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Free Markets Are a Woman's Best Friend

Steven Horwitz

Capitalism is frequently blamed for many things it isn’t responsible for.  This is simply a reality we defenders of free markets have learned to live with.

Among the accusations made against capitalism is that it is bad for women.  A couple of weeks ago I discussed the gender wage gap, which is often claimed as an example of how capitalism causes discrimination against women.  We hear other arguments about how it supports “patriarchy” and otherwise leads to women being treated as second-class citizens.  In fact capitalism has done far more good for women than bad.

One of the best examples is the way capitalism has made possible women’s economic advancement, particularly their increased presence in the labor force.  The steady increase in women’s labor force participation is perhaps the most important demographic fact of the last 100 years.  By giving women their own source of income, capitalism has empowered them in a number of ways; for example, the changing dynamics of marriage has enabled women to get out of relationships they previously could not have left.  Women’s economic independence has transformed the family in other ways as well.

We can look at women’s increased labor force participation from two sides, as we often do in economics.  Capitalism both demanded more female labor and supplied the conditions that made it easier for women to provide it.

Rising Demand

The demand side is perhaps more obvious.  The economic growth that capitalism generated after the Industrial Revolution and into the early twentieth century had two consequences.  First, it increased the demand for labor in general.  As wages rose and workers (mostly men) grew wealthier, they began to buy more than before.  That rising demand for final goods increased the demand for all the inputs that went into them.  Of course one of those inputs is labor.

This increased demand for labor meant that firms had to find workers somewhere.  One option was to try to bid men away from other jobs, but the only way to do that was to pay higher wages.  The other option was to hire more women in jobs that had previously been restricted to men.  In fact this is what many firms started to do early last century.  The result was that women who had not worked outside the home before began to get jobs.  The growth driven by capitalism and industrialization made this possible.

Growth had a second effect on the demand for female labor.  As industrialization progressed and the scale of operations grew, the number of ancillary jobs such as secretaries and clerks grew.  In addition, part of the increase in consumer demand noted above was for services rather than goods.  Instead of buying a chicken and butchering it themselves, people were willing to pay more for chicken parts.  Eating out became more common, and the demand for personal services such as barbers and hair stylists grew.  Women could compete against men for many of these clerical and service jobs more effectively than they could for harder physical labor.  The result was more job opportunities for women.  By the 1940s the demand for female labor was intense enough that firms started to offer the option of part-time work to meet married women’s need for flexibility.

Domestic Labor-Saving Devices

Capitalism also supplied the conditions that made it easier for women to supply this labor.  The biggest problem married women, especially with kids, faced if they wanted to work was caring for the household.  With the technology available at the turn of the last century, keeping a home clean was a fulltime job.  The interwar era, however, saw the development of all kinds of new household appliances that significantly reduced the time required to clean and cook.  Doing the laundry went from a three-day, multi-person job to just a matter of hours.  These inventions liberated women from much of the drudgery of housework and made it at least thinkable to work outside of the home.  (This point is powerfully presented in this Hans Rosling video.)

Women were also becoming increasingly educated, both at the high school and college level.  Here too the wealth created by capitalism made it possible for families to afford to educate their children longer, including their daughters.  This wealth was also sufficient to make children’s income unnecessary for survival.  The more-educated and more-productive potential female workforce meant that it was more likely women would get hired.

Although it rarely gets the credit, capitalism liberated women from centuries of second-class citizenship.