A More Just And Equitable Capitalism Is Possible. Here’s How.

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Kim Kelly wrote a history of capitalism in Teen Vogue. Here’s what it got right, what it got wrong, and the progressive role of capitalism in historical development.

Kim Kelly has presented a pretty good explainer of capitalism for the uninitiated at Teen Vogue. I wouldn’t be writing this if I didn’t have issues with the piece, but I want to begin by affirming Kelly’s scepticism of capitalism as it is often portrayed and defended. She writes of capitalism’s beginnings:

“The origins of capitalism are complicated and stretch back to the 16th century when the British systems of power largely collapsed after the Black Death, which was a deadly plague that killed off up to 60% of Europe’s entire population. A newly formed class of merchants began trading with foreign countries, and this newfound demand for exports hurt local economies and began to dictate overall production and pricing of goods. It also led to the spread of colonialism, slavery, and imperialism.

The death of feudalism — a hierarchical system often seen as oppressive that kept poor people bonded to their masters’ land, which they farmed in exchange for a place to live and military protection — also left rural British peasants with no homes and no work, which eventually funneled them away from the countryside and into urban centers. These former farm workers then had to sell their labour in a newly competitive work environment to survive, while the state worked in concert with the new capitalists to establish a maximum wage and “clamp down on beggars.”

A “People’s History Of Capitalism”

It’s dubious to claim that capitalism spread slavery and imperialism — numerous examples of both can be found before capitalism. And foreign trade is as old as history. But it is true that capitalism developed in a racialised form, and likely co-evolved with racism and the concept of race itself, which most likely didn’t exist before modernity. In fact, theories about the inferiority of “savage” peoples developed to justify enslavement. This culminated in the racialization of Irish, Slavs (whence the word “slave” derives*), indigenous peoples, and of course, Africans.

Colonialism and imperialism, while not caused by capitalism, were certainly used by capitalist powers to secure cheap or free labour, and natural resources. So historical capitalism was a racialised, colonialist, imperialist, slave capitalism from its very beginning. Since women were tasked with unremunerated domestic labour and child rearing, we can add “patriarchal” to the list of adjectives.

Every ideology has a nasty history: this is just so much genealogy unless this history points to more nefarious recent inheritances of past injustices. The defenders of capitalism are often only dimly, if at all, aware of this actual history, preferring abstract theories of how independent, adult, able-bodied, and unburdened individuals might interact with each other in a hypothetical “state of nature,” how private property arises from the need of individuals to enjoy the spoils of their own work, and how free exchange benefits society by the logic of the division of labor.

This mythology obscures the actual history of violence, dispossession, and oppression; and it thus programs its adherents to see the present distribution of wealth and property to be legitimate by default. Free exchange between individuals is legitimate even when a gross power difference obtains between the parties. Unfree exchange is illegitimate absent extraordinary justification, so taxation, even to provide public goods and social welfare, faces an uphill climb. This mythology of the unburdened adult presents care and dependency as deviations from the norm, despite their ubiquity in real life.

Capitalist intellectuals usually find some space in the footnotes to trouble their theories. John Locke, for example, argued in his Second Treatise of Government that initial claims of private property required that “enough and as good” be left over for those who come after. The libertarian philosopher Robert Nozick, acknowledging this “Lockean proviso,” briefly and casually admits that the entire edifice of his theory of just transfers (free exchange) is invalid in case the original acquisition of property was ill-gotten. But these bite-size admissions evaporate from the minds of readers who come looking for justifications of capitalism. If these admissions did find purchase, then they would form the bases of entire volumes rather than footnotes. Instead, the popular discourses among libertarians and conservatives focus on the ideal theory of just property and free exchange.

john locke, treatise of government

John Locke’s ‘Treatise of Government’ writings are part of the foundational texts of capitalist philosophy. Image Credit: biography.com

Because early capitalism systematically advantaged identifiable groups, especially property-owning white men, the mythology of just property and free trade often protects members of society who are already advantaged, fueling inequality. Welfare transfers are, in the best case, construed as necessary but evil infringements on property rights. In the actual case, identity takes over the narrative. The descendants of those original wealthy whites come to believe their socioeconomic advantages owe to their merit and hard work, and social provisioning is crafted to disproportionately benefit them (see, for example, how the New Deal was tailored to exclude black and migrant workers). Meanwhile political and economic rights are denied to other groups like women and minorities. When explicit rights are acknowledged, implicit forms of exclusion are used. For blacks in America, for example, this took the form of the progression from slavery to Jim Crow, to formal segregation, to redlining, and finally to mass incarceration, and all of it accompanied by varying levels of racial terrorism and assumptions of black inferiority and criminality. The fig-leaf justifications of racial disparities just get subtler with time.

I won’t argue that this isn’t ‘true’ capitalism. However, Kelly misses the dynamics within liberal capitalism that push social justice forward while other forces work against it.

The blessings of historical capitalism

Kelly scarcely mentions the most powerful argument in capitalism’s favour. Any candid discussion of historical capitalism must grapple with the sheer abundance it has brought forth and the consequent hockey-stick rise in living standards achieved everywhere capitalist institutions have taken root. The increased output of capitalism — mere wealth — has been accompanied by increases in expected lifespans, decreases in infant mortality, smaller families, and reduced child labour and increased schooling, among other indicators of progress. The liberal feminist philosopher Ann Cudd has pointed out that democratic capitalist countries tend to outperform both socialist and traditionalist countries on various progress indices, including the GDI and GEM, both emphasizing gender equality. 

Women, in particular, have benefited from the innovations of capitalism. The domestic appliance revolution liberated women from hours per day of drudgery. As Ann Cudd points out, “capitalism has also increased women’s opportunity cost of working in the home, and thus [created]incentives for both men and women to reduce the time women spend on household chores.” Patriarchy was not defeated, but it was undermined by this wave of innovation. Women also benefited from the decreases in infant mortality coincident with capitalism, as these decreases drove the fertility transition to smaller families, meaning fewer births per woman and fewer children to raise.

Even Marxists usually don’t dispute the ability of capitalism to produce the goods, though they believe that once industrial production is underway capitalism has outlived its usefulness. Critics will fairly point out that child labour required legal regulation to abolish. But part of what made this possible was the transition to lower fertility and the declining need for children to work due to rising real wages.

Any candid discussion of historical capitalism must grapple with the sheer abundance it has brought forth and the consequent hockey-stick rise in living standards achieved everywhere capitalist institutions have taken root. The increased output of capitalism — mere wealth — has been accompanied by increases in expected lifespans, decreases in infant mortality, smaller families, and reduced child labour and increased schooling, among other indicators of progress.

So although capitalism initially increases child labour, as countries develop they become wealthy enough to support their children without having them labour. Adult workers in capitalism have a monetary incentive (in addition to a moral one) to reduce child labour to reduce the competition for jobs and raise wages. In democratic countries, then, adult workers who are able to care for their children without having the children earn a wage can pressure their governments to pass laws against child labour. Furthermore, in more technologically advanced societies, children become important human capital investments in their own right. Thus, there is an inbuilt incentive to educate them and help them become autonomous individuals. In an entrepreneurial society, creativity and the ability to innovate becomes even more valuable. Thus, as countries develop into entrepreneurial capitalist economies, we have every reason to expect that child labour falls and child education and health investments rise.

And while, say, modern pharmaceuticals are cheap and easy to distribute, their development required the intensive capital accumulation and skill/knowledge formation made possible by the surpluses of capitalism. The idea that we have reached a final stage (late capitalism?) beyond which no further innovation would be worthwhile seems foolhardy. There is little reason to believe the difference in life possibilities between the years 2100 and 2000 will be any less stark than that between the years 2000 and 1900. Our grandchildren are unlikely to agree with any place we choose to draw the line.

The social justice logic of capitalism

This is the broad empirical case for capitalism as it has played out in the world. These results aren’t incidental. The non-zero-sum logic of capitalism has inherent egalitarian and inclusive elements.

The basic principle of free exchange, for all its caveats, holds for much of commercial life. Commerce is generally a positive sum interaction, wherein both parties stand to gain by voluntary exchanges. Successful positive-sum transactions encourage repetitions to reap continuing benefits. This conduces to forming relationships and genuine good will. The opportunity for profit by trade doesn’t stop at social barriers, whether these are ethnic divisions or national borders. This dynamic is not sufficient to overcome organized, systemic injustice like Jim Crow, yet it’s telling that preventing such free exchanges across the colour line by violence and with the complicity of local governments was necessary to uphold Jim Crow.

Property rights and economic freedom (the freedoms to buy, sell, trade, work, hire, fire, and contract) are also important elements of a comprehensive notion of freedom. Private property provides a person with a domain within which to more fully control their environment and to develop their sense of self. You don’t have to be a crass materialist to see that a person’s belongings — what they choose to obtain, to keep, what to do with them and how to arrange them, whether trinkets or homes — reflect who that person is. Marxists affirm personal property, but try to exclude productive property. This boundary — where it’s not hopelessly arbitrary — discourages saving and sustainability, since property that produces value loses its social protection.

Members of oppressed and marginalised groups especially have reason to value these freedoms, as they are both directly assaulted by oppressor classes and subtly undermined by systemic oppression. Under the feudalism Kelly describes, liberalism (and thus capitalism) was a social justice movement: guilds and landed aristocrats forcefully monopolized lucrative trades and the ownership of land, respectively. African chattel (not “wage”) slavery was violent exploitation of labour. Women could work, but they could not control their own wages. Husbands maintained control over their wives’ property and labour.

capitalism, feminism

Capitalism changed gender roles, notably by eliminating or streamlining household chores.

Realizing capitalism’s radical potential

A more radical capitalism fit for Teen Vogue’s social justice-oriented readers is one that is organised to unleash the creative potential of all persons, regardless of identity. But this is impossible with rigid socioeconomic hierarchies. Blacks, for example, are under-banked, segregated away from valuable economic networks and high-quality public goods, and criminalized by mass incarceration and school-to-prison pipelines. Black people are thus prevented from living as fully realised individuals within present capitalism; they must instead live as black persons, subject to systemic obstacles. While everyone has a unique history and personal circumstances leading to particular challenges and advantages, blacks face patterned disadvantages and threats well-described by the history of anti-black racism in America. In other words, the disadvantages owe not to the random fluctuations of a well-ordered society — the kinds of inequalities a free society must abide — but to specific racial injustices that warrant address. Blacks are constrained by capitalism’s original sin of racialization.

Women are likewise constrained from living as fully realized individuals as they are discriminated out of many prominent economic roles and expected to perform unremunerated domestic labour. The expectation is often that women are first and foremost wives and mothers, rather than individuals with their own projects, including economic and career ambitions. Traditional capitalism offers a false individualism in which the caring for and rearing of children must be given up in order to fully participate in the market. Capitalism thus fails to bear the full fruit of what women as individuals can do and create.

Similar charges can be leveled against traditional capitalism with respect to other collectivised groups, such as immigrants and the working class, including the white poor. Capitalists imagine they see only individuals, but an authentic individualism is one in which the individual’s capabilities must be cultivated, and protected against social and legal threats. Where capitalism as we know it assumes relations of justice and equality, capitalism for Teen Vogue corrects social injustice and relations of social inequality. This means robust social safety nets so that individuals are less dependent on oppressive or exploitative relationships — though economic security also encourages entrepreneurial risk-taking. It means public support for child care and policies promoting the more equitable distribution of domestic labour. It means racial integration by affirmative action and by replacing the property tax-based public school funding model with general revenue. And it means directly correcting racial injustice by legalising drugs and freeing those in prison for drug crimes, by ending retributive incarceration, by vigorously defending voting rights, and by reparations for slavery and the displacement of native peoples.

A capitalism wedded to rectificatory social justice and the welfare state will still be capitalism. It is consistent with free trade, free movement of both labour and capital, liberal labour markets (easy to hire, easy to fire), and a regulatory (sometimes deregulatory) regime oriented toward improving competition, innovation, and economic growth. While such a form of capitalism will necessarily involve strong property rights, commerce and its social benefits will be emphasised over ownership (returning to a more Smithian understanding of capitalism). The means of production (with rare exceptions) will be in private hands and there will still be wealth and income inequality, but there will also be wealth supports and income floors. Main street mom & pop shops will still close and global trade will still dislocate workers, but easing transitions for displaced workers will be an explicit concern of public policy.

Committed anticapitalists will deny that this combination is possible. Exploitative economic relations and entrenched social hierarchy are simply what capitalism is. But to say that a robust social safety net; health, safety, and environmental regulations; and policies to correct social injustice are aberrations of ‘true’ capitalism is like saying that constitutional checks on authority and protections for minority rights are deviations from ‘true’ democracy. In both cases, these are necessary adjustments made to advance the liberal and humanitarian purposes of those very systems. And in both cases there are lamentable but natural tendencies for certain groups within society to poison those same safeguards for their own advantage.

Of course, the term “capitalism” is alienating to some. But it doesn’t matter what you call it. Market Liberalism. Social Capitalism. Welfare Capitalism. Black radical capitalism. But also: Social democracy, market socialism. Whatever the name, there is an unknown ideal that recognises that economic freedom is intrinsically valuable to human beings and that it is vital for the purpose of expanding human welfare and capabilities, which can benefit the disadvantaged most of all. A social justice capitalism nurtures individuals to their full potential, rather than assuming they spring into the world fully formed, and it extends the domain of positive-sum interactions to include marginalised people. Capitalism and social justice require one another to realise their respective full potentials.

This piece originally appeared in Liberal Currents

*Editor’s note: It is important to observe that the etymology of the word slave is disputed and that siding with the Western-centric etymology is potentially injurious to the ethnic group involved. It is also likely that the English word has its origins in the Medial Latin ‘sclavus,’ which meant slave.

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