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When Richard Nixon Met Karl Polanyi

On the Guaranteed Annual Income, Nixon turned to Polanyi.

In 1969, while he was working on Richard Nixon’s Family Assistance Plan, which would have guaranteed an income of $1600 plus $800 in food stamps to every family of four, Daniel Patrick Moynihan was deputized by Nixon to investigate the historical accuracy of one of Karl Polanyi’s claims in The Great Transformation.

Polanyi had argued that Britain’s Speenhamland system — like Nixon’s plan, it would have guaranteed an annual income to poor families, regardless of whether they worked or not — had the perverse effect of making the poor poorer. Reiterating claims made by Marx and Engels, Polanyi wrote that Speenhamland allowed, even encouraged, employers to hire workers at below-subsistence wages (the poor were guaranteed an income regardless of whether they worked). Because workers would start losing their income supports once they earned more than a subsistence wage, and because employers were more than happy to have local parishes supplement or subsidize wages, Speenhamland effectively put a cap on wages. Productivity went down, and with it, poor rates and income supports. The long-term result, said Polanyi, was increased immiseration among the poor.

Few people have attended to Polanyi’s caveat that had the working poor not been prohibited by the Anti-Combination Laws of 1799–1800 from organizing themselves they might have been able to reverse these effects. (Admittedly, that point only gets a passing mention in Polanyi’s chapters on Speenhamland.) Instead, his argument has been taken as Exhibit A of Albert Hirschman’s perversity thesis: policies designed to achieve positive ends, particularly when those ends relate to the poor, often produce the opposite of their aims. (Hirschman himself made a nod to these linkages.)

When Nixon began mooting his version of Speenhamland in the early part of 1969, talk of perversity (in all senses) was very much in the air. In mid-April, the economist Martin Anderson — then a White House staffer, but previously a devotee of Ayn Rand; Anderson has also been credited with bringing Alan Greenspan, another Randian, into government — prepared a report on the history of poor assistance, which was essentially little more than a series of extracts about Speenhamland from The Great Transformation.

So troubled was Nixon by this history that he had Moynihan personally undertake an assessment of Polanyi’s findings. Moynihan set his staff right to it, resulting in a team of bureaucrats surveying all the most up-to-date historical literature on Speenhamland.

As Fred Block and Margaret Somers — from whose wonderfully informative 2003 article in Politics & Society “In the Shadow of Speenhamland: Social Policy and the Old Poor Law” I have cribbed this story — concluded:

The Family Assistance Plan was ultimately defeated in the US Senate but only after Richard Nixon had a conversation about the work of Karl Polanyi.