The main event in capitalist free markets is the creation of wealth. The other event is the creation of inequality. Under principles of laissez faire this is not so much a tradeoff, a positive for a negative, as it is two positives. Inequality, the natural outcome of competition, is a sign of healthy struggle on which the whole community is said to thrive.
In corporate philosophy the mission of business is to maximize profit. To that end it values efficiency over almost everything, including moral considerations. The parent philosophy, utilitarianism, does not care if some people suffer injustices if a greater good shows up later. (In fact some have drawn “indifference curves” showing various gradients of inequality among humans, suggesting the more equality, the fewer total satisfactions (1)).
The industrial revolutions raised Western nations to massive wealth. Their stories can be written as a history of progress, and that is the outward appearance. But their entrails also ran with strikes, rights actions, antitrust decisions and labor strife; at times the creation of wealth ruined people. Free marketers will still explain labor mutinies as envious workers bent on random wreckage. But these actions all targeted massive inequalities.
Yesterday’s and today’s conservatives both say inequality is not bad if it comes from a free and fair market. They explain that where you land in the economic struggle for survival depends on your abilities, intelligence or character, so the blame for pain must be laid on the individual. Actually, some go further and hold inequality and injustice to be in the nature of things, so installing ethics or equity is tampering with natural law and its Darwinian ways, and it’s not a good idea to help weaker players or the less talented because that slows natural selection.
The nub is that free markets and equality are opposed.
Next, what laissez faire tries to promote also collides with the two prime values of democracy: freedom and equality. They are the two legs on which democracy walks; the goal is therefore to preserve both.
Louis Brandeis, who as Supreme Court Justice before and after World War I inserted himself in the midst of these struggles, said that we can have democracy or we can have great wealth concentrated in the hands of a few, but we cannot have both (2).
Working conditions have improved of course. We no longer use child labor, nor fourteen hour shifts, nor do we pay workers the absolute minimum they will accept. But every one of these reforms was contested, fought, litigated, and intensely lobbied, because it is not in the nature of laissez faire business owners to want what is moral or humane. They want profit.
The basic colors of this conflict have never changed. The arguments that nature is ruthless and cannot be changed and that poverty results from inability or weak character still abound. The rest of society is concerned with morality every day. But businesses are amoral, following utilitarianism, and so we have collisions. (Cardinal Ratzinger once presented the church’s moral position in this chronic conflict (3)). In this part of history we are on a rightward swing of the pendulum. Union power is at a low ebb, and corporate culture, materialism, and big money all seem formidable. People struggling for social justice have reason to fear because laissez faire and Social Darwinism are rising again (4).
Free market capitalism continues on its fundamentally undemocratic course. The interior landscape of most corporations is authoritarian, often exploitative. As a kind of public relations gesture they regularly serve us those well-chewed paradoxes: that competition is good for everybody, and that what is bad (the unhappiness of poverty) is good because it’s a spur. Third, that making wealth by these competitive means raises everybody.
But common observation shows that competition is not good for everyone, only the winners; that what is bad is not good; and that unhappiness is not a source of energy, it is depressing. And while this country gets richer it grows more unequal (this has been going on since1774 (5)). So does the free market lift the whole of society up? It does not. It spreads the upper and the lower apart. (We may have wondered about these tricks of reason, but laissez-faire is a powerful ideology, and under its spell we somehow accept that wheels on the same axle can turn in different directions.)
The bigger the unfettered free market, the less equal we become. And poor people cannot change this, because even if dependable and hardworking, they are powerless.
But now a new player has stepped in. New scientific evidence has been accumulating that inequality itself is bad for our health. It’s not so much the qualities of the individual. Nor what he does. It is the system. It’s the shape of the community he lives in hierarchical or egalitarian.
After years of collecting health data, Ichiro Kawachi in the U.S.(6), Richard Wilkinson in Britain (7) and John Lynch in the U.S. (8) and their associates have discovered that more lethal than cigarettes, obesity, alcohol, pollution, AIDS, vehicle accidents, suicides and homicides, is the gradient of inequality in our societies.
This finding was unexpected and earlier researchers published and stood waiting for confirmation. Over ten years, confirmation came. Now more than 30 studies show that if you live in an unequal society, you run the risk of a shorter, unhealthier life and your environment is more violent. In researchers’ comparisons of the 50 states, social equality is correlated with life expectancy (9, 10), and the steepness of the inequality predicts homicide rates and a raft of social ills. It’s not just poverty (separately, poverty is correlated with poor health).
When you compare nations, on the other hand, richer nations don’t have the longer life expectancies; egalitarian nations do. Robert Sapolksy, in his recent Scientific American article (11), teases out the mediating factors: it seems that people in communities having higher ‘social capital’ (the degree to which residents trust each other and participate in social groups) experience better health, longer lives and less violence. It turns out that communities with high social capital are also more egalitarian.
In short, each community has a social gradient. The steeper the gradient, the more that community is a killer. We can expect this new scientific evidence to be resisted with every sinew–it runs frontally against our free market beliefs. The United States is one of the most unequal nations in the world. Over 40% of the wealth is owned by only 1% of the population. This is a terrible weapon in the hands of the rich.
If we want to improve our health–something that obsesses Americans–it is clear what we must do. We must find a way to raise both affluence and equality.
1. Rawls, J. A theory of justice. Cambridge: Harvard University Press, 1999. Pp. 32-34.
2. Brandeis actually went more inclusive at one point, stating that curbing bigness was essential to democracy. Strum, P. (Ed) Brandeis on democracy. Lawrence, Kansas: University Press of Kansas, 1995.
3. Razinger, J., Cardinal (now Pope Benedict XVI) Market Economy and Ethics was presented at a 1985 symposium “Church and Economy in Dialogue” in Rome and can be retrieved at http://www.acton.org/publicat/occasionalpapers/ratzinger.html
4. Edney, J.J. Greed: A treatise in two essays. Lincoln, Nebraska: iUniverse, 2005. See Greed II.
5. It appears in 1774 the top 1% owned 14.6% of the national wealth.~ By 1989 it owned 36.3%. In Gordon J.S. “Numbers game,” 1992, Forbes, October 9. p. 48.
6. Kawachi, I., Kennedy, B.P. and Wilkinson, R.G. (Eds.) The society and population health reader. New York: The New Press, 1999.
7. Wilkinson, R.G. The impact of inequality. New York: The New Press, 2005.
8. Lynch, J. and G.A. Kaplan. Understanding how inequality in the distribution of income affects health. In Kawachi, I., Kennedy, B.P. and Wilkinson, R.G. (Eds.) The society and population health reader. New York: The New Press, 1999. p. 202.
9. Kawachi, I. and Kennedy, B.P. The relationship of income inequality to mortality: Does the choice of indicator matter? In Kawachi, I., Kennedy, B.P. and Wilkinson, R.G. (Eds.) The society and population health reader. New York: The New Press, 1999. p. 112.
10. Sapolsy, R. Sick of poverty. Scientific American, 2005, 293, 92-99. (December 2005).