Capitalism Is Not A System Of Morality

National wealth exploded during The Gilded Age of American capitalism. In 1892 the Census Bureau reported that the average annual wage of an industrial worker rose from $380 to $564 between 1880 and 1890, a 48 percent increase that reflected a change in inflation-adjusted real income. Though the economic role of women remained circumscribed, poor, unmarried Irish and French Canadian women obtained work in Northeastern textile mills, offering them a modicum of social prestige and mobility.

We’re more familiar with the concentration of industry and the consolidation of massive fortunes that occurred during the period: John D. Rockefeller’s Standard Oil, J.P. Morgan’s interventions in the stock market, Andrew Carnegie’s vertical integration of the steel industry, and Cornelius Vanderbilt’s shipping empire, to name a few examples.

The drastic increase in personal wealth between 1870 and 1900 led to much reflection on the continuing presence of poverty in a society inundated with new material comforts. Carnegie’s “Wealth” is one example of the various solutions commentators offered to the quandary of properly administering the resources created by industrial capitalism.

Carnegie’s article strikes a conservative and realistic tone. He diagnoses one of the chief benefits of the expansion of industrial capitalism: the production of goods at low prices. “The inevitable result” of the homespun method of production, he writes, “was crude articles at high prices.” In a sentence that should strike a chord with a generation of “digital natives,” Carnegie notes, “what were the luxuries have become the necessities of life. The laborer now has more comforts than the farmer had a few generations ago.”

In a speech delivered in Springfield on July 17, 1858, Lincoln argued that the Declaration secured to every American citizen–black and white–“the right to put into his mouth the bread that his own hands have earned.” As Allen Guelzo notes in Redeemer President, Lincoln’s visceral disdain for slavery stemmed from its devaluation of labor within an expanding market economy.

For his part Carnegine wrote, “One who studies this subject will soon be brought face to face with the conclusion that upon the sacredness of property civilization itself depends–the right of the laborer to his hundred dollars in the savings bank, and equally the legal right of the millionaire to his millions.”

These quotes from Lincoln and Carnegie exemplify a struggle that free market capitalists must confront, namely defending the sanctity of labor and property as the best method of social organization in an imperfect world while also ensuring that greed and acquisitiveness are not valorized as good things per se.

On the right, there is a tendency to assume that failure to prosper in a market economy signifies a lack of initiative, determination, and resourcefulness. Carnegie, for instance, insists that when it comes to charitable giving, “the main consideration should be to help those who will help themselves,” and not “to encourage the slothful, the drunken, the unworthy.”

On the left, there is a reactionary tendency to look at the exploitation and poverty that persist in capitalist economies and to make the perfect the enemy of the good. James Henry Hammond’s mudsill theory is correct. Material prosperity inevitably rests on the exploitation of the least powerful members of society. Under capitalism, however, material comfort and marginal social mobility tends to encompass more and more people. (The Eastern European immigrants who lived in urban squalor during the Gilded Age did so because it was better than the alternative.)

Capitalism is neither “God’s way of determining who is smart and who is poor,” to use Ron Swanson’s phrase, nor is it “the problem,” to use the diagnosis scrawled in front of Amherst’s World War II memorial when my friend and I visited that campus. It is a system under which exploitation and unfairness occur on a daily basis and material comforts are generated more effectively than any competing model, largely because it taps into our unlimited potential to act sinfully.

That’s why conservatives are befuddled when “inequality” and “fairness” are brought into conversations about economics. Economic systems are not concerned with fairness or equality. They do not operate according to moral laws, unless you think concupiscence is a moral law. They’re concerned with generating wealth. Capitalism does this quite well. Morality, for us, falls in the domain of religion, philosophy, and individual conduct.