Life insurance, Self-reliance, Risk, Investment
Sharon Ann Murphy's Investing in Life is a meticulous history of a significant but understudied event in the making of liberalism, the invention of life insurance. This was a social technology born of statistics, population, and the mass market, and of modern notions of self-ownership. All were pillars of the new industrial system, which meant that all effectively undermined an older patriarchy resting on land and household by which family and property had traditionally been organized in America.
Life insurance was accordingly designed for persons whose income depended upon their lives, as the North American Review explained in a survey of the industry's explosive growth in 1863. The reference was to those who owned no real property and so lived and worked exclusively within the money economy. In the event of a father, brother, or son passing away, and in the absence of more grounded collateral, the family would be protected by a financial contract drawn up in advance for such a contingency. The insurance policy, in other words, transformed the wage, that most ephemeral of possessions, into an inheritable asset capable of spanning generations. Boasting of their subsequent success in protecting widows and orphans, insurance companies effectively assumed the mantel of the deposed patriarch. A properly insured society, it was explained, did not have to depend on the good will of family, friends, and neighbors. Instead, everyone would be in a position to help themselves. This was, in other words, the technical apparatus of "self-reliance." Or, as Tocqueville remarked in his famous chapter on individualism, "Aristocracy links everybody, from peasant to king, in one long [End Page 310] chain. Democracy breaks the chain and frees each link."1 A market niche had opened up, and a new industry rushed in to insure that democracy.
Life insurance was most often peddled in modest policies on affordable terms. This was an obvious strategy for expanding sales. Much of Investing in Life is consequently taken up with the "price-setting quandary" (16), the entrepreneurial challenge of turning a novel technology into a profitable enterprise. Regardless of which actuarial model was ultimately adopted, however, the terms for business success were obvious. Insurance required a mass market. "There is really no element of uncertainty in the case, provided the company can obtain business >enough," the North American Review explained (emphasis in the original).2 Only if enough policies were sold, in other words, would there be enough cash on hand to pay out on claims: Risk could thus become a reliable investment rather than an irresponsible gamble only if it was spread out over the population. In this respect we could say that insurance generated a new form of community, peopled by policy holders who mutually guaranteed each other's personal security while entirely lacking any particular ties or even passing acquaintance.
Like money more generally, then, insurance simultaneously socialized and individualized human relations. It turned responsibility for the social order into a collective but anonymous burden, fixed by a statistics of costs rather than such old-fashioned, or unprofitable, principles as natural justice and moral economy. There were those who spurned the hubris of a technology that seemed designed to "act in defiance of providence" (207). "Tis God alone who holds the key of Life or death," as opponents protested the ontological conceits of insurance. They pointed, predictably enough, to the farmer as representing the proper order of things, investing as he did in "that best of all banks, a bank of earth."3
But the bourgeoisie, enthusiastic subscribers to the post-agrarian creed of progress, opportunity, and ambition, believed otherwise. And so they insured themselves against that same volatility that underwrote [End Page 311] their power and privilege in the first place. Life insurance, Sharon Murphy explains, would serve as "a countervailing force against these dramatic societal changes" (3). That is true. But insurance was itself a dramatic change: It was certainly not a force of reaction. Securitizing one's own life might seem to...