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Is Capitalism Immoral?

Capitalism has been called immoral because it supposedly contributed to the widespread misery of the working classes in the 19th century industrialized nations.1 Friedrich Hayek describes this objection as the

. . . .One supreme myth which more than any other has served to discredit the economic system…. It is the legend of the deterioration of the position of the working classes in consequence of the rise of “capitalism” (or of the “manufacturing” or the “industrial system”). . . . The widespread emotional aversion to “capitalism” is closely connected with this belief that the undeniable growth of wealth which the competitive order has produced was purchased at the price of depressing the standard of life of the weakest elements of society.2

Bertrand Russell typified those persuaded that early capitalism grew by feeding upon the misery of the working classes that it exploited. In Russell’s words,

The Industrial Revolution caused unspeakable misery both in England and in America. I do not think any student of economic history can doubt that the average happiness in England in the early 19th century was lower than it had been for 100 years earlier; and this was due almost entirely to scientific technique.3

Russell failed to inform his reader what evidence he had for his belief that the life of the poor in the 18th century was such a happy lark compared to the other misery produced by the Industrial Revolution.

Poverty did not begin with the advent of capitalism.

In 1954, Friedrich Hayak edited a book, Capitalism and the Historians, in which he challenged the accuracy of this collection of charges. He pointed to a tremendous bias on the part of historians that has led many of them to ignore the evidence that contradicts the simplistic thesis that the misery of the 19th century poor can be laid squarely at the doorstep of capitalism. The undeniable misery of that century should be seen as a continuation of the wretchedness of previous centuries superimposed on the particular conditions of life in a society that was becoming increasingly industrialized. Instead of the poor starving in dirty hovels in the country, they were starving in dirty city slums. Susan Love Brown explains the bias thusly,

Several generations of eighteenth- and nineteenth-century writers, clergyman, and assorted social critics tended to lay the blame for every social woe, real or imagined, at the factory doorstep. Many of the intellectuals during the Industrial Revolution looked about and suddenly noticed that there was poverty. The poverty had been there all along. Why, then, the passionate distaste for the very system which was gradually improving man’s material lot? Possibly capitalism was its own worst enemy in this respect, for in raising the general standard of living it made more conspicuous the poverty that still remained.4

Poverty did not begin with the advent of capitalism. It may have become more obvious as more and more of the middle class rose to modest affluence, and the contrast between them and the poor became more apparent. Perhaps the poor were also more noticeable because they flocked to urban areas where work was to be found.

The use of child labor in the early years of the Industrial Revolution is a legitimate target of concern. But, once again, it is proper to ask to what extent more general ills in society contributed to the problem. Everyone would prefer a society in which children are free to play games and pick flowers. Unfortunately, that choice was not readily available in those years.

Susan Love Brown continues:

For many of these children, the factory system meant literally the only chance for survival. Today, we overlook the fact that death from starvation and exposure was a common fate prior to the Industrial Revolution, for the pre-capitalist economy was barely able to support the population. Yes, children were working. Formerly they would have starved. It was only as goods were produced in greater abundance at lower costs that men could support their families without sending their children to work.5

Was capitalism to blame for the miserable housing conditions of 19th century England? The enemy of the market seldom points out that the vital role the British government played in this matter. For example, usury laws restricted housing by making it extremely difficult for builders to borrow the money needed to build new housing. There was also a heavy tax on bricks needed for housing as well as a heavy-duty on imported timber that might have been used for such building. There was even a tax on windows that penalized the owners of buildings that sought to make more light and fresh air available. Taxes on bricks and tiles also restrain the construction of drains and sewers.

Were work conditions really worse than in earlier centuries? The evidence is certainly inconclusive and hardly warrants the dogmatism of Lord Russell. Was capitalism solely responsible for the wretched lot of the 19th century poor? More attention should be given to the complicity of the British government in this matter. The truth is, as Hazlitt notes, that

Capitalism has enormously raised the level of the masses. It has wiped out whole areas of poverty. It has greatly reduced infant mortality, and made it possible to cure disease and prolonged life. It has reduced human suffering. Because of capitalism, millions live today would otherwise have not been born. If these facts have no ethical relevance, then it is impossible to say in what ethical relevance consists.6

This objection to capitalism can only be advanced by those who carefully sift the evidence to fit their preconceived prejudices.

Citations & References
  1. This extract is from Ronald Nash’s book, Social Justice and the Christian Church. All attempts have been made to reach the copyright holder.

  2. F.A. Hayek, editor, Capitalism and the Historians (Chicago: University of Chicago Press, 1954) pp. 9-10.

  3. Bertrand Russell, The Impact of Science on Society (New York: Columbia University Press, 1951) pp. 19-20.

  4. Susan Love Brown, et al., The Incredible Bread Machine (San Diego: World Research, Inc., 1974) p. 25.

  5. Ibid., pp. 25-26.

  6. Henry Hazlitt, Foundations of Morality, op. cit., p. 325.

Ronald Nash

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Ronald H. Nash was a philosophy professor at Reformed Theological Seminary. Nash served as a professor for over 40 years, teaching and writing in the areas of worldview, apologetics, ethics, theology, and history. He is known for his advocacy of Austrian economics, and his criticism of the evangelical left.

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