The Anti-Capitalism Historical Lie

Have you ever heard someone blame capitalism for child labor?  How about blaming capitalism for the living and working conditions of the Gilded Age?  How about blaming capitalism for the excesses of the Robber Barons?  The notion that capitalism is guilty of these things is based on historical lies, told to spread fear of freedom among the masses.

And like all good lies, they start with a measure of truth.

Child labor did not occur because of capitalism, but was a part of every economic system in the world prior to capitalism.  Children not born into the nobility worked as soon as they were physically able, and even noble children were expected to work as soon as they hit puberty – usually between 12-14 years of age.  As Thomas Malthus wrote in the late 1700s and early 1800s, populations always rose faster than did food supplies, such that 90% of all populations were never more than a bad harvest from starvation.  In such an environment, anyone who could work did, and even then life was little more than a slow process of starvation, under conditions not materially different from those of a Roman Slave.  Life was, and had always been, brutal and short.

Looking forward, however, Thomas Malthus was wrong, and it is time to dispel some Malthian myths.

There were no calls in the early 1800s to end child labor.  For the vast majority of the population, the only way to even hope to earn enough to feed one’s family was to send anyone who could work, to work.  Throughout the 1800s, as living and working conditions improved, more and more families were able to send their children to school instead of to farms or factories, and by the early 1900s, suddenly people found themselves outraged at child labor.  People had never been outraged before.

There were plenty of writers during the 1800s, such as Charles Dickens, who compared the bleak existence of the common worker to the excesses of the rich, but there were also writers, such as Adam Smith, who wrote about how food supplies in England and the United States were suddenly growing faster than the populations of those places – something Malthus had deemed impossible.  Opinion split between two camps – those who, like Malthus, looked back and tried to find better ways to distribute what was produced; and those who, like Adam Smith, looked forward and tried to find ways to produce more.

Adam Smith found that the change that suddenly allowed food supplies to grow faster than populations was the notion that people owned their own labor, and were free to profit from their labor however they wished.  That had never before been true.

People look back at Dicken’s England, or the United States of the Gilded Age, and compare it to today, pretending that if capitalism really worked, those conditions would never have existed.  What they ignore is that those bleak conditions were far better than the working and living conditions of previous eras.  Living and working conditions of the average worker improved at the fastest rate in recorded history, in the United States, from 1789-1913, and all of the per capita GDP growth in the United States, prior to the abolishment of slavery, was in the North.  England had the second fastest rate of growth in living and living conditions during the same basic time period.  What did England and the United States have in common during this time period?  Both had laissez-faire capitalism.

Socialists like to compare the living and working conditions of the Gilded Age to the living and working conditions of today, and to suggest that life is better today because we have reigned in capitalism, under the strict control of government.  This ignores the fact that today comes after, and is built on the progress made during, the Gilded Age.  Today quite literally stands on the shoulders of yesterday, so to pull out two snapshots in time, and to compare them without taking their temporal relationship to each other into account, is absurd.  The correct comparison would be to compare the living and working conditions we have today to the living and working conditions we would have today had the growth in living and working conditions never stalled.

Throughout the 1800s, as more and more families were able to support themselves without sending their children to work, more children began going to school.  By the early 1900s, child labor was rare enough to cause something that did not exist when virtually everyone sent their children to work: outrage at child labor.  Government can rightfully claim to have ended the practice of child labor, but it ended it only after capitalism put it on it’s death bed, and ending it did great harm to those few families who still survived only because their children worked.

Similarly, socialists decry so-called sweat-shops with no regard for the living and working conditions people have before they find employment in so-called sweat-shops.  Socialists also have no regard for the living and working conditions people have once they have acquired the job skills to leave sweat-shops for better employment.  Our economy has moved beyond sweat-shops, and we should allow other economies to do the same, rather than holding their economic growth back to appease our sensibilities.

As for the excesses of the Robber Barons, while it is true that some people became ridiculously wealthy, socialists never want to discuss how they became wealthy, and while there were some monopolies that emerged in that era, socialists never want to discuss how they were maintained.

The wealthiest man of the age was Andrew Carnegie, of Carnegie Steel.  Once Carnegie Steel was purchased by J.P. Morgan, to form U.S. Steel, it controlled 70% of the US steel industry.  Andrew Carnegie did not make his wealth by raising the price of steel, but by constantly making it cheaper, while also making it a higher quality, than could anyone else.  People bought his steel because it was both the best steel on the market, and the least expensive, and as a result of Carnegie’s efforts, the cost of everything that had steel in it also came down, from cars to refrigerators, to bridges and buildings.  Furthermore, once J.P. Morgan owned U.S. Steel, Carnegie was no longer innovating production techniques, and other steel companies quickly overtook U.S. Steel.

Similarly with Standard Oil, John D. Rockefeller built and maintained his monopoly only by constantly lowering the cost of oil.  More recently, Bill Gates was accused of anti-competitive behavior, for giving things away for free.

A number of people did become ridiculously wealthy during the Robber Baron era, but their wealth represented only a tiny fraction of the total wealth they created for our nation – wealth that was enjoyed by everyday workers, who could afford to buy things they could never have imagined owning before.

Socialists, and many others on the political left, like to look to the Gilded Age as proof of the excesses inherent in laissez-faire capitalism, in spite of the fact that the American Worker was immeasurably better off at the end of that era than at the beginning, and by a margin far wider than our lives have improved since.  Far from making the United States weak and poor, laissez-faire capitalism made us the richest and most powerful nation the world had ever seen.

I would like to ask my socialist friends to name me one nation that has become wealthy through either central planning, or welfare.  Western Europe and the Scandinavian countries all became rich through capitalism.  Their wealth has actually stagnated since they built their welfare systems.  Unlike socialism, laissez-faire capitalism works.  To say otherwise is to ignore, or to pervert, the historic record.