The Factory Act of 1844 and the Economic Inefficiency of Banning Child Labor

One of the dominant threads–sometimes explicit, sometimes implicit–in any modern conversation about employer-side regulation of the workplace (health and safety standards, worker unions etc) is that such constraints are invariably economically inefficient, a burden on the profit-making potential of the enterprise. The parameters for this conversation are drawn from a sparse set consisting of technocratic values: revenue-maximization and technological efficiency, with human welfare as a to-be-hoped-for but not inevitable by-product. Some winners and some losers, you see.

‘Twas ever thus, of course. Consider for instance the debates surrounding the passage of The Factories Act of 1844  by the Parliament of the United Kingdom, to regulate the number of hours worked by women and children in industrial establishments. Some of its benevolent provisions limited the number of hours that children between the ages of 9-13 could work to a mere nine hours a day, others required machinery be fenced in, and yet others required accidental deaths to be reported to a surgeon and investigated.

Unsurprisingly this Act met with determined opposition from factory owners, bemoaning, I presume, the ‘nanny-state’ and busy-body bureaucrats determined to stick their oars into the frictionless, benign churnings of market forces and technological imperatives. For instance, it was ‘inefficient’ to use full-grown workers to do work that could be done just as well–and sometimes better–by children. Adult labor was more expensive; employing it would lead to ruination. Increased poverty and unemployment, decreased competitiveness in the international market for manufactured goods were but the least of these consequences. Sir J. Graham, who spoke up vigorously on behalf of factory owners, said,

We have arrived at a state of society when without commerce and manufactures this great community cannot be maintained. Let us, as far as we can, mitigate the evils arising out of this highly artificial state of society; but let us take care to adopt no step that may be fatal to commerce and manufactures.

Sir Graham then went on to greater concreteness as he noted that reducing the workday for women and children would throw the current depreciation cycle for machinery off-kilter–a factor in assessing year-end balance sheets–and result in lower wages, higher prices for goods and trade imbalances. Thus,

In the close race of competition which our manufacturers are now running with foreign competitors …such a step would be fatal…

Regulation was felt by Sir Graham to be:

[B]ased on a false principle of humanity, which in the end is certain to defeat itself.

Its proponents were disingenuous; for what they were offering was:

[I]n principle an argument to get rid of the whole system of factory labor.

Well said, Sir Graham. Someone has to step up and speak out on behalf of the entrepreneur, constantly on guard against the intrusion of profit-denying Whitehall mavens. The next thing you know these do-gooders will be asking for environmental safeguards against economically-necessary and profit-ensuring pollution. Better to man the barricades now.

Less facetiously, I hope to write a follow up to this little story very soon.

Source: Andrew FeenbergBetween Reason and Experience: Essays in Technology and Modernity (MIT Press, Cambridge: MA, 2010, pp-11-12)

3 thoughts on “The Factory Act of 1844 and the Economic Inefficiency of Banning Child Labor

  1. I studied a fair amount on safey and standards, in a variety of classes, but some of it was in graduate economics, business ethics, etc. the conclusion that I, and most drew, was that there can be no compromise on safety, and some measure of freedom. Safety and conditions are the highest priority. I find child labor distasteful, but a family that might otherwise be picking garbage would likely find my opinion to be cavalier. I believe that Milton Friedman did a study showing that cheap labor going to countries, of course accounting for safety and conditions, was the best thing, because the alternative was so much worse. He also discovered that the generational progress that resulted was tremendous. The next generation would be more educated, and ultimately as the economy grew, wages went up. We are seeing this now in the development of the middle class in china, and as a result, American and in particular Mexican manufacturers are becoming more competitive and sourcing jobs. Look atthe outsourcing of jobs from the US to India,on cost. Tremendously educated and skilled workers at a much lower cost, but again, it is wonderful for the Indian economy, and will ultimately result in wage growth. It’s a very interesting topic from both an economic and moral perspective. What is the right thing to do? We can begin, of course, by being vigilant and uncompromising around safety and conditions.

  2. JR,

    Thanks for the comments. I think the important lesson from that child labor story is that some values that we might treasure as a society might not enter so easily into the cost-benefit analysis style of reasoning that always seems to be the rage. And of course, once that value was taken on board, then societal values changed as well such that now in our society, we’d find it ridiculous to let that enter into any CB calculations. My general point was that environmental protection is one such value as well, one whose demotion in our priorities will seem ludicrous to future generations.

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