995: 1-2). To address these issues, in the next section, I present how Shaw tried to develop a synthesis of the scientific and popular models of economy, whose main effort were his two texts on economics in the Fabian Essays of 1889.

2. ECONOMICS IN THE FABIAN ESSAYS

The first British movement to call itself “socialist” was the Social Democratic Federation, created in 1881 under the leadership of Henry Mayers Hyndman, whose book England for all was an early milestone of the movement⁷. This group claimed to be the heir to “Marxism” in England. However, Hyndman’s authoritarian behaviour caused the organisation to split in 1885, from which emerged the Socialist League (SL). Its main leaders were William Morris and Eleanor Marx, to whom Shaw was close (Bevir 2011: 81).

The theoretical differences between the two “Marxist” groups and the Fabian Society, created in 1884, did not initially prevent them from maintaining good relations. The difference, which became clearer as each group formalised its respective political programme, lay in the way in which they wanted to arrive at socialism. While the SDF advocated proletarian revolution and the SL, the boycott of elections, the Fabians believed that the transition would pass through long democratic reforms⁸. Far from seeing the working class as a ‘revolutionary agent’, the Fabians interpreted it as the ‘conservative element in society’. For Shaw, this perception was confirmed by the sociology of the formulators of socialism: “Lassalle, Marx, Liebknecht, Morris, Hyndman: all, like myself, bourgeois, who painted the flag red” (Shaw 1949: 50).

In 1885, Shaw broke from Marxism and began to formulate, together with his comrades in the Fabian Society, a particular interpretation of socialism, a synthesis of elements from classical political economy and the marginalism of William Stanley Jevons and Philip Wicksteed. In 1887, a resolution was adopted on criteria for membership in the Society, a text that became known as “The Basis”, which stated that “The Fabian Society consists of Socialists” (Pease 1912: 284).

The main leaders of the group then set about the task of studying various topics in the social sciences that could underpin their project of developing democratic socialism in England. The personal accounts of the founders and early leaders of the Fabians show their involvement with the formulation of a new idea of socialism. Sidney Webb, for instance, mentioned that

We spent what free time we had, after earning our daily bread, in reading and talking - in studying everything from bluebooks to art, from history and politics to novels and poetry; and perpetually discussing and lecturing, among ourselves and before anybody who would listen to us (Webb 1948: XV).

The years of theoretical reflection and the search for a socialism with specific characteristics had as its main fruit the launching of Fabian Essays in Socialism, published for the first time in 1889 and edited by Bernard Shaw. In a short footnote, he revealed the order of magnitude of the activities promoted by the Society: “In the year ending April 1889, the number of lectures delivered by members of the Fabian Society alone was upwards of 700” (Shaw 1948: III).

The period from 1885 to 1889 was punctuated for Shaw by the intellectual effort to deepen his readings in marginalist economics and to reaffirm his differences with Marxism and, particularly, with Marxists. In August 1887, he published a set of three reviews of Karl Marx’s Capital, whose first complete English translation had been published in January of that year, in the radical journal National Reformer. The main object of his critique was not exactly Karl Marx, but above all his followers, who he pejoratively termed, the “Marxolaters”. For Shaw, such a devotion was laughable, when only recently the first volume of Marx’s main work was available in English. Marx had taken Ricardo’s formulations as an axiom and the followers of the German thinker turned them into dogma. The path of science should be to question the dogma, he argued, turning it back into a theorem that can finally be rejected⁹.

Having settled his accounts with Marxism and, above all, with Marxists, Shaw concentrated on refining his economic ideas and how to present them in a didactic way to the general public. From this effort came his texts for the Fabian Essays, first published in 1889, with several reprints and, while Shaw was alive, four new editions in 1908, 1920, 1931 and 1948. In the 1908 and 1931 editions, Bernard Shaw wrote new prefaces, and in 1948, in the so-called “Jubilee Edition”, he wrote a postscript. In all these texts, Shaw basically updated certain elements of the history of the Fabian Society. The content of the essays, however, was not changed in any of the editions.

The first two printings of the book were quickly sold out and before long the Fabian Essays were sold in the United States and translated into several languages in continental Europe (Webb 1948: XVI). The sale of the Essays and the Fabian Tracts, a series of short publications over the years, were important fundraising tools for the Society¹⁰. According to Mark Bevir (2011: 172):

Arguably, Fabian Essays was the high point of Fabian theory. ... The essays represented an attempt to define a broad and practical form of socialism without relying on Marxist economics. They began by identifying theoretical bases of socialism, then went on to consider the organization of society under socialism, and concluded with discussions of the political action needed to create socialism. The whole volume is a prodigious achievement.

After several editions and a relevant political influence, Sidney Webb, who wrote an introduction to the Essays in 1920 stated: “Tested by a whole generation of further experience and criticism, I conclude that, in 1889, we knew our Political Economy, and that our Political Economy was sound” (Webb 1948: XVIII). By mentioning the formulation on economics, Webb was indirectly alluding to Bernard Shaw, responsible for the subject in the Essays.

In his text, Shaw deals with three themes: land income, value and wages. When compared to Shaw’s other texts on economics, the Fabian Essays were distinguished by the attention given to land rent, a hitherto unpublished theme. More than a simple digression on an important concept of classical political economy, Shaw’s analysis of the question was the main thread of his exposition, which culminated in a critique of rentierism and of capitalism itself, providing for the first time a more precise outline to Fabian Socialism, which consisted of both a critical interpretation of capitalism and a program of economic reforms.

The formulation on land rent that most marked the history of economic thought was the one developed by David Ricardo in the second chapter of his Principles (Ricardo 1911). The different productivity of land meant that people who owned better land were able to earn more. Once the best plots of land were occupied, the new farmers who settled in the region would settle on more distant and less productive land. The owners of the best plots would hardly be willing to sell them easily, so there would be no competitive market for the land, resulting in a monopoly. This opened up the property for landlords to rent out their land, the payment required for which tended to increase as less productive land was used. This was the foundation of land rent theory in classical political economy, which was later revised by John Stuart Mill to apply to all sources of natural wealth with variable productivity (Screpanti, Zamagni 2005: 103). Besides presenting an overview of Ricardo’s formulation, Shaw indicated how several of the Anglo-Saxon economists closely followed it: Stuart Mill; Henry Fawcett; Marshall; Sidwick and the American general Francis Amasa Walker.

First, Shaw’s critique focused on the possibility of someone achieving prolonged incomes, which were independent of his labour. A dedicated worker may have gotten very little if he had a plot of land that was not very productive, while the landlord, who did not perform any activity, only leased his most productive land, accumulating a large income. Starting from the income from land, Shaw extrapolated his argument to include the question of interest, which was also a type of income independent of labour and merit (De Vivo 1987: 50).

Second, Shaw analysed the income consequences of land in a monopoly. Once all the arable land was occupied, what could the people who did not own any lots do? This was how Shaw analyses the emergence of the working class: without access to private property, the worker needed to sell his labour power. According to Shaw:

The tenant cultivators of the land have not strength enough or time enough to exhaust the productive capacity of their holdings. If they could buy men in the market for less than these men’s labour would add to the produce, then the purchase of such men would be a sheer gain. It would indeed be only a purchase in form: the men would literally cost nothing, since they would produce their own price, with a surplus for the buyer. Never in the history of buying and selling was there so splendid a bargain for buyers as this (Shaw 1948: 11).

The second theme dealt with by Shaw in his text was the theory of value. At this point, Shaw modified the ideas presented in his reviews of Capital. In analysing the decision-making on the production of a good, in addition to its utility, Shaw indicated, for the first time, scarcity as one of the parameters that had to be taken into consideration.

The exchange value, in fact, decreases with the supply. This is due to the fact that the supply decreases in utility as it goes on, because when people have had some of a commodity, they are partly satisfied, and do not value the rest so much. ... however useful any commodity may be, its exchange value can be run down to nothing by increasing the supply until there is more of it than is wanted. The excess being useless and valued less, is to be had for nothing; and nobody will pay anything for a commodity as long as plenty of it is to be had for nothing. This is why air and other indispensable things have no exchange value, whilst scarce gewgaws fetch immense prices (Shaw 1948: 13-14).

Next, Shaw continued his analysis indicating how, in a system of free competition, supply tended to expand, reducing the value of the good until it equalled the marginal cost of production. Thus, Shaw argued that the only way to influence the value of a good was to control its supply, which could be seen in the attempt to monopolize the production of certain sectors to restrict the supply of the good and thus control its price (Shaw 1948: 18; Dobb 2012: 208).

Once the impact of land rent on the functioning of the economy and the theory of value had been analysed, Shaw moved on to the third aspect of his formulation: wages. Since the worker was obliged to sell his labour power, due to the monopolization of all arable land, how was his wage determined? First, it was necessary to analyse the operation of the law of value for the case of labour-power. Being equivalent to any good, the value of labour power also depended on its scarcity and on the utility generated by an additional unit. Once demand was satisfied, increases in its supply reduced its scarcity and hence its value. New people may even have been employed, but at a lower value and, by the law of indifference, this reduction determined the remuneration practiced in the entire labour market. Unlike what happened with other commodities, the “production” of labour power could not, however, be interrupted once the marginal revenue from its production equalled its marginal production cost. In this way, there was a large oversupply of this factor of production, so that its remuneration tended to zero.

Shaw came to the conclusion that the working class in England was “valueless, and can be had for nothing” (Shaw 1948: 19). The existence of the unemployed demonstrated this conclusion: “By the law of indifference, nobody will buy men at a price when he can obtain equally serviceable men for nothing” (Shaw 1948: 19). The oversupply of labour power caused workers to be paid subsistence wages.

For a moment, one might have the impression that Shaw’s argument was heading towards a Malthusian demographic approach. The core of the author’s formulation, however, was the power of the rentier mechanism, which allowed that part of society to live on the labour of others, to whom they paid mere subsistence wages (Bevir 2011: 144).

In fact, Shaw’s analysis of land rent was not restricted to just one form of nascent rural capitalism. Land rent was only the initial historical model of the remuneration of the elites, which was updated with time. The development of joint-stock companies - in his text, Shaw mentioned the case of a railway company - would be an example of this. For the author: “one property with a farm on it is said to be land yielding rent; whilst another, with a railway on it, is called capital yielding interest. But economically there is no distinction between them when they once become sources of revenue” (Shaw 1948: 20)¹¹.

A monopoly enabled landlords to live on the labour of others, to whom they paid mere subsistence wages. Shaw’s critique of capitalism involved extending these two arguments from land and rent to capital and interest. He argued that interest is the product of rent and therefore of “lottery” and market failure. Capital was merely stored land rent. The existence of a labour market enabled capitalists to purchase labourers for any purpose. The surplus generated by land rent gave capitalists the necessary purchasing power (Bevir 2011: 144).

Having become a mode of production that degraded workers and deprived them of a full cultural life, capitalism ended up creating economic distortions. The increase in the income of rich people made conspicuous consumption and the production of luxury goods grow, so that “exchange value itself, in fact, has become bedevilled like everything else, and represents, no longer utility, but the cravings of lust, folly, vanity, gluttony, and madness, technically described by genteel economists as ‘effective demand’” (Shaw 1948: 22).

Going beyond the moral aspect of rentierism, Shaw attempted to provide an economic explanation. What was the origin of rents? For Shaw all these types of rent were “... paid out of the difference between the produce of the worker’s labour and the price of that labour sold in the open market for wages, salary, fees, or profits” (Shaw 1948: 26-27). Shaw assumed, therefore, that there was the production of an economic surplus, which could be appropriated by a social group other than the one that produced it. Interestingly, in a footnote Shaw made the following comment “This excess of the product of labour over its price is treated as a single category with impressive effect by Karl Marx, who called it ‘surplus value’ (Mehrwert)” (Shaw 1948: 27). Further on I shall analyse this question of surplus value and the mention made of Karl Marx.

Once he had described how rentierism affected the functioning of the economy and its impacts on the working class, Shaw recommended an element of a possible socialist economic policy: “Socialism involves discontinuance of the payment of these incomes, and addition of the wealth so saved to incomes derived from labour” (Shaw 1948: 26). Indeed, Fabian Socialist policies would be based mainly around measures of more just income and wealth distribution.

The text concluded with a critique of elements of classical political economy, especially the jusnaturalism that predominated at its inception. By establishing that the economy obeyed so-called “natural” laws, economic science assumed a particular vision of “Nature”, which was “a remorselessly malignant power” (Shaw 1948: 28). The poverty of many ended up being naturalised and justified by part of economics as being a consequence, for example, of the increase in population. It is worth remembering that it is in this context that Thomas Carlyle, one of Shaw’s theoretical influences, described economics as the “dismal science”. Unlike most economists, socialists “challenge individualism, scepticism, pessimism, worship of Nature personified as a devil, on their own ground of science” (Shaw 1948: 28). By proposing a new interpretation of the development of capitalism and pointing out that the social problems experienced by the working class were neither natural, nor eternal, and that they could be overcome by political action, the Fabians could convert economic science from a “dismal to hopeful science” (Shaw 1948: 29).

3. CONCLUSION

When Shaw began the discussion of economics in the Fabian Essays based on land rent, he ended up modifying his own training in economics. From his initial readings of Henry George, even though he did not use George’s formulations of economic theory afterward, he retained the relevance of the discussion on land rent, which he developed from Ricardian formulations (Shaw 2012: XII; Newton 1971).

In his article on Bernard Shaw’s economics, Maurice Dobb stated that the playwright had accepted the theory of exchange developed by Jevons and Wicksteed, but not the marginalist theory of distribution. For Dobb “Here we have seen that he clung to the Ricardian tradition, generalising the notion of economic rent so that it included income derived from ownership of capital as well as income derived from ownership of land” (Dobb 2012: 207).

In the Fabian Essays, Shaw ended up rescuing a concept inherent in classical political economy: surplus. In doing so, he seemed to seek a marginalist theoretical foundation for Marx’s theory of surplus value. As Bevir indicated: “In Shaw’s opinion, Marx’s theory of value contained a contradiction, but a marginal utility theory of value could still support the Marxist analysis of exploitation” (Bevir 2011: 170). Although the centre of Shaw’s formulations was land rent, the consequence of his analysis is the observation that there was a surplus in the capitalist economy which was, in part, appropriated by a social group that had not produced it. With such affinities to the ideas of Marx, it would be legitimate to ask why Shaw chose to make this kind of theoretical bricolage with various theories. Maurice Dobb raised a hypothesis that I consider plausible: “it was with the aim of making a more ready appeal thereby to the English Radicals of the time” (Dobb 2012: 206).

Even if it rescued elements of the labour theory of value and thus of Marx’s own theory, one cannot speak of Shaw’s return to Marxism. His critique of the workings of capitalism, in particular, rentierism, was combined with his defence of the model of perfect competition and even with individualism, theoretical elements which appeared almost as an ideal type of the future socialist society. There was, therefore, a philosophical aspect underlying Shaw’s economic analysis: the compatibilization of individual freedom and agency with collective welfare, which passed through the full functioning of the market, but also through the action of the state in developing a redistributive policy.

Finally, by identifying the origin of workers’ exploitation in the existence of monopolies, Fabian socialism should act to eliminate them. However, since it was not possible to completely eliminate the monopoly of access to land, an aspect which in Shaw’s analysis is the foundation of all rentierism, it would be up to the socialist government to develop a type of taxation that would neutralize the impact of land rent (Shaw 1948: 27).

In the period from 1885 to 1889, Shaw was directly involved in the synthesis of Fabian socialism, having contributed to the elaboration of the vision of economics that marked the early years of the Society. Shaw was thus one of the formulators of “Fabian economics”. In addition to the Fabian Essays, he also wrote directly, or contributed to the writing, of several of the Fabian Tracts (O’Neil 1986: 132). His path as leader of the Fabian Society is representative of the very fate of Fabian socialism. From a broader theoretical formulation close to the format of Political Economy as the term became notable throughout the nineteenth century, he increasingly dealt with economic policy issues such as the policy of nationalising land, managing the economy at the municipal level or making proposals for fiscal policy. As the Fabians became linked to the Labour Party and the latter became a major political force in the United Kingdom, the initial impulse of the discussion developed in the Society during the second half of the century had to be transformed into the formulation of concrete alternatives.

Despite the transformations that occurred in the formulations of the Fabian Society, the Fabian Essays were a reference for its political action. This was because they embodied the attempt of the Fabians to synthesize an easily accessible language to deal with the economy and the transition to socialism and some theoretical refinement when comparing contemporary formulations of economic science. Bernard Shaw’s performance was fundamental for the final text to take on these contours.

Formulated over the course of five years, Shavian Political Economy was an example of the paradigm transition period in economic science, which began in the context of the “marginalist revolution” and only concluded in the 1930s. This theoretical transition, which transformed political economy into economics, took place at the same time as the rise of socialist ideas, with which it was integrated. Although the main socialist authors had formulated their theories on the basis of the labour theory of value, their disciples allowed themselves to cross-reference the critical elements of socialism with recent formulations of economics, in particular the theory of utility value.

Shaw did not hesitate to dissociate himself from Marxism and to adhere to marginalism. However, as we have pointed out throughout our exposition, it was less a contentious divorce than an amicable separation. The influence of Marx’s work was still present in Shaw’s ideas. However, Shaw stated that “Marx’s Capital is not a treatise on Socialism: it is a jeremiad against the bourgeoisie, supported by a mass of official evidence and a relentless Jewish genius for denunciation” (Shaw 1949: 49). A true treatise on Socialism should be based on the new scientific evidence of the period. Just as physics had advanced throughout the 19th century, without needing to prescribe Newton, so should economics and Marx. This was an argument of a positivist character, which was perceptible in the Fabian Society.

Fabian socialism, although “scientific”, has some intersections with Marxism. Even if they were presented as Jevonian, marginalism was actually rarely put to use by the Fabians. The utility value appeared more as an instrument of negation of Marxist economic theory than as a precise instrument of economic analysis. Although they tried to disentangle the labour theory of value and “Marxism”, seen as an anachronism, Shaw’s formulations in the Fabian Essays ended up slipping into an explanation close to that of Marx for the exploitation of labour power (Bevir 2011: 169). Moreover, the defence of labour against rentierism also harked back to a long tradition of English political economy, including authors ranging from John Locke to contemporaries of Shaw such as William Morris and to Romantic authors such as Thomas Carlyle and John Ruskin.

All this makes Shavian political economy primarily eclectic. By refusing the direct link with Marxism, it was not possible simply to reproduce the theory of Capital. However, marginalism would not be a complete alternative either, since there was no economic surplus that was appropriated unequally by different social groups. Shaw’s way out was to combine the critical elements of classical political economy with an appeal to the scientific precision of marginalism. This combination was most often done by the simple juxtaposition of formulations, as in the Fabian Essays, or the attempt to harmonize concepts from Jevons and Marx.

Shaw’s aim was to propose a socialism that was critical in analysis and consequential in action. In this way, Fabian socialism was marked by a moral critique of capitalism sparsely supported by the theory that would most robustly sustain its argument. From the scientific point of view, it was a formulation that cannot be considered a consistent theory. From the moral and political point of view, however, Shaw contributed to the emergence of so-called “Fabian economics”, which succeeded in establishing the imaginary of a third way between the free market and the nationalization of the economy.

Shavian economics is notable above all for being the swan song of the long tradition of popular economics, which goes back to the moral economy of the poor in the 17 th century. A man of letters, Shaw was heir to the ideas of Thomas Carlyle, John Ruskin, and William Morris, who propagated, at different times, the notion of a popular economy (Stokes 1958: 244). In this way, Shavian economics and its practical unfolding, Fabian socialism, sought to dialogue with the majority of the population “from below”, which, acting politically through elections, could open space for the achievement of the broad reforms advocated by the Fabians.

Even though it was aimed at a discussion with those “from below”, the Fabians needed to consolidate themselves as a credible political alternative also among those “above”. This required a discourse that valued science and the advances made in the social sciences. To this end, it was necessary to entomb the ghost of Marxism and its antiquated theoretical foundation of the labour theory of value, without, however, abandoning its moral criticism of the development of capitalism. This explains the gradual rapprochement of Shaw and, with him, of Fabian socialism, with marginalism, which allowed them a scientific interpretation of the economy. It was evidently a concession to the scientific model of economics, which at the end of the 19th century was marked by neoclassical economics.

Because it was linked to popular economics, Bernard Shaw’s reflection on economics was not so refined in terms of analytical tools or argumentation in terms of economic theory. But in seeking to reinforce his seriousness and political credibility in the face of Marxist groups, he needed to appropriate certain formulations of the scientific model. Thus, Shavian economic thought and Fabian socialism were attempts at a synthesis among the models of economics I described earlier, which in reality was a juxtaposition of quite different theories welded together by fin-de-siècle social criticism.

As the link between the Fabian Society and the Labour Party grew stronger, the Fabians themselves abandoned the Society’s founders’ synthesis of the two models of economics and openly adhered to the scientific model. The growing hegemony of the scientific model among the Fabians did not escape Bernard Shaw himself, and he did not hide his frustration with his comrades who tended to restrict the spectrum of themes of their analyses to economic questions “stricto sensu”:

Here and there in the Socialist movement workmen turned up who had read “Fors Clavigera” or “Unto This Last”; and some of the more well-to-do no doubt had read the first chapter of “Munera Pulveris”. But Ruskin’s name was hardly mentioned in the Fabian Society. [...] My explanation is that, barring Olivier, the Fabians were inveterate Philistines (Shaw 1912: 263-264).

Bernard Shaw’s writings embodied a broad interpretation of the economy, but they superficial in terms of theoretical developments and quantitative grounds. The so-called professional economist was the antipode of this format: a deep but narrow analysis. Taken to its extreme, this narrow training can generate problems in the interpretation of reality, which has even alarmed a figure unsuspicious of his ties to the scientific model of economics, such as Lionel Robbins who, at the end of his life, complained about the training model of English economists whose “... excessive specialization in the first-degree stage, productive of one-eyed monsters, is too often the order of the day” (Robbins 1997: 427).

4. REFERENCES

• Blaug, Mark. (1972) “Was there a marginal revolution?” In: Black, R. D. Collison; Coats, A. W.; Goodwin, Craufurd D. W. The Marginal Revolution in Economics Interpretation and Evaluation. Durham: Duke University Press.
• Beugelsdijk, Sjoerd; Maseland, Robert. (2010) Culture in Economics: History, Methodological Reflections and Contemporary Applications. Cambridge: Cambridge University Press.
• Bevir, Mark (2011). The Making of British Socialism. Princeton: Princeton University Press.
• De Vivo, Giancarlo. (1987) “Marx, Jevons, and Early Fabian Socialism”. In: Political Economy Studies in the Surplus Approach, Vol. 3, No. 1, pp. 37-62.
• Dobb, Maurice (2012) “Bernard Shaw and Economics”. In: Dobb, Maurice. On Economic Theory and Socialism. London: Routledge, pp. 205-214.
• Gallagher, Catherine (2006). The Body Economic: Life, Death, And Sensation In Political Economy And The Victorian Novel. Princeton: Princeton University Press.
• Hulse, James. (1970) Revolutionists in London: a study of five unorthodox socialists. Oxford: Oxford University Press.
• Kitch, Aaron (2009) Political Economy and the States of Literature in Early Modern England. Farnham: Ashgate Publishing.
• Klaver, Claudia C. (2003) A/Moral Economics: Classical Political Economy and Cultural Authority in Nineteenth Century England. Columbus: Ohio State University Press.
• Marx, Karl. (1982) Capital. Vol 1. London: Penguin.
• Mirowski, Philip. (1984) “Physics and the ‘marginalist revolution’”, Cambridge Journal of Economics, December, Vol. 8, No. 4, pp. 361-379.
• Newton, Bernard. (1971) “The Impact of Henry George on British Economists”, American Journal of Economics and Sociology, v. 30, pp. 179-186.
• O’Neil, Stephen J. (1986) The Origins and Development of the Fabian Society, 1884-1900. PhD Theses. Chicago: Loyola University Chicago.
• Pease, Edward R. (1912) The history of the Fabian Society. Plymouth: Brandon and Son.
• Ricardo, David. (1911) The Principles of Political Economy and Taxation. London: J. M. Dent & Sons Ltd.
• Robbins, Lionel (1997). Economic Science and Political Economy. London: Macmillan.
• Screpanti, Ernesto; Zamagni, Stefano. (2005) An Outline of the History of Economic Thought. Oxford: Oxford University Press.
• Shaw, Bernard. (1912) “On the History of Fabian Economics”. In: Pease, Edward. The history of the Fabian Society. New York: E. P. Dutton & Company Publishers, pp. 253-280.
• Shaw, Bernard. (1933) “The Jevonian criticism of Marx”. In: Wicksteed, Philip. The Commonsense of Political Economy. Vol. 2. London: Routledge & Kegan Paul Limited, pp. 724-730
• Shaw, Bernard (ed.). (1948) Fabian Essays. London: The Garden City Press.
• Shaw, Bernard. (1949) Sixteen self-sketches. London: Constable and Company.
• Steedman, Ian. (1994) “Wicksteed: Economist and Prophet”. In: Brennan, H. Geoffrey; Waterman, A. M. C. Economics and religion: are they distinct? New York: Springer, pp. 77-122.
• Steedman, Ian (ed.). (1995) Socialism and Marginalism in Economics (1870-1930). London: Routledge.
• Stokes, E. E. (1958) “Bernard Shaw and Economics”. In: The Southwestern Social Science Quarterly, December, Vol. 39, No. 3, pp. 242-248.
• Tribe, Keith (2022) Constructing Economic Science: The Invention of a Discipline 1850-1950. Oxford: Oxford University Press.
• Wallas, Graham (1948) “The organization of society”. In: Shaw, Bernard (ed.). Fabian Essays. London: The Garden City Press, pp. 165-212.
• Webb, Sidney. (1948) “Introduction”. In: Shaw, Bernard (ed.). Fabian Essays. London: The Garden City Press, pp. XV-XXVII.
• Wicksteed, Philip (1933). The Commonsense of Political Economy. Vol. 2. London: Routledge & Kegan Paul Limited.
• Williams, Raymond (1985). Writing in society. London: Verso.

• 1
  The text in question can be viewed at the following link: https://www1.folha.uol.com.br/ilustrissima/2016/02/1738971-metodo-e-nao-retorica-deve-reinar-na-economia.shtml. Viewed on 04/06/2024.
• 2
  Beugelsdijk and Maseland develop an instructive overview of the separation of the economy from culture. For the authors: “Economics and culture are difficult to reconcile. It was not always like that, however. The contemporary interest in the relation between culture and economics and how to include culture in economics is not something completely new. Early economists did not yet believe that issues like morality, beliefs and traditions lay outside the normal bounds of economics. Up until the early twentieth century, what we now call culture and economics were naturally studied together. Scholars such as Adam Smith, Karl Marx, Gustav Schmoller, Max Weber and Thorstein Veblen have all contributed more or less explicitly to the subject in the past” (Beugelsdijk, Maseland 2010: 16).
• 3
  By the 1930s there was a clear convergence between British, American, German, Austrian, Swedish, Dutch, French, and Italian specialised journals around a common core for the discipline of economics. In the course of 50 years, a new academic discipline had emerged and established itself” (Tribe 2023: 3).
• 4
  If economics was averse to the other sciences, neither were these sciences open to economics. As Gallagher mentions: “Our disdainful view of it had many sources [...] but it seldom came from any serious encounters with texts by political economists. We preferred to get them secondhand, already packaged as the direct ideological justification of a particularly rapacious capitalism” (Gallagher 2006: 1).
• 5
  Adjective used to describe George Bernard Shaw or his works.
• 6
  “First of all, it is highly doubtful that we can speak of one economic science in the 1860’s as if it were a heritage shared between economists all over the world, studying the same treatises, reading the same journals and employing a common set of tools in the analysis of a similar range of problems. A glance at Hutchison’s terse accounts of the state of economic thought around 1870 in England, Germany, Austria, France, and the United States will show that there were at least two, if not three or four, ‘models’ of economic science extant at that time” (Blaug 1972: 5).
• 7
  In reality, it was created only as Democratic Federation, passing the name Social Democratic Federation in 1883.
• 8
  The following quote from Graham Wallas, one of the founders of the Fabian Society, from which he eventually withdrew in 1904, makes explicit his group’s belief in the slow evolution of societies and their improvement through gradual reform: “The growing recognition, due in part to Darwin, of causation in the development of individuals and societies; the struggles and disappointments of half century of agitation; the steady introduction of Socialistic institutions by men who reject Socialist ideas, all incline us to give up any expectation of a final and perfect reform. We are more apt to regard the slow and often unconscious progress of the Time spirit as the only adequate cause of social progress, and to attempt rather to discover and proclaim what the future must be, than to form an organization of men determined to make the future what it should be (Wallas 1948: 172).
• 9
  Excerpted from: https://www.marxists.org/subject/economy/authors/fabians/earlyenglishvalue/gbs-nationalreformer-18870807.htm. Viewed on 04/06/2024. In the preface he wrote for the third volume of Capital, Engels mentions George Bernard Shaw. In analyzing the formulations of the German statistician Wilhelm Lexis, Engels ironically mentioned that “I even suspect that if Mr. George Bernard Shaw had been familiar with this theory of profit, he would have likely fallen to with both hands, discarding Jevons and Karl Menger, to build anew the Fabian church of the future upon this rock”. Engels’s verdict on Shaw: “very talented and witty as a belletrist but absolutely useless as an economist and politician, although honest and not a careerist” (Marx 1982: 446).
• 10
  For many years, the sale of the Fabian Essays and Fabian Tracts accounted for most of the Fabian Society’s income (O’Neil 1986: 127). According to Mark Bevir (2011: 172): “The essays were a spectacular success, beyond all conceivable expectations. The first one thousand copies sold out in a month. By 1900 there were American, Dutch, German, and Norwegian editions”.
• 11
  “Here we have seen that he clung to the Ricardian tradition, generalising the notion of economic rent so that it included income derived from ownership of capital as well as income derived from ownership of land. The analogy between the two he developed in a vigorous and graphic fashion; and although this exposition somewhat lacked the rigour that economists demanded if deductive argument were to carry conviction, the substantial common sense of the conclusion contrasted boldly with the sophistries about ‘abstinence’ and ‘productivity of capital’ in which the analyses of economists at the time had become enmeshed. ... Moreover most of the incomes of the professional middle class - the so-called ‘reward of ability’, and especially that ‘artificial rent of ability inflated by snobbery and the requirements of social status’ - were part of the same genus of unearned surplus or rent, as were also the profits of industrial management. ‘Private property, by cheapening the labourer to the unlost in order to get the greatest surplus out of him, lowers the margin of human cultivation, and so raises the rent of ability’!” (Dobb 2012: 208).
• JEL Classification:
  B13; B14.

Publication Dates

• Publication in this collection
  24 Mar 2025
• Date of issue
  2025

History

• Received
  02 Oct 2023
• Accepted
  11 June 2024