The Moral Basis of Capitalism (or Lack Thereof)

Great Debates
1

There’s one claim that generally sure to come up whenever capitalism is subjected to scrutiny. Regardless of whether we’re debating the philosophical underpinnings or the specifics of some situation such as sweatshop labor, someone’s sure to mention that in capitalism everyone is free to make their own decisions, and hence any interference with the system would force somebody to against what he or she wants.

I don’t think this claim is true at all. As I see it, capitalism does not now and never has had any particularly close relationship with freedom of economic choice.

Let’s look at England for starters. We generally speak of capitalism as starting in England in the 18th and 19th centuries. How did it happen? Certainly in the year 1600, England would have looked a lot like other European countries in terms of economy. It was mostly agricultural, with the typical English folks being small landowners in a small village, making a living by farming or other village trades. Over the next two centuries, through the process of enclosure, millions of them were forced off of their land, and the common lands that helped sustain small farmers were also taken away by force. These people had no choice but to migrate to the cities, where they formed the cheap labor pool that allowed the factory system to begin.

Anyone who follows English history knows perfectly well that the late 18th and early 19th centuries featured frequent violence against the working class. Laws disallowed them from unions, striking, voting or receiving any representation, and any attempt on their part to stand up for better conditions was met by violence. We know the Duke of Wellington as the guy who beat Napoleon, but few people know him as the guy who beat the English poor. In his own words:

This being his account of how he helped deal with labor unrest in Hampshire in the 1830’s.

The details vary, but similar things occured in many places in Europe as capitalism spread. In 19th century France, for example, workers were required to carry a passbook proving that they were employed. Those caught in public without a passbook could be arrested. Hence ordinary French people did not have a right to choose to work or not. Likewise there was violent suppression of any attempt at unionizing or political activity and laws which barred French workers from having their day in court.

In the United States, outright government violence against workers was not so common, but certainly we’re all familiar with private police agencies such as the Pinkertons who often attacked unions and the working poor with force.

In our day and age, the spread of global capitalism has lead to widespread use of force in many third-world countries. As one example, in Peru, a large portion of the Native American and black population has been forced off their land in the past couple decades so that the land can be exploited by mining, energy, and agribusiness companies.

So in short, capitalism is not about freedom of economic choice at all. Rather, it’s about massive hypocricy: using force to control the working class while insisting that it wrong for the government to intervene with force against capitalists.

2

There has been liberty, and there has been coercion, throughout history. What you have shown is that sometimes a region may have some level of coercion while also having some semblance of a market. You have not shown that there is any connection between the two, let alone that capitalism “is about using force to control the working class.” (I’d note that noncapitalistic societies had levels of coercion and appropriation that were just as high if not higher - something you conveniently ignore.)

Your argument so far resembles pointing out that many abortions are paid for with cash, and concluding that the market is inherently about being pro-choice in the abortion sense of the word.

3

Capitalism is an economic system, not a political system. You are conflating the political system of a country with its economic system.

You would be better off talking about a “free market” system, which you can’t have if there is coercion by the government against labor.

4

There’s also a common misconception about the industrialization in the U.K. It wasn’t about “mass production” as we think of it - however the studies were often done of the textile industry which was as close to mass production as things came. Most British production, however, remained bespoke up until much later than is conceived. Industry didn’t follow the Adam Smith pin-making model. This led to the importance of a skilled working class - the Labour Aristocracy, and can be seen in the development of British Trade Unions along a very different model to the European Unions that tended to develop later.

The skilled, quasi-independent worker can also be seen in mining for a very long period. British mining focused heavily on the “butty” system (if I am remembering the name right). A miner would be assigned an area of coal face, and was paid by the truck of coal he produced. How the miner chose to dig it out was up to him and his team mates, who were often family members. Much early industrial action in the UK can be seen as coming from troublemakers being assigned to bad areas of the mine, and also more generally to an attempt to impose an external, professional management class over very independent working class people. Lots of studies show this wasn’t so much to drive efficiency or as a response to any particular problem, but was instead to break labour aristocracy attitudes and prepare them for greater exploitation. It was common, for example, for miners not to turn up to work on Friday or Saturday if they had a good seam and had made the week’s money by Thursday. They’d instead spend that time tending to their gardens and livestock. Other miners would work 8 months then disappear to the America’s to work as miners for a few months, then return.

This independence went counter to the capitalist profit maximization motive. Hence the pit villages, with company shop and truck system, the prevention of miners keeping livestock, the regularization of the work day and week, and the imposition of management. If you can make a worker a cog in the machine, he loses his independent value and ability to up and leave. Even if 100 workers all make an entire pin can make as many pins in a day as 100 workers each performing only one part of the process of making a pin, it is easier to control those who only cut the wire, or only flatten the head. And workers who are paid hourly aren’t going to leave work to go feed the pigs unlike a piece work worker who may work harder to be done by 4. Of course, once the owner sees how much can be produced byt he piece work worker laboring harder, then the pace can be increased, and that rate enforced for the full shift without added compensation.

5

Political systems and economic systems are inextricably linked.

6

Actually no…capitalism isn’t about everyone being free to make choices or anything else. Capitalism is simply an economic system where the ‘means of production’ are privately owned. Nothing more. I think what you are doing is conflating capitalism with a free market economy. One is a subset of the other.

Neither is particularly ‘moral’ or has a ‘Moral Basis’, however.

-XT

7

They affect each other, sure. What do you mean by “linked,” and how would you prove or disprove that claim?

8

“Inextricably linked”, not just “linked”. Let’s be clear on what the claim was.

9

I think a capitalist could argue that enlisting the government for any reason is a violation of the spirit of pure capitalism, even if capitalists do it, so the examples in the OP are not particularly good ones.

If you want to talk morality, you can consider monopolies and cartels which might reduce the economic freedom of others without involving government at all.

10

First off, I hate it when people start talking about “capitalism”.This is because whether they like it or hate it, they are confusing themselves on several points. They do not define capitalism. And frankly, the word itself is a mild perjorative that was created by social theorists who didn’t understand the phenomenon they were describing in the least.

First, there are classical non-economics, which have to some degree or another been the default. Most early markets were very limited by transportation outside of urban areas, and by cartels within them to some degree or another. Even when there was no formal restriction, it was often very difficult to break into the economy simply because there wasn’t a lot of ability to differentiate between products - there was someone already in place already with about the same skill. He probably passed the family business down to his son or nephew or something. Even if not, there was unlikely to be a lot of market space except with the odd new product.

Then there are free market economies, which started to develop over time in Europe (north and south, actually). For a variety of weird reasons, there wasn’t much push to regulate things, and it wasn’t worth it. People wanted new products (coffee and sugar especially), and transportation improved considerably. These were and are vulnerable to boom and bust cycles, but they began to open up and provide far better standards of living. It encouraged, over a lot of time, rationalization and specialization.

“Capitalism”, if it means anything at all, really is talking about large-scale capital formation. Now, this is not precisely a neccessary part of a free market. Just as the free market grew out of classical quasi-free economies, so too did capital accumulation and corporations grow out of free markets. This needed some government protection. And they are arguably not “fair”.

However, they have allowed far more rational and effective enterprises than otherwise. As long as the investor’s liability was unlimited, his risk was nearly unlimited. Thus, only the wealthy wanted to invest, and they weren’t likely to invest with a lot of other people (who would want a say in the enterprise and make it even more likely to fail). But once they could effectively “fire-and-forget” with their wealth, they could invest much more aggressively and without worrying constantly about each individual opportunity. And this was a bigger boon for the less wealthy than the wealthy: the Haves already had money and the ability to make risky investments, since they’d average out in the long run. The middle and lower classes can now invest in ways that they simply couldn’t before.

11

Well, the moral basis of capitalism is if you create something, you should be able to retain the rights to that thing. Pretty much every company ever was once started from nothing by some guy with an idea. If you build a company, why should the government simply be able to take it away from you?

12

How do you propose to retain the rights to something without government enforcing those rights? You invest $10 million in a better widget, I reverse engineer it and undercut you. What do you do? Isn’t the money you pay to government to set up a system to enforce patent rights worth it?

If government rips you off (and please show some examples of government stealing an idea) you have recourse in the next election. If a crooked capitalist does it, you are sol.

If businesses are run only to maximize return on capital, they will do things socially harmful but locally profitable, or watch a competitor do it. That includes polluting, lying about the content of their products, putting dangerous things on the market. How do you propose to solve this type of problem?

ETA: To sum it up, your average citizen is more law abiding when there is a cop nearby.

13

No one is advocating anarchy or a taxless society.

A non-capitalist government wouldn’t “steal ideas”. They would simply nationalize your business and take control over the means of production. Sort of like what Chavez does in Venezuela.

I’m not sure why you are focusing on IP either.

The issue people seem to have is that once a company grows to a certain size, it is capable of weilding a great deal of influence and power. Communities and people become dependent on the jobs and tax revenues those companies provide. It’s like this. If I run a factory in a small town that employs half the town, I would expect that town to bend over backwards to keep my business happy. Otherwise, I will just pick up stakes and reopen somewhere else that’s more business friendly.

14

If a factory owner is driven by the profit motive, then he has a motivation to use coercion on the workers. A worker who can be forced to work is better–as defined by the profit motive–than one who can choose to get up and quit at any moment. Forced labor has always been and will always be cheaper. Likewise, it will always be cheaper to take land by force than to let the owners decide what to do with their own land.

So in any free market economy, there will be a strong economic motivation among the upper class to use the tactics that were used at the dawn of European capitalism and are still being used in many countries today. Now the political circumstances will vary. In some places, pro-freedom forces may be powerful enough to overwhelm the upper class. Nevertheless, the economic pressure towards political coercion is bound to exist wherever the profit motive exists.
villa, your post was fascinating and I’d never heard about that before. I’d be interested in any books or sites that dig into that situation deeper.

15

No…s/he has a motive to reduce costs as much as possible. The key there is the ‘as much as possible’ part. Granted, such an owner might try to use coercion, and it’s certainly been done before, but in the end people always has the choice of simply taking their labor somewhere else.

Workers ‘forced to work’ invariably are less productive than those who work of their own free will, so I’m unsure why you think that forcing people to work, as you put it, would be something that most companies today would want to engage in.

Conversely, workers who’s jobs are completely secure and can’t be easily (or even with difficulty) let go or fired are also less productive, since they have no vested interest (at least from this perspective) in working hard…or working at all for that matter.

No…it won’t always be cheaper. Even if we take the legal system out and are simply talking about naked force (i.e. seizing the land at the point of a gun), it might end up costing you more if the people resist.

-XT

16

Fine. We can all sing together about the evils of communism and real socialism.
I didn’t know why you brought up the evils of government stealing ideas, actually. I thought it might be the old government steals from us shtick. I just brought up the Patent Office as the case of something government does which businesses can’t do for themselves.

Outside of IP, we can have monopolies, and their ability to extract high prices from customers, and, more important for this discussion, the ability squash competition. Once you buy that smaller and newer businesses should have the right to fair access to the market (not success, just access) you are buying into all sorts of government regulation.

As for your example, what is the town to do if the business pollutes? Does it let the business poison the citizens to protect jobs, or does it kick the business out? Federal rules about this at least ensure that the business can’t move with in the US - poisoning the Chinese or Indians is just dandy. More to the point of the thread, is a system that encourages businesses to pollute if it increases stockholder value ethical?

17

Can you provide a cite for a non-government backed monopoly in the U.S.?

Slee

18

What would you accept as a monopoly? Finding by a court? A consent decree?
Did you realize that almost of all Dell’s profit from the past few years came from money Intel paid them to not use AMD parts? Did your realize that if Intel vanished today, AMD does not have the fab capacity to replace them?

That monopolies, like Microsoft sometimes lose monopoly power through technological change doesn’t make them any less a monopoly in their prime.

I worked for the Bell System. Though local phone service qualifies as a government backed monopoly, a lot of the parts of it didn’t. Remember they kept non Western Electric equipment off the network not from government rules. Nothing in government rules forced the Telcos to buy Western switches, but woe to anyone who didn’t.

19

That’s so far from a monopoly that it’s not even funny. Neither AMD, Dell nor Intel has monopoly type power over their respective industries; hell, the very presence of AMD as a significant competitor removes any notion of monopoly in the PC processor market. Dell isn’t a monopoly in PCs either.

A monopoly would be if Intel bought AMD, and then proceeded to charge $2000 per processor, simply because there’s nobody else to undercut that price. Furthermore, where would their motivation be to develop faster and more capable chips, without someone to drive them to make better ones? They could sell their $2000 chips forever and make crazy money, and not have to upgrade a thing.

That’s why monopolies are bad; there is NO competition, which gives no motive to keep prices low, or to innovate in new products, except to drive potential competitors out of business.

20

That the economic system defines the political one.