DRI-219 for week of 12-16-12: The Economics of Dickens’ ‘A Christmas Carol’

An Access Advertising EconBrief:

The Economics of Dickens’ ‘A Christmas Carol’

Charles Dickens’ “A Christmas Carol in Prose,” written in 1843, is one of the hardiest of all Christmas perennials and a seminal example of the Christmas story. Dickens’ gift for evoking emotion and vivid ingredients like ghosts, sickly children and hearty Christmas celebrations made the tale a natural for the movies. Memorable versions came out of Hollywood in 1938 and Great Britain in 1951, while television gave us a distinctive reprise in 1984. (Herein, we follow the example of the movies, which typically shorten the title by omitting the last two words.)

As he did with many of his novels, Dickens used his authorial prerogative to criticize elements of Victorian English society. His protagonist, Ebenezer Scrooge, is a businessman whose lack of Christmas spirit, parsimonious habits and eye for the bottom line have made his name a byword for misanthropy. Scrooge’s relationship with his clerk, Bob Cratchit, would attract unfavorable comment by the EEOC, the NLRB, OSHA and the rest of today’s regulatory alphabet soup.

Over the decades, various commentators have suggested that Dickens’ motives were not purely literary and commercial – that he sought to censure capitalism or, at the very least, its perceived excesses. This story has moved and inspired countless millions through many incarnations over a century and a half, so it is well worth inquiring into its economic significance.

The Carol

Dickens introduces us to Ebenezer Scrooge the aging miser and misanthrope. Scrooge’s life is devoted entirely to his business, formerly a partnership but now a sole proprietorship employing a clerk named Bob Cratchit. It is Christmas Eve, but in Scrooge there dwells none of the Christmas spirit. “Christmas? Bah! Humbug!” is his reaction to the holiday. He refuses a Christmas-dinner invitation from his nephew and niece-in-law. Grudgingly, Scrooge gives Cratchit the day off on Christmas Day. Approached to donate to the poor, Scrooge is indifferent to their misery. “Are there no prisons?” he demands. “Are there no work houses?” Apprised that some might die from starvation and exposure, he snaps that “they had better do it and decrease the surplus population.”

Alone at home on Christmas Eve, Scrooge is visited by the ghost of his former partner, Jacob Marley. Marley’s ghost endures eternal torment for mistakes he made in life; namely, avarice and lack of generosity and compassion for other human beings. The ghost warns Scrooge to mend his ways or suffer a similar fate. Scrooge will be visited by three more ghosts, each with a life lesson designed (so to speak) to scare him straight.

The Ghost of Christmas Past transports Scrooge back to his forgotten youth. He revisits his lost love – his longing to provide for her produced the steely resolve to accumulate wealth. The sight of her moves him deeply. We begin to glimpse a – heretofore unsuspected – sympathetic side to Scrooge.

The Ghost of Christmas Present allows Scrooge to see himself as his contemporaries see him; notably, as he is seen by his nephew and the nephew’s wife. The scathing picture they present sobers him, but he is touched by his nephew’s stubborn belief that goodness lies buried underneath Scrooge’s flinty exterior. Scrooge is taken aback by his visit to Bob Cratchit’s home, where Cratchit’s ailing son, Tiny Tim, bolsters the family’s spirits with his pluck. The lesson is driven home to Scrooge by the sight of two poor, hungry children in the streets of London, each sporting a sign. One sign reads “Ignorance;” the other “Want.” Scrooge recalls his earlier dismissive rejection of the poor and hungry with bitter remorse. Once more we sympathize with Scrooge.

The Ghost of Christmas Future brings Scrooge face to face with his fate. It is a terrifying experience. Scrooge enters dilapidated quarters in which scavengers pick the figurative testamentary bones of a shroud-covered corpse. Their conversation leads Scrooge to suspect the worst. This is confirmed when the Ghost leads him to a cemetery and points with empty sleeve to a tombstone on which the horrified Scrooge sees his own name carved.

Now desperate and bereft of emotional resource, Scrooge begs for reprieve. Is the future irrevocably writ or is there still hope? He receives no answer but is instead transported back to his own time and quarters just as Christmas Day dawns. Intuitively, he recognizes that he has been given a second chance to rectify his mistakes and remake his life.

Scrooge is miraculously revitalized. He purchases a huge fowl for delivery to the Cratchit family for Christmas dinner, tipping the messenger boy extravagantly. He buttonholes the charity solicitors and reverses his previous stance by donating generously to their cause. He makes a surprise – and surprisingly welcome – appearance at his nephew’s Christmas Day celebration. And the following day, Scrooge reproves Cratchit for arriving late to work by … raising his wage and inviting him to imbibe some holiday cheer.

Speaking in narrative voice, Dickens ends by informing us that Scrooge followed through on his reformation by financing successful medical treatment for Cratchit’s son, Tiny Tim. Tiny Tim’s valediction may be history’s most beloved bit of literary Christmas lore: “God bless us – every one!”

The Carol at Face Value

Most people react to “The Christmas Carol” viscerally. Consequently, evaluations of its economic content – and intent – have followed parallel lines. Scrooge is a businessman. Scrooge is a miser. Therefore, Dickens is saying that businessmen – or at least, successful businessmen, which Scrooge was – are misers. Scrooge is single-mindedly devoted to wealth accumulation. Scrooge is unhappy and makes others unhappy. Therefore, Dickens is saying that the pursuit of wealth will end badly and is a bad thing. Since businessmen and wealth accumulation are portrayed unfavorably, it is only a small step to the conclusion that Dickens was excoriating capitalism in general in “A Christmas Carol.”

There is indirect support for this conclusion both inside and outside the story. The plight of the poor is stressed and Scrooge – in his pre-reformation, presumptively-pro-capitalist persona – is indifferent to that plight. In life, Dickens was a noted philanthropist and promoter of causes intended to benefit the poor. In particular, Dickens was bitterly opposed to child labor and relentlessly publicized what he saw as unsafe and unconscionable living and working conditions for poor children. He placed most of the blame for these conditions on wealthy businessmen.

These considerations have been ample to persuade most interested parties of Dickens’ anti-capitalist bent.

The Carol Reconsidered

Not surprisingly, economists view “A Christmas Carol” in a different light. A recent blog by Jacqueline Otto serves up stimulating insights. “I would go so far as to say,” she avers, “that ‘A Christmas Carol’ is a story about capitalism.” Ms. Otto offers three arguments in defense of this thesis.

First, she spotlights what Dickens does not say. “Dickens never condemns capitalism [or] business owners [or] trading… the only criticism Dickens makes is that Scrooge… and Marley… were not generous.”

Second, she points out that business success plays a central role in the tale. “There would never have been a story if Scrooge and Marley were not successful businessmen (e.g., if they had been unhappy poor men instead of unhappy rich men).”

Third, she makes the telling point that when Scrooge reforms, “he does not then become poor,” but instead “uses his wealth to help those around him” by saving Tiny Tim’s life with medical treatment, buying food for local families, donating to charity and raising Bob Cratchit’s salary.

Economist and editor David Henderson observes that today it is political liberals who play the role of Scrooge. Research done by Arthur Brooks (now president of American Enterprise Institute) and compiled for his book, Who Really Cares? strongly shows that contemporary donors to charitable causes are predominantly conservatives or inhabitants of the political right wing. Left-wing poll respondents indicate that they consider their tax payments supporting government programs as sufficient unto their causes.

In other words, Henderson declares, the left wing is reacting much as Scrooge did to pleas for charity for the poor: “Is there no Medicaid? Are there no food stamps?” In effect, their position is that they gave at the office via their withheld payroll taxes. Henderson’s point is that Dickens’ tale supports the conservative position that charity must be voluntary in order to be morally defensible.

Otto’s and Henderson’s parsing of Dickens follows in the footsteps of pioneering work by one of Ronald Reagan’s chief aides, Edwin Meese. In 1983, Meese seized the occasion of a news conference to comment extensively on the relationship between Scrooge and Bob Cratchit. Scrooge, claimed Meese, didn’t “exploit” Cratchit. Unlike many workers of his day, Cratchit lived in a house rather than a tenement. He could afford a Christmas dinner with goose and plum pudding. He was paid 10 shillings a week [actually, 15 shillings], a good wage for that day. The free market, Meese judged, would not permit Scrooge to exploit Cratchit, for it would allow Cratchit to escape an intolerable employment for a better one. For his pains, Meese was stigmatized by the news media of that day as “Edwineezer” Meese.

Readers of Dickens will recall that Cratchit’s inability to afford a full-blown Christmas dinner elicited the sympathy of Scrooge and motivated the (anonymous) donation of a Christmas fowl. An aide to a conservative President resolves to brave the scorn of the liberal news media by using a contrarian interpretation of a beloved Christmas classic to make points about economics – shouldn’t he at least take the time and trouble to get the details right? Still, Meese’s economic logic and history were eminently correct even if his recollection of the source material was shaky. He opened the door to our deeper understanding of the meaning of Dickens and “A Christmas Carol.”

In subsequent years, one point has often been made in passing reference to Dickens and “A Christmas Carol.” Scrooge’s triumphant redemptive gesture is to raise Cratchit’s salary. (In a few of the dozens of movie, television or stage versions, he doubles it.) This is perhaps the surest indicator of Dickens intentions and his view of the economic system of Victorian England. It reveals a mindset best described by economist Thomas Sowell as “volitional economics.” Economic outcomes are determined not by the impersonal forces of markets but rather by the will (volition) of powerful market participants – in this case, employers. Employers are the prime movers; employees are not actors but rather are the passive, helpless recipients of employers’ actions.

Modern economic theory utterly rejects this primitive conception of volitional economics. In the strictest sense, an employer doing what Scrooge did in a competitive market – arbitrarily raising the salary of a key employee – would go broke. In practice, various frictions and modifications to theory might lessen that penalty, but economists nonetheless view Scrooge’s capricious behavior with amusement. In Victorian England, pay policies of employers were constrained by the markets for labor and goods, not by personal whims. Neither personal generosity nor parsimony came into it.

The Carol as a Classic Case of Unintended Consequences

“A Christmas Carol” is one of the most emotionally compelling fictional works ever penned. “The story…has become so well known,” conclude John Tibbets and James Welsh in Novels Into Film, “that it has transcended its origin as a work of fiction and has entered the public consciousness with the life-changing power of scripture. Even those who have never read [the] story, or seen…the movie adaptations…know… what a ‘scrooge’ is and what ‘Bah! Humbug!’ means.”

Dickens himself, in common with other great novelists such as Dumas, was overcome by the force of his own writing. By his own account, he “wept and laughed, and wept again” during the six weeks it took him to complete his work.

Thus, it is not shocking that even economists, hardcore rationalists though they are, should bend over backwards to judge that work favorably. A clear-eyed appraisal suggests that Otto, Henderson, et al have been caught up by the same extravagant spirit of generosity that captured Dickens himself as well as subsequent generations of readers.

Calling “A Christmas Carol” a story about capitalism is overdone for at least two reasons. The first is that the term “capitalism” has not been coined yet. Karl Mark published Das Kapital in three volumes nearly thirty years apart, in 1867, 1885 and 1894 – long after Dickens wrote “A Christmas Carol.” Devotees of free markets eventually appropriated Marx’s pejorative descriptor to characterize the system he abhorred. But Dickens could hardly have intended to defend a system that had not yet been characterized as such.

To be sure, this cuts both ways. Dickens also could not have been criticizing capitalism per se. But he did criticize the institutions and practices that comprise it. Somehow, it is easier to criticize piecemeal than to defend, perhaps because the defense usually invokes the systemic role played by the piece as part of the defense.

Then there is the equally obvious point that the way an author deliberately goes about praising a social system is by…well, praising it outright – not by failing to condemn it.

As economists like Carl Menger and F. A. Hayek have pointed out, a major task of economics is to point out the unintended consequences of human action. Here, Otto and Henderson have demonstrated that – without in any way intending to – Charles Dickens mounted a significant defense of Victorian capitalism in “A Christmas Carol.”

Dickens as 20th Century Liberal

In Playback, Raymond Chandler’s legendary detective protagonist, Philip Marlowe, responds to a woman’s expression of surprise at his amatory gentleness by philosophizing: “If I wasn’t hard, I wouldn’t be alive. If I couldn’t ever be gentle, I wouldn’t deserve to be alive.” Toughness and rationality are the qualities needed to preserve and extend human life. Tenderness and empathy are qualities necessary to make life enjoyable as well as long. In our modern age of specialization, it is common to find toughness and tenderness distributed in a skewed manner rather than in equal measure.

Dickens certainly did not intend to praise or even defend capitalism as such in “A Christmas Carol,” but that does not devalue his work as literature or even as unwitting exercise in economic pedagogy. Like many on the political left, Dickens did not possess highly developed rational skills. His powers to stir and move his readers were prodigious, however. The emotional resonance of “A Christmas Carol” is its principal gift.

Dickens was ahead of his time in several ways. Although he inhabited the 19th century, he was a 20th-century liberal in his lack of ironic self-awareness. “A Christmas Carol” was a straightforward story of personal avarice and excessive preoccupation with wealth and pecuniary aggrandizement. But Tibbets and Welsh note that Dickens “did not necessarily intend to create a deathless and beloved work of literature. His aim was far more prosaic: to earn some much-needed money.” Dickens was mired deeply in debt in 1843 and his current project, the novel Martin Chuzzlewit, was not proving successful in its initial serial form. “A Christmas Carol” succeeded beyond Dickens’ dreams; it has not been out of print since it first appeared.

Thus we have the industrial-strength irony that the world’s greatest cautionary warning against love of wealth and avarice was written to make money and ended up earning a fortune for its author. Even since, leftists have set out to do good and ended up doing right well in bookstores, art galleries, theaters, cinemas and on university campuses. They followed Dickens’ example by remaining unaware or at least untroubled by the glaring contradiction.

In his books and in his private life, Dickens stridently criticized the conditions of life for English children of poor or modest means. Ever since, conventional thinking has blamed the Industrial Revolution for making life in Victorian England hellish for children. Meanwhile, painstaking research begun by men like Ronald Hartwell and continuing on down to present-day quantitative economic historians like Deirdre McCloskey has refuted this portrayal, showing that technological progress and free markets midwived economic growth and gains in longevity and hygiene among the poor. But because Dickens creates more excitement than economic statistics, the conventional view continues to overshadow the facts. In his contribution to economic myth-making, Dickens also foreshadowed his 20th-century counterparts.

Unlike modern liberals, though, Dickens should not be called to account for his failure to square perception with reality. By 1843, among the great economists only Adam Smith, David Ricardo and James Mill had made much impact on the public. It is certainly not clear that Dickens knew or understood much of their works. We do know that Scrooge’s biting comment that the poor had better “[die] and decrease the surplus population” was a veiled reference to the over-population theories of the economist Thomas Malthus, whom Dickens disliked. Although Malthus is recognized today for having done pioneering work in certain areas, he was then known and is still best remembered for his errors in population growth (failing to take technology into account) and consumption theory (supporting a theory of chronic underconsumption). It is hardly fair to blame Dickens for failure to apprehend an economics that was still lingering in its formative stages. For example, Dickens’ enslavement to the concept of “volitional economics” (as outlined above) could have been ended only by exposure to a systematic theory of labor and product markets that did not develop until after Dickens’ death.

“A Christmas Carol” Properly Appreciated

Works of art must be evaluated in temporal and historical context. Dickens’ “A Christmas Carol” is a memorable work whose beauty and tenderness rightfully continues to warm us all. Properly appreciated, it does not condemn capitalism but in fact bolsters free markets and free trade. The fact that Dickens himself was unaware of the full moral of his story may be ironic, but it does not detract from that moral. It shows that even when seeking in a primitive way to overturn the basis for capitalism, even one of the world’s greatest authors ended up doing just the opposite.