The market, or capitalist, economic system has transformed the material world in wondrous ways over the last 200 years. Poverty, once the natural condition of virtually all of humanity, is being lifted from people’s shoulders, not only in the Western world but also increasingly around the globe. But the criticisms of free market liberalism continue, among them the idea that labor is not treated with dignity, fairness, and respect in the capitalist economy. Nothing could be further from the truth.
In 1820, the total world population numbered around 1 billion people. Out of that 1 billion, demographers and economic historians have estimated that about 95 percent lived in poverty, and 85 percent in abject poverty. Only a small fraction of the human race had any form of material comfort, though we need to keep in mind that what was considered a comfortable existence in 1820 would be viewed as material wretchedness by most in the 21st century.
The world population has increased to over 7.6 billion people in 2018. The World Bank calculated that less than 10 percent lived in serious poverty in 2015. In 200 years, the population has grown by more than 6.5 billion people while poverty has sensationally fallen to less than 10 percent of the much larger total. If this trend continues, it is not unreasonable to anticipate that before the end of the 21st century, poverty will be a thing of the past.
All might not have the same standard of living in, say, 2075 or 2090. But the differences will likely be reduced to degrees of comfortable material enjoyment of life, not the dichotomy in which some have it while others do not. This should be praised to high heaven as one of the great accomplishments in human history.
The Disrespect and Indignity of Labor in the Ancient World
Instead, the majority of intellectuals and academics and political pundits condemn the economic system that has been making this improvement in the human condition possible. Free market liberalism, they declare, is based on greed, crass materialism, and unjust treatment of the “common person” and those with minority status.
Why did it take so long for humanity to escape from poverty after 200,000 years of human-like creatures’ being around on this planet? It is really only over the last 200 to 300 years that the mass of mankind has come to no longer wonder whether they shall starve tomorrow or next week or next growing season.
For all those thousands of years, people lived in tribes (roving or finally settled down), under kings and conquerors, tyrants and terror, and cruelty and callousness concerning human life. Slavery was the dominant social institution of human association. Those not killed in wars were captured and held in bondage to do the work the victor could not do or did not want to do.
Everyday labor neither had dignity nor commanded respect. It was beneath the slave master and the free members of such a society. For the ancient Greeks, the slaves were there to do what was needed so free citizens of, say, the Athenian city-state could devote themselves to the common affairs of the community and have the leisure to pursue the higher callings of philosophy, art, literature, and family life.
To work with your hands and to devote your time to the production of material wealth for the base needs of human existence were contemptuous ways of spending your existence. Thus, slaves who were directed to such activities were said to be concerned with the lower aspects of life. As the French social philosopher and liberal economist Louis Rougier (1889-1982) expressed it in The Genius of the West (1971):
The slave was not considered a human being; he had no legal existence. He could be sold, bequeathed, rented out, or given away. In the hands of his master he was a thing, a “living tool,” as Aristotle said. His fate depended on the discretion of the owner.… Manual work, because it was performed by slaves, discredited craftsmanship and the mechanical arts. The attention of citizens and scholars was turned away from anything involving the work of the hands.… Manual labor, regarded as destructive of the beauty of the body, came also to be regarded as destructive of the human mind and soul.
Some Were Masters and Many Others Were Servants Before Capitalism
As many historians have pointed out, the rise of Christianity began to change these attitudes about human labor and work. For his sins, Adam was cast out of the Garden of Eden, and he now had to work by the sweat of his brow to live, and through his work he had to redeem himself in the eyes of God. Work, therefore, when devoted to the glory of God and his purposes for man, had dignity and was deserving of respect.
But this philosophical turn concerning man and labor did not and could not significantly affect societies based on politically sanctioned and enforced hierarchy and status, as existed in the Middle Ages and into the modern age. Change required the emergence of market-based human relationships and the accompanying change in attitudes toward work, innovation, and individual independence, which really only started to take root in the 1500s and 1600s and after, as economic historians like Deirdre McCloskey have emphasized.
Before the last few centuries, some were masters and many were servants; the few ruled and the multitude obeyed; some considered themselves better than the large number of the rest while the rest took it for granted that there were those who politically and socially were better than them and to whom they had to defer in almost all things.
Peasants worked on the nobleman’s land, craftsmen earned their living by serving the needs of the lord of the manor, and peddlers passed through the nobleman’s domain and had to plead and pay, with their limited items for trade, for the privilege so they could make their meager living. None of them received or expected dignity, respect, or any independently recognized rights from those who ruled over them. It was considered a privilege to serve those above them in the institutional structure of that social order.
Emerging Markets Gave Opportunity and Independence
The slow rise of liberal capitalism began to change all this. Emerging market relationships widened the horizons for the peasant, the craftsman, and the traveling merchant to have customers for their wares outside of the confines of the nobleman’s estate. Loss of the lord of the manor’s favor and good graces no longer meant starvation or hardship or physical punishment or inability to earn a living.
Markets began to provide independence and greater autonomy for the ordinary person outside of the political realm. Markets meant freedom to live and choose and associate outside of the dominating eyes of the politically privileged and powerful. Markets came to represent liberty.
This did not happen all at once or to the same degree everywhere in Europe. But the ideas and institutional opportunities of markets slowly influenced people’s minds and their conceptions of themselves, their relationships with others in society, and the purpose of the political order.
In the classical liberal political and economic heritage, as captured in John Locke’s philosophy of individual rights and the Declaration of Independence, humans are free and self-responsible. They belong to themselves. There are no permanent masters with the authority and legitimized power to make others do (or not do) what they do not wish.
Market Liberalism Brings Respect Through Free Exchange
This means that a cornerstone of the liberal market order is freedom of association and exchange. No one may be forced to participate in any activity or transact with others in any trade without their consent. Such is part of the meaning in Adam Smith’s famous words in The Wealth of Nations, “It is not from the benevolence of the butcher, or the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities but to their advantages.”
The implication is that everyone must approach their fellow human beings and make an appeal for their assistance in some way that would be beneficial to those others. But they may not threaten physical harm, they may not use force, and they may not practice fraud or deception to gain the others’ consent and participation. A person can try to persuade, or offer something in return that would be sufficiently attractive that the other individual will be willing to do what is asked of them. But violence is banished from the human condition to the greatest degree possible for a free society to effectively function.
Few of us enjoy being ridiculed, treated with contempt and disregard for our wishes, or bullied and intimidated. Such behavior directed toward us may result in our turning down what otherwise might have seemed an attractive offer, because we find the conduct of the other person too distasteful to put up with.
Even when circumstances result in our putting up with a lot that we find demeaning or impolite, even a desperate person will finally have a breaking point beyond which they will not take it anymore, and they will walk away.
But in a developed and complex market economy, many alternatives are potentially available to people, both in our roles as consumers and producers. An impolite salesperson soon finds that existing and potential customers buy what they are looking for from someone else rather than put up with the disrespectful conduct.
While each of us, no doubt, has had frustrating experiences with sellers in the marketplace, such instances usually stand out in our minds precisely because they are the exceptions to the rule. We expect and almost always experience the opposite: courtesy, politeness, deference, helpfulness, and respectfulness in the conduct and demeanor of those from whom we buy things in the market.
People in their own self-interest find it advantageous to practice and develop good manners in their interactions with others in the marketplace. Success and profitability may depend on it. The nature of markets serves to cultivate good manners and social etiquette in all who enter the arena of exchange. Thus, free markets foster the emergence and evolution of civil society and its unwritten codes of conduct that are part of the hallmark of a refined and polite civilization.
Individual Liberty and the Dignity of Labor
Another aspect of the system of division of labor in the liberal society is that it generates an increasing awareness of the dignity of all honest and hardworking labor, regardless of the task being performed. Why? Because every niche in the market system of specialization represents a role, task, or activity that is needed and considered worth performing; otherwise it would not be done and paid for.
It became a bit of a joke at one point when garbage collectors became “sanitation engineers,” and doormen became “entryway professionals,” and dogcatchers became “animal-retrieval specialists.” But it highlighted something important, and that was that everyone in the marketplace does something that is important to someone, and if it were not done it would leave some minor or major part of everyday life less comfortable and more inconvenient.
Thus, what a person does for a living should not be demeaned, because if the person hired to provide that service or supply that good did not do so, you’d have to perform the task yourself or do without it. There is dignity in every activity in the division of labor, if performed well. It has long been captured in the American colloquial expression “What makes him think he is any better than the rest of us?” In the American political and economic tradition, certainly as understood in the heyday of classical liberal cultural attitudes and beliefs, no one has rights before the law any different from those of everyone else.
He may put on airs and look down upon others, but has he demonstrated any special gift or ability as reflected in the higher income he has earned for work done or for social recognition received for community service performed? Even if so, before God and the law, he remains a man no different from the other members of society. In a country like America, a land of immigrants with usually humble beginnings for either yourself or your parents, the phrase was “Don’t forget where you’re from,” no matter how high you or your family may have climbed from more modest circumstances.
Competition Ensures Workers Receive the Full Value of Their Hire
Equally, the worker whose labor is for hire in a developed market economy almost always finds him- or herself with more than one option for employment. The competition among employers means that workers must be wooed with wages, including fringe benefits and other related perks that come to be seen as part of many hiring packages, equal to or greater than those of the closest attractive alternative.
There are always two sides to competitive markets, the demand and the supply sides. It is certainly true that anyone selling their labor services is competing against those looking for similar employment. But this is matched by the competition from the private enterprisers needing workers to assist in the production of what they ultimately wish to offer to the consumers in society.
The upshot is that the long-run tendency in a free, open, and competitive market is for all those looking for employment to be offered and receive what the hiring employers best estimate is of the value of the (marginal) contributions those workers can bring.
Finally, we must always keep in mind that in all of this, we are talking about human beings, less-than-perfect creatures. When there is a low or minimal cost to being rude, crude, and offensive to others in our dealings with them — when there is less of a market check on our conduct — some of us may be prone to exercising such behavior.
Few of us have fond memories of dealing with employees at government offices such as the Department of Motor Vehicles, where you often wait in long lines to renew your driver’s license or pay for the sticker attached to your license plate. It’s the only game in town — the government has a monopoly on supplying and selling such things — so if you do not like the waiting or the demeanor of the state employees, there is not much you can do. What you don’t want to do is to get one of them mad at you, because they can, in principle, make your life a living hell.
The Respectful, Courteous, and Fair Dealing of Market Liberalism
Acting politely, courteously, and respectfully, and treating others with dignity, grow out of an institutional setting in which failure to do so carries with it undesired costs and negative feedback. Free market liberalism fosters just such institutional rules, both formal and unwritten.
By insisting that all individuals have rights to their life, liberty, and honestly acquired property, they are declared to be free and independent human beings who may not be violated and abused through private or political use of force or threat of force.
Since liberalism requires that all human association is to be voluntary, anyone desiring the assistance and participation of their fellow human beings in some undertaking must make it attractive for them to do so. At the end of the day, cultivating such collaboration in the arena of free exchange means treating others in respectful ways so as to not drive them into different relationships with others who are practicing better and more sincere good behavior and possibly offering better purely monetary terms.
Everyone performs tasks valuable to others to one degree or another in the interdependent social system of division of labor; otherwise there would be no value placed upon those tasks, thus making it not worth someone’s while to see that they are taken care of. Thus, no job in the market economy does not have worth and dignity, especially when done with professionalism and pride in the work done, however modest and mundane the task.
Finally, competition fosters a tendency to see that everyone hired receives the market’s best estimate of the value of what they contribute to production in society. It is not from the benevolence of the employer, per se, but from the inevitable rivalry of employers needing different types of human hands to perform the tasks needed to bring a potentially profitable product to market.
This is why free market liberalism not only has brought about growing prosperity for more of humanity, but has cultivated a more polite and respectful society to accompany the material betterment of the human condition.
This article was originally published by The American Institute for Economic Research.