Capitalism and Job Security

Karl Marx argued that capitalism would eventually collapse and give rise to socialism, as a matter of historical necessity. Many now believe he was wrong but they rest this less on the problem with his theory than on the failure of the Soviet attempt to implement it.

Actually, Marx would probably have denied that the Soviets could be socialist – he in fact warned that if socialism is attempted in places where capitalism never had a chance to develop, all that would be accomplished is the "socialization of poverty" – exactly as it happened in the Soviet bloc!

Whether Marx had anything really important to say about the future of capitalism isn't something we can deal with here but there is one point that he clearly had right. He noted that in capitalism many workers would get fed up with the system because of its volatility. This is especially so when it comes to how capitalism affects job security.

In a capitalist economy, which libertarians fiercely champion, there is what Marx called economic anarchy. By this he meant that what is sold and bought, where, for how much, and so forth are all unplanned and unpredictable. It all depends on supply and demand, and that goes especially for labor.

Those in the work force experience the down side of this anarchy when their jobs dry up simply because others will have decided to buy stuff that they do not produce, or do not produce in a location where they have settled. So, in a pure capitalist market, working people may have to pull up roots and move elsewhere in order to remain solvent and prosper. Capitalism is, in this sense, destructive of stability, especially as far as people's jobs are concerned.

There is, of course, an enormous benefit that comes from this anarchy: employment is actually more abundant in a capitalist system than in all the alternative systems known. This is evident today from comparing employment figures from much of Europe and those from across the United States of America. While job stability is better in Europe, at least over a certain time period and for some people, than it is in America, there is a far greater abundance of employment in America than in Europe precisely because of the greater measure of anarchic capitalism enjoyed in the latter.

If one believes, however, that all human beings require stability, must be well rooted – so they can live in the same place for an extended period of time, send their kids to the same school, go to the same church, and so on – then one will think badly of capitalism and will wish to sacrifice its principles of free trade and limited government.

Marx actually believed it is when workers experience uprooting that they would begin to overturn capitalism by voting for politicians who enact measures that "stabilize" the economy via government intervention and restriction on the use of private property. And Marx probably had it right about many people, the ones who would rather restrict trade, interfere with the movement of capital and labor than risk having to adjust to market pressures.

But what if people are far more adaptable than Marx believed? What if many of us are quite able to adjust to new social and economic conditions, while others would just as soon stay put and even have laws enacted that make this mandatory for the rest? In the contemporary world there is ample evidence that people can be quite happy while also on the move. Mobility is nearly the norm, at least for a great many of us, while being rooted in various communities is more of a preference rather than a necessity.

If this is indicative of how people are, that they have no innate need to remain in one place, however much at times they may prefer this, then any attempt to restrain trade and tame the anarchy of capitalism is unjustified. Sure, this doesn't mean people will not attempt to have their vested interests protected by politicians, that they will not be willing to compromise the principle of liberty for the sake of their convenience.

People often breach principles of right conduct so as to have their way.

But it is wrong to do so and a failure of nerve, to boot.

January 5, 2004