“The market can’t…”

Over on the Book of Faces, I came across, and shared, this image (one of the many “Harambe” memes that have been going around over the last few years):

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It was not long before someone, who in general claims to be for the “free market”, was coming in and saying that no, it doesn’t work like that, that you had to have government regulation or you would get the horrible conditions and low pay of the factory workers in the early industrial revolution.

I pointed out that as horrible as those circumstances seem to us, they were actually an improvement over available alternatives and a necessary stepping stone upwards in improving the lot of pretty much everyone. (As, indeed, I have pointed out is the case with so-called third world “sweatshops” today elsewhere on this blog.)

His “answer” was basically to flat deny that they were and, further, to claim that they were the inevitable consequence of laissez faire capitalism (because, apparently, the only difference between then and now was the lack of regulation on businesses–even if we granted the implicit claim of a complete lack of any such regulation).

Well, my head went through the desk then.

They weren’t better than available alternatives?  Then why did people take the jobs.  “Greed” might make the business owners want to offer next to nothing in pay.  It might want the business owners to work them at extreme hours with no concern for worker comfort or safety.  But that greed cannot explain why people took the jobs.  The business owners had no armed press gangs rounding people up and dragging them, kicking and screaming to the factories.  They had no barbed wire fences and chains keeping people in the factories.  No guarded and fenced in barracks to keep people from running off when not actually working.

People came to them seeking employment.  And the only real threat the business owners had to hold over the employees was employment.  “Do what you’re told or we’ll kick you out.”

If these factory jobs weren’t better than available options then why did people take the factory jobs rather than the other available options?

The simple truth was that life was hard back then.  Human life was cheap.  And misery was the common lot.  Factory conditions then reflected that longstanding truth of mankind.  And it was not going to change overnight in any system, market or otherwise.  Even Marx, if you look at what he actually wrote rather than the many “interpretations” attributed to him over the years, saw all this as a necessary step to his favored Utopian ideal.

But, I was told, this proved proved that the market didn’t work for providing decent conditions and wages for workers?

Why, then, did Henry Ford (to use one example) go to an eight hour work day long before any government regulations required it as well as long before Ford factories had unions to demand it?  Why the five day work week, likewise?  Why did he pay higher wages than his competitors?  Did the fact that the higher pay meant he could hire the better workers away from those competitors, giving him a more skilled, competent, productive work force that could produce more cars and therefore make more money for him have anything to do with it?  Did that an eight hour day in three shifts allowed for keeping production operations running around the clock so that he could get the most out of expensive capital equipment play a part?  Did the thought that having workers work five days with two off made them more productive during those five days than they would have been working six with one off influence his decision making?

Henry Ford made those changes, that improved the lot of his workers, not because of any great love for his workers, and not because regulations or unions demanded it.  He made those changes because, in the face of competition, they were simply good business that made. him.  more.  money.

Or take the case of South Africa during the days of Apartheid.  As Thomas Sowell points out in Basic Economics laws in South Africa restricted what businesses could do with regards to black labor.  No more than a certain number of blacks could be hired.  Work crews had to have a white supervisor.  And so on.  These laws were routinely broken by businesses.  They were broken because competition required them to do so.  If they didn’t then some other business that did, in violation of the law, would out compete them and they’d end up losing money.  It was a better business decision to break the law and pay the fines then to do without the black labor (and black supervisors), whatever the law said.  The market not only provided without government, it provided when both government and prejudice were actively opposed.

The market works.  It may not work as fast as you want.  It may not produce the precise solutions you want (and what hubris makes you think what you want is the way things inevitably should be).  But it does work.

Government is more likely to get in the way.  But that’s a topic for another day.

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One thought on ““The market can’t…””

  1. Government USUALLY gets in the way. A saying I came up with probably thirty-odd years ago: “There is no situation so bad that one cannot add government and make it WORSE.”

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