By Steve Horwitz

With my book Hayek’s Modern Family just a few months from publication, I thought I’d provide a little preview of one strand of my argument there.

downloadWhatever the scientific merits of Abraham Maslow’s hierarchy of needs, it serves as a useful heuristic to capture the upward progress of humanity over the last two or three centuries. From millennia of poverty in which ensuring the basics of food and physical safety were day-to-day challenges for the vast majority of humanity, an increasing proportion of the population has reached a point where those struggles are non-existent. In the Western world, the overwhelming majority of the population does not worry moment-to-moment about their physical safety or where their next meal is coming from.The percentage of people living on less than $1.25 a day continues to fall, and fall rapidly, while people in other parts of the world continue to climb close to Western levels of wealth and comfort. Pulling ourselves out of poverty is perhaps humanity’s greatest achievement. Creating a world in which a substantial majority of the seven billion people on the planet live at least relatively long lives of reasonable comfort is a feat sometimes overlooked.

Even among those who recognize this accomplishment, fewer still recognize that the institutions of market capitalism and respect for trade and profit that it requires are the main reason for that upward climb. Understanding how capitalism has met our material needs is one thing, but as we more easily meet our material needs, we open up the ability to pursue all kinds of non-material values. The less time and fewer resources we have to spend on life’s necessities, the more we have to spend on things we want simply because we enjoy them. In 100 years, we’ve almost doubled the percentage of the income of the average American household being spent on things other than food, clothing, and shelter. We indulge our toys and our hobbies like never before. We give gifts and we travel. Even what we do spend on the necessities can be spent on not just items that are merely functional, but those that please us aesthetically. Our expenditures on food are on vastly better food than a century ago, if not even a generation ago.

imagesMore generally, this expansion of wealth has freed us to engage in education, art, and leisure that was possible only to a tiny fraction of humanity for most of our history. Even relatively poor Americans can get a college education and have access to books, music, and art that even the wealthy of generations past did not have. For others, the expansion of wealth is an opportunity to create knowledge, music, literature, and art that would not have been available generations before. Even the fact that so many young people spend the first 18 to 22 years of their lives just learning and not engaged in much in the way of economic production is a luxury of the wealth capitalism has produced.

Consider these points in light of the frequent complaint that capitalism makes people overly materialistic and focused disproportionately on money and profit. By contrast, I would argue that market capitalism has freed us from a focus on the material and the narrowly economic by producing so much material well-being and economic growth that such concerns can be less central to our daily lives. Capitalism has freed us to pursue an ever-expanding range of non-material interests and values.

The history of the family is a good example of this point. The changes in economic activity and the wealth that capitalism brought have freed the family from a concern with material survival and have opened the space for it to be the site of our deepest non-material aspirations.  We look to the family for love and emotional satisfaction rather than sheer survival.

For most of human history the family was hardly the Victorian domestic ideal. Children died young and those who did not were expected to work hard for the household and eventually leave to earn their own keep at what would to us be a young age. Like the cattle, children and women were seen as assets to be managed by the male head of the household. Often this meant that the needs of humans were less important than those of cattle, or that the opportunity cost in terms of market production foregone of engaging in human labor-intensive forms of child care was simply too high. The pre-industrial and pre-capitalist family was simply not a pleasant place. Capitalism, and the wealth it brought, began to change all of this almost completely for the better.

It is in this way that the evolution of the modern family is an application of Deirdre McCloskey’s argument in The Bourgeois Virtues. download (1)Capitalism offered ways to earn income outside of the household and in doing so slowly eliminated the family’s role as an institution of market production and thereby removed it from the realm of narrow economic calculation and “Prudence Only,” or at least “Prudence Mostly.” Without a need to treat family members instrumentally as parts of a production process, and with the means to treat them as ends in themselves now available as a result of higher incomes capitalism produced, the family became the focal point of the altruism of intimate associations. The improved economic and legal status of women and children, the gradual equalization of the marital relationship, and the ascendance of the virtue of Love as the basis for marriage and the parent-child relationship, all reflect the ways in which capitalism made possible and nourished other virtues.

As Prudence began to spend more time out of the household and in the market, capitalism made it possible for Love (and perhaps Faith and Hope as well), to come in and take its full and rightful place at the family table. In making this transition possible, capitalism thereby humanized the family. By providing us with such bountiful material wealth, capitalism has enabled us to treat other people, including our families, lessinstrumentally. The less we have to worry about the material, the more we can engage in the non-material.

Today many take for granted the idea that the family is an institution in which we can aspire to our deepest emotional connections, and that is thereby an oasis from the supposed instrumental rationality of the market. However, the idea that families are first and foremost about such connections and that they offer a respite from the world of instrumental rationality and economic calculation is a relative recent change. It is also a change that was a consequence of capitalism and industrialization.  It is one of the tragic ironies of our time that capitalism gets blamed for our supposed materialism and for turning human relationships into calculative and instrumental ones, when in fact it has been capitalism that has both enabled us to explore our non-material values in ways never possible before and has, in the process, humanized the most universal and central of our relationships, those within the family.

*This article was previously published on Bleeding Heart Libertarians


Steven Horwitz is Charles A. Dana Professor of Economics and department chair at St. Lawrence University in Canton, NY. He is the author of two books, Microfoundations and Macroeconomics: An Austrian Perspective (Routledge, 2000) and Monetary Evolution, Free Banking, and Economic Order (Westview, 1992), and he has written extensively on Austrian economics, Hayekian political economy, monetary theory and history, and macroeconomics.

Posted by The Indian Economist