January 4, 2024 Reading Time: 5 minutes

There’s a lot to like in Richard Jordan’s recent essay at Law & Liberty, “Romancing Creative Destruction.” But it’s also infected with a notable flaw, namely, Jordan’s claim, complete with added emphasis, “capitalism is soulless.”

Read narrowly, this assertion is empty of useful meaning. Capitalism isn’t a sentient creature; it has neither consciousness nor a conscience. Capitalism is the name we give to a particular manner of human interactions. It therefore is no more useful to observe that “capitalism is soulless” than it is to observe that “automobile traffic is soulless.”

But the ‘soullessness’ of capitalism is claimed so very frequently, and by people of all ideological stripes, that this claim obviously conveys some substantive meaning to those who encounter it.

What might that meaning be? I think I know. The claim that capitalism is soulless reflects a confusion of “impersonal” with “soulless.” Capitalism does indeed feature myriad impersonal exchanges, but this reality doesn’t mean that capitalism is soulless.

The Warmth of Personal Interactions

Among people who intimately know each other, assistance is offered out of a sense of love and genuine fellow-feeling. The interactions of family members can be described as ‘exchanges,’ and the motivations for these personal interactions are perhaps best understood by analysts as being rooted in psychological dispositions that were ‘chosen’ by natural selection because these dispositions promote the survival of each of the interacting parties. Yet the conscious experience of interacting with loved ones and friends involves no sense of weighing costs and benefits – no sense of self-interested “exchange.” We help our parents and children because we love them. We receive assistance from our friends because of their fond feelings for us. And both the giving and receiving of such assistance stirs emotions that we humans understandably describe as “warm.”

The sweetness of experiencing such love and affection, and of giving such love and affection, cannot adequately be expressed in words drawn from textbooks in economics or biology. We cherish the personal touch and bask in the knowledge that we as flesh-and-blood persons are cared for by other particular flesh-and-blood persons.

In small communities, the members of which seldom interact with individuals whom they do not know personally, all commercial interactions feature heavy doses of personal knowledge and emotion. Tailor Smith knows that grocer Jones will not cheat him because Smith and Jones are old friends. While each gains economically from trading with the other, each also gains emotionally. Smith treasures his in-store chit-chat with Jones, who in turn appreciates Smith’s purchase of that extra loaf of bread – a purchase motivated, Jones is silently aware, by Smith’s knowledge that Jones is currently going through a financial rough patch.

These interactions are personal. And they are good.

The Extended Capitalist Market Order

Trade exclusively among people who know each other – even when wholly unregulated by government – is not, as such, capitalism. Capitalism requires more than that government remain largely uninvolved in the details of economic processes; capitalism also involves (1) such an openness to economic change that incessant innovation is encouraged, and (2) an eagerness to earn profits by catering to as many people – and as diverse a population of people – as possible. Under capitalism, the division of labor – that is, specialization – is limited not by individuals’ personal connections or by boundaries fixed by tradition, but (as Adam Smith famously observed), “by the extent of the market.”

The greater the number of people who interact economically with each other, the greater the ability of individuals as producers to specialize. This increased specialization, in turn, increases output per person. But the same condition that makes it possible for this increased specialization to occur also makes it impossible for any individual in this economy to know personally all the other individuals with whom he economically interacts. Because in today’s global economy the people with whom we interact economically number literally in the billions, the percentage of these persons with whom we also interact personally is near zero.

It is therefore true that almost all of the motives that prompt and guide the billions of human actions that daily make possible our modern prosperity are exclusively ‘economic’ rather than warm and personal. Whoever it was who rolled out of bed one morning a few weeks ago to drive from farm to slaughterhouse the pig that I shared on Christmas day with family and friends does not know me, and I don’t know him. That person certainly contributed to my fine Christmas dinner, but the motivation wasn’t love or neighborliness. And no part of the purchase of the ham that I ate was motivated by affection for that truck driver – or, indeed, for anyone else involved in supplying that ham. From start to finish, the motivation and information came in the form of prices, wages, profits, and losses registered in terms of money. All of these exchanges were purely ‘economic.’ The chief motivation throughout is material gain, and the whole process is guided by rational, monetary calculations. Almost no role was played by personal, warm fellow-feelings.

All true. Yet to describe capitalism – or, at least, capitalist society – as soulless is misleading.

First of all, capitalism doesn’t prevent us from exercising and experiencing fellow-feeling. We denizens of the 21st-century global economy have just as much opportunity to connect personally with fellow human beings as did our ancestors in the Pleistocene and those in quaint 18th-century New England villages. And, of course, many of us do. We love our parents, siblings, children, and grandchildren. We are members of churches. We care for our neighbors. We comfort our friends when they are down and are comforted by them when fortunes are reversed. If some of us today choose to live lives more isolated and alone – an option admittedly made easier by capitalist riches – that isn’t the fault of capitalism. If fault must be assigned, it is on the individuals who choose that option.

Yet, again, most of us don’t choose to live as isolated atoms. I suspect that the typical resident today of Manhattan or Miami or Manchester has as many personal, warm connections with other flesh-and-blood individuals as did the typical resident 500 years ago of any medieval village.

But the charge that capitalism is “soulless” is flawed in a second and even deeper way. What the denizen of modernity has that his medieval ancestor lacked are very real connections also to countless more fellow human beings. In today’s globe-spanning system of social cooperation, billions of individuals every day are incited and guided to work for each other’s betterment. We still have the personal connections from which we draw warmth. But we also have extensive market connections to countless strangers that allow vast swathes of humanity to assist each other as if each of us loves, and is loved, by billions of strangers of diverse backgrounds and beliefs.

Motivated, in fact, not by love but by self-interest – and guided not by personal knowledge, but by impersonal market signals – capitalist markets are indeed impersonal. And I grant that they seem cold and soulless when compared to the face-to-face connections that we have with loved ones, neighbors, and mom’n’pop merchants in small towns. But surely when compared to the deadly poverty that we’d experience if we had economic connections only with people we know by face and name, capitalist markets ought to be applauded for their humanity. To describe as “soulless” a system that encourages and enables countless strangers to peacefully and productively cooperate for each other’s benefit surely conveys a wholly false impression.

Capitalism is impersonal. It is not soulless.

Donald J. Boudreaux

Donald J. Boudreaux

Donald J. Boudreaux is a Associate Senior Research Fellow with the American Institute for Economic Research and affiliated with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University; a Mercatus Center Board Member; and a professor of economics and former economics-department chair at George Mason University. He is the author of the books The Essential Hayek, Globalization, Hypocrites and Half-Wits, and his articles appear in such publications as the Wall Street Journal, New York Times, US News & World Report as well as numerous scholarly journals. He writes a blog called Cafe Hayek and a regular column on economics for the Pittsburgh Tribune-Review. Boudreaux earned a PhD in economics from Auburn University and a law degree from the University of Virginia.

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