The Economics of A Christmas Carol

The economics underlying Dickens' A Christmas Carol are far more radical and profound than most people realise. Dickens presents not an economic theory as such but instead a challenge to the then economic theory of the free market which still prevails today. Most economists deal in assumptions. Hence the old jokes about economists such as 'How does an economist change a light bulb? Well, the first thing he does is assume a light bulb' and 'How does an economist eat a tin of beans washed up on a desert island? He assumes a can-opener'. What most economic theories and systems 'assume' is limited supply (scarcity) and unlimited demand (greed). Cost decides who among 'the demanding' gain the 'limited supply'. Dickens dared to assume not scarcity and greed but abundance and generosity.

The prevailing economic theory of the early nineteenth century was the acceptance of the unrestrained free market. It is a theory that still has its supporters today. Just before Christmas in 1983, Ed Meese, then the Presidential counsellor to US President Ronald Reagan and later Reagan's Attorney General, made a speech to the National Press Club. He said, "Ebenezer Scrooge suffered from bad press in his time. If you really look at the facts, he didn't exploit Bob Cratchit." Meese went on to explain that "Bob Cratchit was paid 10 shillings a week, which was a very good wage at the time... Bob, in fact, had good cause to be happy with his situation. He lived in a house not a tenement. His wife didn't have to work... He was able to afford the traditional Christmas dinner of roast goose and plum pudding... So let's be fair to Scrooge. He had his faults, but he wasn't unfair to anyone. The free market wouldn't allow Scrooge to exploit poor Bob... The fact that Bob Cratchit could read and write made him a very valuable clerk and as a result of that he was paid 10 shillings a week." Factually Bob's wage according to Dickens was fifteen shillings a week not ten shillings ( Bob had but fifteen bob a-week himself; he pocketed on Saturdays but fifteen copies of his Christian name; and yet the Ghost of Christmas Present blessed his four-roomed house ) but the thrust of Meese's argument was that the 'free market', better known to economic theorists as laissez-faire , served Bob well and had provided him with a living wage to feed his family. Ed Meese omitted to say that the free market economy in England in the 1840's, a period that became known as the 'Hungry Forties', was in deep depression and an excess of labour was keeping wages low. Cratchit could hardly ask for more when there were many willing to take his place and for probably for much less.

However, Meese's broader point was about the ability of the free market to provide employment. This theory has its origins in laissez-faire economics, a doctrine first introduced by Adam Smith in 1776 in his book The Wealth of Nations . Smith held that the economic system functions best, meaning efficiently and productively, when there is no interference by government. Laissez-faire comes from the French 'let (them) act' though it is sometimes translated by its opponents as 'let alone' economics.

Laissez-faire economics had a major world wide revival in the 1980's. Both Reagonomics in the US and Thatcherism in the UK have their origins in the free market economics of the early nineteenth century and the monetarist theories of Milton Friedman and the Chicago School of Economics developed in the 1960s. The film version of A Christmas Carol starring George C. Scott in 1984 drew strong parallels between the economic systems of the 1840s and the 1980s. Scrooge (Scott), as he watches the Christmas meal of the Cratchits, makes a similar point to that of Ed Meese, saying that if it wasn't for him there would be no food on the table. However, when Scrooge sees the consequences of unemployment as opposed to a family on a low wage income, he then realises that the economic system he supports has major social flaws.

The economics of the George C. Scott Scrooge and Edwin Meese (who quickly became known as 'Edwinezer Meese') had been out of fashion for many years. After the Second World War the Keynesian economic theory of financial and social intervention in the market put forward by John Maynard Keynes (1883-1946) who dominated the political and economic landscape. Keynesian economics argued that the level of demand could be and should be manipulated through fiscal intervention in order to create full employment. Government spending could be set at such a level that it would, through altering levels of demand, maintain a situation of full employment. However, one of the problems with this system is that the economic cycle is difficult to predict and in practice periods of full employment were matched by periods of recession. From Dickens's economic point of view both Adam Smith (free market) and John Maynard Keynes (interventionism) approach the situation from the wrong starting point. Both laissez-faire and Keynesian theory make the assumption of limited supply and unlimited demand. The daring of Dickens' challenge to economic theory was to say through the Ghost of Christmas Present: let's assume plenty and through the Ghost of Christmas Future: see the terrors that isolation and not sharing will bring.

The Economics of Scrooge

Two gentlemen enter Scrooge's counting-house collecting to "make some slight provision for the Poor and Destitute". Scrooge asks them, "Are there no prisons? And the Union workhouses? The Treadmill and the Poor Law are in full vigour, then?" The gentlemen answer: yes, all are in operation. They then attempt to solicit a donation. Scrooge replies, "I don't make merry myself at Christmas and I can't afford to make idle people merry. I help to support the establishments I have mentioned -- they cost enough; and those who are badly off must go there." Scrooge is told that many can't and besides, "many would rather die." Then comes Scrooge's famous retort: "If they would rather die they had better do it, and decrease the surplus population." He adds: "It's not my business. It's enough for a man to understand his own business, and not to interfere with other people's. Mine occupies me constantly. Good afternoon, gentlemen!"

Scrooge's economics are at least consistent. Whatever faults he has at this stage he is not a hypocrite. He doesn't make merry at Christmas, so why should he aid others in their merriment? Besides, there is the law and the state and he pays his taxes to support the establishments designed to provide for the poor and destitute. He believes the poor are lazy. His reasoning behind the destitution of the poor seems to be based on his logical assumption that if he eats it is because he works and so, if the poor are in want of food it is because they don't work and are, as he puts it, idle . It's an odd way of thinking certainly but it has its own logic.

Such concerns anyway, are of course none of Scrooge's business. He believes such matters are out of his hands. If there isn't enough food to go round it is because the mathematics of the economic situation prove that there are too many people wanting to eat. It makes sense, therefore, to him that it would actually help matters if the surplus population died. Economically that would be beneficial. Scrooge could also have pointed out that since he never married and had children, unlike his clerk with six children, he at least has not added to the surplus population. Scrooge's economics are clearly laissez-faire . It is logical and well-reasoned. There is though one problem he has not yet considered about the 'surplus population' in the economy: they are people.

The term 'surplus population' used by Scrooge has its origins in the thinking of Thomas Malthus in his essay on "The Principle of Population" written in 1798. He linked, mathematically, the acceleration in the population growth with the potential growth in the food supply. He concluded they were not in balance and could never be in balance. The difference between the number that can be fed and the number that want to eat is the 'surplus population'

The basis of the Malthusian doctrine is that the "population increases in a geometric ratio, while the means of subsistence increases in an arithmetic ratio." The human need for food, argues Malthus, like the human sexual drive, can not be controlled. Consequently, in time, because of limited supply, resources will be used up and life will come to an end. In a famous passage Malthus said, " A man who is born into a world already possessed, if he cannot get subsistence from his parents on whom he has a just demand, and if the society do not want his labour, has no claim of right to the smallest portion of food, and, in fact, has no business to be where he is. At nature's mighty feast there is no vacant cover for him. She tells him to be gone, and will quickly execute her own orders, if he does not work upon the compassion of some of her guests." Scrooge's workhouse poor and his surplus population are not welcome at nature's mighty feast if they do not work. If they don't work, they starve and die.

Malthus asserted that Nature had a set natural limit on the population of plants and animals -- sparing of room and the nourishment to rear them . Two things did though keep the human population down : vice and misery ( Among plants and animals its effects are waste of seed, sickness, and premature death. Among mankind, misery and vice .) These vices and miseries and their agents of war, famine and disease were a necessary evil. In a later edition of his work in 1803 Malthus added moral restraint ( By moral restraint I mean a restraint from marriage, from prudential motives, with a conduct strictly moral... Delaying the gratification of passion from a sense of duty. ) This thought is surely in the mind of Dickens and indeed Scrooge when Scrooge lets go of his sweetheart, Belle. Scrooge once again is very reasoning in his argument. Discussing the world's attitude to poverty he says, "There is nothing on which it is so hard as poverty; and there is nothing it professes to condemn with such severity as the pursuit of wealth!"

Belle says Scrooge fears the world too much. She then makes an insightful psychological remark about Scrooge's fear of poverty: "All your other hopes have merged into the hope of being beyond the chance of its sordid reproach. I have seen your nobler aspirations fall off one by one, until the master-passion, Gain, engrosses you." Given Scrooge's early childhood neglect it is hardly surprising that his psychology needs to make sure he is somehow always safe. Someone who did not think about marriage as Scrooge does is Scrooge's nephew. If Scrooge believed in Malthus then the question he asks of his nephew Why did you get married? is really an economic question not a personal one. It is also possible to see why Scrooge has a none too veiled contempt for his clerk with a large family ("My clerk, with fifteen shillings a week, and a wife and family, talking about a merry Christmas. I'll retire to Bedlam" ). They did not follow Malthus and must suffer the consequences of their ill advised ways.

Scrooge's economics, largely based on those of Thomas Malthus, is isolationist and lacking any social dimension. Its mathematical equation of food production and population growth and its denial of human instincts all betray a rigid economic inhumanity. A Christmas Carol though is all about the potential of the human character to change and when Scrooge's economic theory is put to the test by seeing real human experience in the third part (or stave) of the story with the Ghost of Christmas Present Scrooge's views begin to develop a social conscience.

The Economics of the Ghost of Christmas Present

Economic theory is dominated by the assumption of a limited supply and an inexhaustible demand. But supposing that was turned on its head. Supposing there was an inexhaustible supply and a limited demand. Leaving aside all other supplies and demands, supposing there was enough food to feed everyone if everyone agreed to a limiting fair share. Instead of scarcity there would be plenty, or at least enough for all. This idea is essentially what the Ghost of Christmas Present personifies: the potential of plenty:

Heaped up on the floor, to form a kind of throne, were turkeys, geese, game, poultry, brawn, great joints of meat, sucking-pigs, long wreaths of sausages, mince-pies, plum-puddings, barrels of oysters, red-hot chestnuts, cherry-cheeked apples, juicy oranges, luscious pears, immense twelfth-cakes, and seething bowls of punch, that made the chamber dim with their delicious steam. In easy state upon this couch, there sat a jolly Giant, glorious to see: who bore a glowing torch, in shape not unlike Plenty's horn, and held it up, high up, to shed its light on Scrooge, as he came peeping round the door.

Of course the heap isn't real in the same way that Scrooge's gruel is real but it does represent a real economic possibility. The call the Ghost of Christmas Present makes is based on the economics of need. His blessing on a meal is "to a poor one most" because "it needs most". If Scrooge did not hoard his wealth then plenty could become a real possibility.

In order to give Scrooge a social insight into the ramifications of his economics, the Ghost of Christmas Present offers Scrooge something that is not experienced by the economists of the Adam Smith or the Thomas Malthus persuasion and their followers in the 1980s: the real result of the surplus population theory when applied to life:

"Spirit," said Scrooge, with an interest he had never felt before, "tell me if Tiny Tim will live."

"I see a vacant seat," replied the Ghost, "in the poor chimney-corner, and a crutch without an owner, carefully preserved. If these shadows remain unaltered by the Future, the child will die."

"No, no," said Scrooge. "Oh, no, kind Spirit, say he will be spared."

"If these shadows remain unaltered by the Future, none other of my race," returned the Ghost, "will find him here. What then. If he be like to die, he had better do it, and decrease the surplus population."

Scrooge hung his head to hear his own words quoted by the Spirit, and was overcome with penitence and grief.

"Man," said the Ghost, "if man you be in heart, not adamant, forbear that wicked cant until you have discovered What the surplus is, and Where it is. Will you decide what men shall live, what men shall die. It may be, that in the sight of Heaven, you are more worthless and less fit to live than millions like this poor man's child. Oh God! to hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust."

The Ghost of Christmas Present's economics insists that any economic theory be tested and measured not against a theoretical mathematical numerical surplus but against the realities of people's lives. And deaths.

The Ghost has one more important economic lesson and that is the fundamental need to respond to Ignorance. In effect the Ghost's 'economics' here are about human 'investment'. No amount of money, capital, property or gold can make up the shortfall when love, care, education and moral guidance are absent. 'Ignorance' in A Christmas Carol is famously and dramatically personified by a boy:

"Oh, Man. look here. Look, look, down here." Exclaimed the Ghost.

They were a boy and a girl. Yellow, meagre, ragged, scowling, wolfish; but prostrate, too, in their humility. Where graceful youth should have filled their features out, and touched them with its freshest tints, a stale and shrivelled hand, like that of age, had pinched, and twisted them, and pulled them into shreds. Where angels might have sat enthroned, devils lurked, and glared out menacing. No change, no degradation, no perversion of humanity, in any grade, through all the mysteries of wonderful creation, has monsters half so horrible and dread.

Scrooge started back, appalled. Having them shown to him in this way, he tried to say they were fine children, but the words choked themselves, rather than be parties to a lie of such enormous magnitude.

"Spirit. are they yours." Scrooge could say no more.

"They are Man's," said the Spirit, looking down upon them. "And they cling to me, appealing from their fathers. This boy is Ignorance. This girl is Want. Beware them both, and all of their degree, but most of all beware this boy, for on his brow I see that written which is Doom, unless the writing be erased. Deny it.' cried the Spirit, stretching out its hand towards the city. "Slander those who tell it ye. Admit it for your factious purposes, and make it worse. And abide the end."

"Have they no refuge or resource." cried Scrooge.

"Are there no prisons.' said the Spirit, turning on him for the last time with his own words. "Are there no workhouses."

In the scene with the gentlemen collecting for charity Scrooge does not know about the realities of surplus population ("Besides -- excuse me -- I don't know that." ). Now he does.

The Economics of the Ghost of Christmas Future

Scrooge is presented with a scene in the future where three people have taken from a dead man's goods that they then sell on to old Joe, a fence. Dickens tells us: Scrooge listened to this dialogue in horror. As they sat grouped about their spoil, in the scanty light afforded by the old man's lamp, he viewed them with a detestation and disgust, which could hardly have been greater, though they had been obscene demons, marketing the corpse itself. One of the women who stole from the dead man then makes an ironic point about the economic gain they have achieved as a result of the man's death: "Ha, ha!" laughed the same woman, when old Joe, producing a flannel bag with money in it, told out their several gains upon the ground. "This is the end of it, you see. He frightened every one away from him when he was alive, to profit us when he was dead. Ha, ha, ha!" Scrooge is then shown the dead man, lying unwatched, unwept, uncared for . An even more unpleasant side of life benefits as a result of this man's death. Something was getting closer to the dead body: A cat was tearing at the door, and there was a sound of gnawing rats beneath the hearth-stone. What they wanted in the room of death, and why they were so restless and disturbed, Scrooge did not dare to think. Unchecked, what happens to this man's possessions and worse his corpse is the free market in its most macabre incarnation. The only joy as a result of the man's death is felt by a couple who owed the man money. Of course 'the man' is Scrooge but fear puts Scrooge in denial of his destiny.

Scrooge begs to see "some tenderness connected with a death". He is taken to the house of Bob Cratchit and sees that the prediction of the Ghost of Christmas Present has come to pass as he witnesses the family mourning the death of Tiny Tim. Scrooge then sees the realities of his own death, the lonely grave in the church bearing the name: Ebenezer Scrooge. Although never fully expanded on, Scrooge is intelligent enough to know that the two deaths are linked, for if Scrooge does not change and help the Cratchits then Tiny Tim's life will indeed end. Scrooge's vision of his 'death' and Tiny Tim's gives birth not just to Scrooge's new life but life to the surplus population that would otherwise end up dead. That journey towards new life for Tim begins with a willingness on Scrooge's part to spread his wealth.

The call not to hoard wealth but instead to share it was a call that generally went unanswered in Dickens' time, and still goes unanswered today. John Ruskin's political essay "Traffic", written later in the nineteenth century, challenges the hoarding mentality of business:

You gather corn -- will you bury England under a heap of grain, or will you, when you have gathered, finally eat? You gather gold -- will you make your house-roofs of it, or pave your streets with it? That is still one way of spending it. But if you keep it, that you may get more, I'll give you more, I'll give you more... I'll give you all the gold you want -- all you can imagine -- if you can tell me what you'll do with it. You shall have thousands of gold pieces; thousands and thousands -- millions -- mountains, of gold: where will you keep them? Do you think the rain and dew would then come down to you, in the streams from such mountains which God has made for you, of moss and whine-stone? But it is not gold you want to gather! What is it? Greenbacks? No; not those neither. What is it then? Not gold, not greenbacks, not ciphers after a capital I? You will have to answer, after all, "No, we want, somehow or other, money's worth."

Critics of Dickens often say he pointed out social injustice but offered no solution. Dickens, though, was a story teller not a politician. His politics were based on the moral decency of his fellow man. George Orwell in his essay on Dickens said that Dickens is not in the accepted sense a revolutionary writer. But it is not at all certain that a merely moral criticism of society may not be just as 'revolutionary' as the political-economic criticism which is fashionable at this moment... Two viewpoints are always tenable. The one, how can you improve human nature until you have changed the system? The other, what is the use of changing the system until you have improved human nature? 'If men would behave decently the world would be decent' is not such a platitude as it sounds. Other critics have seized on the abundance of the Ghost of Christmas Present as Dickens promoting excess. This is too literal a view of the heap of food and with Dickens' writing, often in the form of a fable or fairy story, one shouldn't ever be too literal. He was a myth maker more than a social historian. His abundance is about the potential of plenty as opposed to the assumption of scarcity. And, as Scrooge learns, Christmas futures, to be secure for all, must also be about responding to need.

The Economics of Dickens in His Writing

Social economics was a theme never far away from the writing of Dickens. Two works though are worth mentioning specifically, The Chimes and Hard Times . One contemporary critic of A Christmas Carol suggested that if the Cratchits ate the turkey that Scrooge had sent round to them then that meant another poor family had gone without. The reviewer was the economist Nassau Senior, writing in the Westminster Review , a radical periodical. Senior argued that Scrooge went against the laws of political economy: The process whereby poor men are able to earn good wages, wherewith to buy turkeys for themselves, does not enter into the account; indeed, it would quite spoil the denouement and all the generosity. Who went without turkey and punch in order that Bob Cratchit might get them -- for, unless there were turkey and punch in surplus, some one must go without -- is a disagreeable reflection kept wholly out of sight . Again, like Thomas Malthus, this critic was working on a supply-side economics mentality of limit. Dickens took his revenge by mocking the logic in a follow up Christmas story: The Chimes :

"Who eats tripe?" said Mr. Filer warmly. "Who eats tripe?"

Trotty made a miserable bow.

"You do, do you?" said Mr. Filer. "Then I'll tell you something. You snatch your tripe my friend out of the mouths of widows and orphans."

"I hope not sir," said Trotty faintly. "I'd sooner die of want!"

"Divide the amount of tripe before mentioned, Alderman," said Mr. Filer "by the estimated number of existing widows and orphans and the result will be one pennyweight of tripe to each. Not a grain is left for that man. Consequently he's a robber."

Trotty was so shocked that it gave him no concern to see the Alderman finish the tripe himself. It was a relief to get rid of it anyhow.

Trotty, a messenger, is given a note to convey: The Alderman cut him short by giving him the letter from his pocket. Toby would have got a shilling too; but Mr. Filer clearly showing that in that case he would rob a certain given number of persons of ninepence-halfpenny a-piece he only got sixpence; and thought himself very well off to get that.

The Chimes also develops Dickens' criticism of 'moral restraint' and the Malthusian "first principles of political economy" :

"What do you mean!" cried Filer sharply. "Married!"

"Why yes we're thinking of it Master," said Richard. "We're rather in a hurry you see in case it should be Put Down first."

"Ah!" cried Filer with a groan. "Put that down indeed Alderman and you'll do something. Married! Married!! The ignorance of the first principles of political economy on the part of these people; their improvidence; their wickedness; is by Heavens enough to -- Now look at that couple will you!"

Well? They were worth looking at. And marriage seemed as reasonable and fair a deed as they need have in contemplation.

"A man may live to be as old as Methuselah," said Mr. Filer "and may labour all his life for the benefit of such people as those; and may heap up facts on figures facts on figures facts on figures mountains high and dry; and he can no more hope to persuade 'em that they have no right or business to be married than he can hope to persuade 'em that they have no earthly right or business to be born. And that we know they haven't. We reduced it to a mathematical certainty long ago!"

Dickens's Hard Times has several parallels with A Christmas Carol . One of its themes is imagination, an important thread in the Scrooge story. Hard Times , like Carol is also concerned with economic theory and its application without thinking of the human consequences. Mr. Gradgrind, the father in Hard Times , is an economic theorist in the Adam Smith and Thomas Malthus mould; he even calls his youngest sons Adam Smith and Malthus. Gradgrind sits writing in the room with the deadly statistical clock, proving something no doubt - probably, in the main, that the Good Samaritan was a Bad Economist. Dickens says that his room was: quite a blue chamber in its abundance of blue books. Whatever they could prove (which is usually anything you like), they proved there, in an army constantly strengthening by the arrival of new recruits. In that charmed apartment, the most complicated social questions were cast up, got into exact totals, and finally settled - if those concerned could only have been brought to know it. As if an astronomical observatory should be made without any windows, and the astronomer within should arrange the starry universe solely by pen, ink, and paper, so Mr. Gradgrind, in his Observatory (and there are many like it), had no need to cast an eye upon the teeming myriads of human beings around him, but could settle all their destinies on a slate, and wipe out all their tears with one dirty little bit of sponge.

Mr. Gradgrind brought up his daughter Louisa not in an imaginative world but a world of facts. But, like Scrooge, she eventually finds her way into a house which is not filled with statistics but with people:

For the first time in her life Louisa had come into one of the dwellings of the Coketown Hands; for the first time in her life she was face to face with anything like individuality in connection with them. She knew of their existence by hundreds and by thousands. She knew what results in work a given number of them would produce in a given space of time. She knew them in crowds passing to and from their nests, like ants or beetles. But she knew from her reading infinitely more of the ways of toiling insects than of these toiling men and women.

In the story, Gradgrind's son becomes involved in a robbery and his father appeals to a man who can help, Bitzer, a man who Gradgrind educated in his own economic philosophy, which now comes back to plague him:

"What motive - even what motive in reason - can you have for preventing the escape of this wretched youth," said Mr. Gradgrind, "and crushing his miserable father? See his sister here. Pity us!"

"Sir," returned Bitzer, in a very business-like and logical manner, "since you ask me what motive I have in reason, for taking young Mr. Tom back to Coketown, it is only reasonable to let you know. I have suspected young Mr. Tom of this bank-robbery from the first. I had had my eye upon him before that time, for I knew his ways. I have kept my observations to myself, but I have made them; and I have got ample proofs against him now, besides his running away, and besides his own confession, which I was just in time to overhear. I had the pleasure of watching your house yesterday morning, and following you here. I am going to take young Mr. Tom back to Coketown, in order to deliver him over to Mr. Bounderby. Sir, I have no doubt whatever that Mr. Bounderby will then promote me to young Mr. Tom's situation. And I wish to have his situation, sir, for it will be a rise to me, and will do me good."

"If this is solely a question of self-interest with you - "Mr. Gradgrind began.

"I beg your pardon for interrupting you, sir," returned Bitzer; "but I am sure you know that the whole social system is a question of self-interest. What you must always appeal to, is a person's self-interest. It's your only hold. We are so constituted. I was brought up in that catechism when I was very young, sir, as you are aware."

'Supply-side' economics, where the focus is on the assumption of limited supply, continues to dominate economic thinking. Fear of scarcity is part of our way of thinking and, because of Scrooge's lost childhood, it is certainly part of Scrooge's psychology. One of the points Dickens is making though is that fear of scarcity and economic withdrawal can lead to the dangers of Ignorance and potential social unrest. A Christmas Carol is like the biblical Parable of the Talents, for nothing of importance will grow if talents are not used wisely. Dickens' work is in part a plea for a new and radical way of economic thinking, suggesting and imagining that at least as far as food supply is concerned it will be, and now is, possible to feed the nation. If not, then at least find a means of fair distribution of what supply does exist. Writing today, when Britain can feed itself, he may well have changed his social message to feed the world. However, a rise in the demand of consumerism may have left him more pessimistic. These new 'demands' are a different sort of Christmas Phantom -- often mere phantoms created by commercial advertising (with advertising, emotional security often depends on satisfying a want you didn't even know you had until the advert came along.) Ironically this is especially true at Christmas, which, as someone will undoubtedly say this Christmas, "becomes more and more commercial every year". But, as C. S. Lewis observed, Mr. Pickwick only took a cod with him to Dingley Dell and the reformed Scrooge ordered only a turkey for his clerk. If fish and poultry were the only presents we gave friends at Christmas the whole affair would be so much easier to manage. Alternatively, we could follow the practice of Charles Dickens and not give presents at all outside the family. Such radicalism would undoubtedly lead to a decline in the commercialism of Christmas. But who wants that?