Arnold Toynbee - Economic History

Economic History

According to Arnold Toynbee, applying the historical method in economics would reveal how supposedly universal economic laws were, in fact, relative. For example, he argued that, despite commonly held beliefs, free trade was not generally advantageous in itself, but only under certain circumstances, which should not be considered absolute. Toynbee considered few laws as universally true, such as the law of diminishing returns. Therefore, there were no universal rules as to how strongly the state should interfere in the marketplace; all depended on the situation and varying degrees of regulation could be appropriate.

Another idea Toynbee dismissed was that free competition was universally beneficial to economic and societal progress, especially as reflected in its apotheosis in Social Darwinism, which promoted laissez-faire capitalism. Toynbee did not equate "a struggle for mere existence and a struggle for a particular kind of existence." From the very beginning of history, he argued, all human civilization was essentially designed to "interfere with this brute struggle. We intend to modify the violence of the fight, and to prevent the weak being trampled under foot." Although economic competition does have its advantages, being the driving force behind technical progress, these were "gained at the expense of an enormous waste of human life and labour, which might be avoided by regulation." Toynbee suggested a differentiation between competition in production on the one hand, and competition in the distribution of goods on the other:

the struggle of men to outvie one another in production is beneficial to the community; their struggle over the division of the joint produce is not. The stronger side will dictate its own terms; and as a matter of fact, in the early days of competition, the capitalists used all their power to oppress the labourers, and drove down wages to starvation point. This kind of competition has to be checked; there is no historical instance of its having lasted long without being modified either by combination or legislation, or both. In England both remedies are in operation, the former through Trades Unions, the latter through factory legislation.

In itself, a market based on competition was neither good nor bad, but like "a stream whose strength and direction have to be observed, that embankments may be thrown up within which it may do its work harmlessly and beneficially". However, in the early phase of industrial capitalism "it came to be believed in as a gospel, from which it was regarded as little short of immoral to depart".