L. von Mises, Why people are free when they work in a capitalist system

The very fact that labor is, under capitalism, a commodity and is bought and sold as a commodity makes the wage earner free from any personal dependence. Like the capitalists, the entrepreneurs, and the farmers, the wage earner depends on the arbitrariness of the consumers. But the consumers’ choices do not concern the persons engaged in production; they concern things and not men. The employer is not in a position to indulge in favoritism or in prejudice with regard to personnel. As far as he does, the deed itself brings about its own penalty.

It is this fact, and not only constitutions and bills of rights, that makes the receivers of salaries and wages within an unhampered capitalist system free men. They are sovereign in their capacity as consumers, and as producers they are, like all other citizens, unconditionally subject to the law of the market.

In selling a factor of production, namely, their toil and trouble, on the market at the market price to everybody who is ready to buy it, they do not jeopardize their own standing. They do not owe their employer thanks and subservience, they owe him a definite quantity of labor of a definite quality. The employer, on the other hand, is not in search of sympathetic men whom he likes but efficient workers who are worth the money he pays them.

This cool rationality and objectivity of capitalist relations is, of course, not realized to the same degree in the whole field of business. The nearer a man’s function brings him to the consumers, the more personal factors interfere. In the service trades some role is played by sympathies and antipathies; relations are more “human.”

Stubborn doctrinaires and adamant baiters of capitalism are prepared to call this an advantage. In fact it curtails the businessman’s and his employees’ personal freedom. A small shopkeeper, a barber, an innkeeper, and an actor are not so free in expressing their political or religious convictions as the owner of a cotton mill or a worker in a steel plant.

But these facts do not invalidate the general characteristics of the market system. It is a system which automatically values every man according to the services he renders to the body of sovereign consumers, i.e., to his fellow men.


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