Capitalism is not Exploitation

A main criticism of capitalism is that it is an economic system in which the rich gain their wealth through exploitation. Many people hold the Marxist belief that the wealthy class exists through the exploitation of the lower classes, and the huge disparity in income present today seems to validate this thought. After all, it is not uncommon to hear the sentiment that low wage earners, such as those working in fast food or at Wal-Mart, are exploited. Adding to the dialogue of exploitation is the outcry against cheap foreign labor and “sweatshops” that exist in less developed countries. It is said that the economic system of capitalism is what promotes the exploitation of these workers in order for the wealthy to gain obscenely high profits. In truth, capitalism thrives on mutually beneficial trade and has done more to eradicate poverty than any other economic system or government program known to man.

Capitalism is a system in which people have rights to their property and all transactions are voluntary. Unlike other systems, such as socialism, capitalism relies on consensual trade and rejects the use of physical force or coercion as a means to economic gain. From this one could easily conclude that a capitalist system is inherently non-exploitative, but because it is commonly labeled as a system of exploitation I will go into further detail as to why it is not.

The lower wage earners are said to be the people who are exploited by the wealthy business owners in a capitalist society. It is no secret that fast food employees and workers at big retail chains such as Wal-Mart make next to nothing when compared to the owners of these businesses. However, all of these employees voluntarily choose to work these jobs. No fast food chain has ever used force or enslaved people to work for them; all of their employees do so willingly. Nobody would willingly agree to be exploited, so why do people agree to work these jobs? The simple answer is there is no better alternative for them. Without the employment that capitalism offers low-skilled labor, these workers would not have a job and would have a much lower standard of living than they currently do.

Of course in America sweatshops no longer exist and there are government regulations ensuring workers get certain benefits from their employer. So what about cheap foreign labor where these regulations do not exist? Many people think that these extremely low wage earners must be exploited by free trade that occurs under capitalism. Quite the opposite is true, actually. Free trade has given the poor in underdeveloped countries more wealth than has ever been available to them. Once again, no corporation uses force to employ people in sweatshops overseas; people choose to work there. Their choice to work in sweatshops is usually because no better alternative exists. Before free trade these workers lived a life of extreme poverty, usually consisting of farming, and often times went hungry and starved. Thanks to increased trade in global markets, these sweatshop workers now have stability and wealth they could have only dreamed of before the presence of sweatshops.

I recently saw a John Oliver segment damning “greedy corporations” for employing child labor in their shops. Mr. Oliver advocates a ban on such labor because he feels no child should be working in those factories. However, if John Oliver got the ban he so wishes, then those children would most likely starve and die. I’m sure John Oliver speaks out against child labor with the best of intentions, but what he’s advocating for is to use force to prevent the severely underprivileged and poor children in the world from being allowed to earn a wage and feed themselves. Sorry, Mr. Oliver, but I would prefer a world in which people are empowered to choose to work and live rather than be doomed to poverty and starve to death.

Free-market capitalism has done wonders for improving the standard of living for everyone in the world today. It is also the only system that rejects the use of force and thrives on mutual exchanges that benefit all parties involved with the trade. Exploitation requires force and is present in many systems other than capitalism. The next time it is touted that capitalism is a system of exploitation, just remember that capitalism is the only system in which all transactions must be consensual and mutually agreed upon.