Why isn't Capitalism more Caring?

Don't confuse the family with the state

Ten years ago, Stephen Dubner interviewed several prominent economists about how they applied their academic research on parenting to raising their own kids, many of whom were very young at the time. This week on the Freakonomics podcast, he followed up by interviewing those same economists together with their children.

While it’s mostly a cute series of interviews, one interesting exchange explores the tension between Sofia Sacerdote’s Marxist politics and her father’s career as a professional economist.

DUBNER: Basically, Sofia, I’m saying give me your best shot. What is it exactly — I don’t mean about your father, per se, I’m sure you love your father and you think he’s a wonderful human — but what is it about being an economist or the field of economics that really doesn’t sit well with you?

Sofia SACERDOTE: I adore my dad. And I think a great deal of what he’s taught me about how to think about the world and how to approach problems and really just how to treat people — when I take that to the logical extreme, that’s how I come to form my politics. I have trouble seeing how market economics and how capitalism are actually meeting our goals of taking care of people. It’s treating people not as people, but as workers and interchangeable bodies. It’s not seeing people for the complexity that we are. And it’s leaving some things up to chance and to a market that’s been rigged from the very beginning.

DUBNER: But you also said that your worldview has been informed by what your father taught you. What do you mean by that?

Sofia SACERDOTE: I think both my parents did a really great job of instilling in me and my brothers a sense of kindness towards others. I think we have a really strong, beautiful ethic of mutual aid in which all of our money is shared and we make decisions pretty collectively. And when I think about a more beautiful world, I would want it to look a little bit more like our family, and for people to have those similar networks of care.

This last statement illustrates an appealing, but fundamentally misguided aspect of Marxist thinking. A loving family provides a great deal of care and consideration for its members, and does so with far less concern for cost and productivity than exists in the labor market. Surely a world in which all people experienced such love and concern in their home life would be a far better place. But applying the same attitudes and procedures that work so well in a family setting at the scale of an entire society is bound for failure.

In The Fatal Conceit, Friedrich Hayek explained that the idea of societal rules that govern individuals differently from how we treat our family members often seems paradoxical to us because our minds are primarily adapted to living in small communities.

Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within the different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e. of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once (emphasis added).

Note that an essential part of Hayek’s message here is that our collectivist instincts are well adapted toward our intimate relationships. Contra Ayn Rand, applying many of the practices that are sound in a market setting to interactions with our children and close friends is as much a recipe for disaster as the reverse. Context and scale change everything.

In the spirit of Hayek’s writings, I close with three reasons why the structure of the family often works well for small, related groups but fails when applied to society as a whole.

1. Loyalty and Cohesion

   Family members are closely bound to each other, usually by shared characteristics, and hold firm responsibilities to the group that are hard to renege. These bonds make high levels of cooperation and commitment possible, even in the absence of monetary incentives.

2. Information

   Families are localized and face limited problems of coordination. Obtaining the necessary information to fulfill the needs and wants of family members is not prohibitively costly and allows for decisions about resource allocation to be made without market price signals.

3. Freedom

   Potential for tyranny is much smaller at the scale of the family. The interests of parents and their children are approximately aligned in some important ways, and the scope of a single family’s abuses of power, while potentially destructive, do not endanger the freedoms of larger social units. Collective sharing and decision-making is largely, though admittedly not entirely, a voluntary process within the family and is not imposed by state power.