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Friday, September 20, 2019

Markets Make More People More “Fit” All the Time

Opponents of market systems are great fans of hurling epithets like “dog-eat-dog” and “survival of the fittest” at supporters.

Photo by mauro mora on Unsplash

Opponents of market systems are great fans of hurling epithets like “dog-eat-dog” and “survival of the fittest” at supporters. You would think self-ownership was actually a eugenics program. But in casting such charges that capitalism is about weeding out those less-abled, they don’t seem to recognize the glaring contradiction between their claims and demographic trends since the acceptance of private property rights and voluntary arrangements began growing in a serious way.

The Impacts of Free Markets

As James Pethokoukis summarized those trends,

The single greatest story of human achievement of the past 2,000 years is the dramatic rise in living standards of the past 200 years. It’s an astounding ascent driven by innovative, entrepreneurial capitalism.

As Steven Horwitz described the process,

capitalism’s engine of growth has enabled the planet to sustain almost 7 billion people, compared to 1 billion in 1800. As Deirdre McCloskey has noted, if you multiply the gains in consumption to the average human by the gain in life expectancy worldwide, humanity as a whole is…120 times better off since 1800.

Rather than eliminating the less-abled, capitalism has made far more people fit not only to survive but also, increasingly, to prosper. Capitalism has no peer when it comes to providing more abundant goods and services for all. Defending private property rights, which stops predation, the default setting in the absence of respect for them, makes market competition the primary uplifting force for the poor. And the less it is hampered, the better it achieves those results. In George Reisman’s words,

economic competition under capitalism is a competition in who can increase the supply of things the most, with the outcome being practically everyone surviving longer and better.

The Power of Capitalism

Further, those not in the elite benefit disproportionately from the premium reward capitalism offers for bringing products within the means of the masses. As Joseph Schumpeter observed in Capitalism, Socialism, and Democracy,

The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.

As Sheldon Richman summarized the evidence,

If under capitalism only the fit survive, it seems to have a knack for making people fit.

Even more powerful is Steven Horwitz’s recognition that

Nothing has done more to lift humanity out of poverty than the market economy…whether we are looking at a time span of decades or of centuries.

Capitalism has also created medical miracles that now routinely save previously “unfit” people. Infant and child mortality rates have been cut, as well as maternal deaths in child-bearing. Life expectancies have grown by decades. In addition, it has generated previously unimaginable amounts of wealth, allowing charity to flourish for those who cannot do for themselves. As Howard Baetjer, Jr., put it, not only is it true that “The market process lifts wage rates for all levels of ability,” but that

Even for the severely handicapped or infirm, capitalism is the best available economic system. Such unfortunate people necessarily depend on the care of others in any system. But in controlled economies, production is meager; the able-bodied have little to spare for those who cannot work. In capitalism, production is bountiful; there is an ever-increasing surplus with which concerned people can care for those unable to care for themselves.

Perhaps Steven Horwitz has provided the best summary of what is wrong with the imagery that private property (ownership of yourself and what you produce) and capitalism (freedom of voluntary exchange) acts to cruelly weed out those less abled:

Today, the poor in capitalist countries live like kings, thanks mostly to the freeing of labor and the ability to accumulate capital that makes that labor more productive and enriches even the poorest. The falling cost of what were once luxuries…driven by the competitive market and its profit and loss signals, has brought labor-saving machines to the masses. When profit-seeking and innovation became acceptable behavior for the bourgeoisie, the horn of plenty brought forth its bounty, and even the poorest shared in that wealth.

  • Gary M. Galles is a Professor of Economics at Pepperdine University and a member of the Foundation for Economic Education faculty network.

    In addition to his new book, Pathways to Policy Failures (2020), his books include Lines of Liberty (2016), Faulty Premises, Faulty Policies (2014), and Apostle of Peace (2013).