Is America a Capitalist Country?

Distributism is often said (particularly by its adherents) to be an alternative both to socialism and to capitalism. But as G.K. Chesterton notes in his masterly work on Distributism, The Outline of Sanity, capitalism is a term that can mean several quite different things:

When I say “Capitalism,” I commonly mean something that may be stated thus: “That economic condition in which there is a class of capitalists, roughly recognizable and relatively small,
in whose possession so much of the capital is concentrated as to necessitate a very large majority of the citizens serving those capitalists for a wage.” This particular state of things can and does exist, and we must have some word for it, and some way of discussing it. But this is undoubtedly a very bad word, because it is used by other people to mean quite other things. Some people seem to mean merely private property. Others suppose that capitalism must mean anything involving the use of capital. But if that use is too literal, it is also too loose and even too large. If the use of capital is capitalism, then everything is capitalism. Bolshevism is capitalism and anarchist communism is capitalism; and every revolutionary scheme, however wild, is still capitalism. Lenin and Trotsky believe as much as Lloyd George and Thomas that the economic operations of to-day must leave something over for the economic operations of to-morrow. And that is all that capital means in its economic sense. In that case, the word is useless. My use of it may be arbitrary, but it is not useless.

If capitalism means private property, I am capitalist.

If capitalism means capital, everybody is capitalist.

But if capitalism means this particular condition of capital, only paid out to the mass in the form of wages, then it does mean something, even if it ought to mean something else.

Is modern day America capitalist in Chesterton’s sense? I would argue no.

Recall that, for a society to meet Chesterton’s definition of capitalism, it must be the case not only that a small group of people hold most of the capital, but that because of this fact it is necessary for a very large majority of that society’s citizens to work for that group for a wage. Now the second part of this definition is ambiguous. It could mean that it is necessary that the vast majority work for a wage, or it could mean that, for the vast majority of individuals, it is necessary that the given individual work for a wage. To see the difference here, consider the case of a wedding reception at which there will be 100 guests and two dinner options: chicken and vegetarian. Suppose that (for whatever reason) the caterers have prepared 85 chicken dinners and 25 vegetarian dinners (the extra ten being available on the “better safe than sorry” principle). It must therefore be the case that most people at the reception will have a chicken dinner. But it needn’t be the case of anyone at the reception (let alone the majority) that he or she will have a chicken dinner. So long as most people at the reception prefer chicken to a vegetarian meal, everyone can choose the dinner of their choice despite the overall ratio of chicken to vegetarian dinners. For easy of reference, let’s call these two senses the individual sense, and the collective sense.

If a capitalist society is one where most people are forced to work for a wage in the individual sense, then America is clearly not a capitalist society. It’s true that most people in modern America do work for a wage, but it is not true of most of them that they have to do so. Pretty much anyone could, if they really wanted, quit their job and join a commune, or follow the example of this guy (or this guy), or, less radically, start their own business. The fact that most people choose to work for a wage rather than exercise any of these options may be vexatious to a Distributist, but the fact that he doesn’t like most people’s choices doesn’t mean that they weren’t free to choose.

What if we take Chesterton’s definition in its collective sense? It is theoretically possible that most people will wake up tomorrow and decide that “wage slavery” isn’t for them. It is highly unlikely, no doubt, but so long as capitalism means more than just a society where people choose to work for a wage (as opposed to one where the majority are forced to work for a wage) then the fact that this is unlikely is not sufficient to make America a capitalist society (in this way the choice of people to be employed in America is different than the choice of dinners in the example above, since in that example most people would be forced to eat chicken dinners if nearly everyone wanted vegetarian).

Further, to the extent that large numbers of people are forced to work for wages in the U.S., the reason for this has little to do with the concentration of capital in the hands of a few. Even if businesses were all extremely small, having on average 9 employees a piece, it would still be the case that 90% of the workforce was working for a wage. Pretty much the only way one could avoid a situation in which a majority of people in a society worked for a wage is if a significant percentage of the workforce in that society was neither an employer or an employee. Historically, that has meant most people working in subsistence agriculture.

In each case, the basic problem for Distributists (who, I take it, generally think that America is a capitalist country) is that they assume the only reason why a person would choose to work for a wage is that they lacked sufficient capital to do otherwise. But that’s not necessarily so. In the case of myself, I’m glad that I don’t have to worry about all the things (from meeting payroll to office repairs) that my boss has to worry about. I much prefer being able to do my job in exchange for a wage, and spend my free time on other, more worthy pursuits (such as this blog).