Two principle complaints about capitalism are that it perpetuates inequity of wealth and that it both causes and worsens poverty. While these might seem to be two sides of the same coin, they are not the same complaint at all. In fact, when advocates of socialism combine these two complaints into one argument, they are working to undermine the very strength of capitalism, its reason for existence.
People once believed that wealth is stagnant, that if one person gains wealth, another person must lose wealth. Adam Smith demonstrated that labor adds value, and that wealth is not stagnant. When capitalism works as intended, everyone benefits. Competition between the wealthy business owners helps their customers to have more choices and also provides their workers with more opportunities to earn wages and improve their lives and those of their families.
God in his creation (or Nature, if you prefer) did not make all people the same. Some people are stronger than others. Some are more physically attractive than others. Some are smarter than others—and there are various kinds of intelligence, so that one person may excel in one kind of thinking while the next is better in a different intellectual field. To hold that all people are created equal is not to hold that everyone must have the same advantages and the same benefits. The fact that some people are born into wealthy families and others are born into poor families is neither the fault of capitalism nor a reason to abandon capitalism. We are all different in several ways; but still we maintain that we all are created equal.
Deuteronomy 15 teaches that, if all people followed God’s commands, there would be no poverty. The same chapter warns us that the poor will always be with us. Capitalism might seem contrary to Christian and humanist principles of loving one’s neighbor, helping those who need help, and caring for the needy and the oppressed. A wealthy capitalist seeks to increase his or her wealth. As selfish as that sounds, the capitalist actually is a servant to his or her neighbors. To increase wealth, the capitalist seeks to provide a product that consumers want or need. The capitalist seeks to make that product more desirable—higher quality, more affordable, or in some other way better. At the same time, the capitalist creates jobs, paying workers to create the product and so providing for those workers and their families.
As the Industrial Revolution emerged, wealthy capitalists found an excess of labor on their doorsteps. More and better food from overseas expanded the population, and enclosure of agricultural lands drove more poor families off the land and into the cities. Craftsworkers were overwhelmed with new competition. At the same time, business owners were using steam and steel to become more efficient, offering products that were both better quality than before and more affordable. Work moved from homes into factories. Only wealthy people could afford to maintain factories and to purchase the new machinery of steam and steel. Often they combined their wealth, creating corporations. The rich became richer, but it was not inevitable that the poor had to become poorer.
I tell my history students that, for every Jane Austen novel they read, they must also read a Charles Dickens novel. Dickens captured the problems of the Industrial Revolution vividly in his fiction. Women and children worked in factories, because they would accept less money for their labor and would cause fewer problems for their managers. A large underclass of unemployed men frequently turned to crime, both out of need and out of boredom. Cities were dirty, overcrowded, and dangerous. Disease ran rampart through the population. For these reasons, nineteenth century socialists predicted the overthrow of capitalism. They expected working people to rise up and demand their rights, including a larger share of the wealth to which their labor was contributing.
Before the Industrial Revolution, families worked together, whether raising food on the land or producing crafts such as shoes, clothing, and candles. Women often were members of guilds, equal to men active in the same crafts. Factories tore apart families. They separated adults from children and women from men. Over time, the dream of the Victorian family developed: the family in which the man was the sole worker and breadwinner, the children went to school and played at home, and the women stayed home to raise a family. This idyllic picture never represented reality for most of the population. But, over time, society and government began to work in that direction. Labor laws took children out of the factories and put them in schools. Other laws began to clean the cities, reducing industrial pollution and untreated sewage. The free market found means of regulating itself so that capitalism did not imply poverty for the working class. More about this will be said in a future post. J.