Proponents of socialism and social democracy would have you believe that capitalism is a purely Western construct that carries no deeper legitimacy in terms of our evolutionary development or our historical roots.
They claim that the hierarchical nature of capitalism was imposed by the West, and without this system, humans wouldn't arrange themselves hierarchically. They also claim that capitalism as an economic system was developed in the West in the 18th century and was not practiced in the rest of the world before this time. Both these claims are incorrect.
Human evolutionary development
Socialists often claim that the hierarchical nature of capitalism has forced people to arrange society in ways we otherwise wouldn't, and these hierarchies are fundamentally oppressive, thereby casting capitalism purely as a tool for oppression.
In actual fact, human beings are programmed to arrange themselves hierarchically based on our evolutionary development. This arrangement is not forced on us, but naturally occurs no matter the context we find ourselves in.
It has been shown that infants and young children form, represent and coordinate within transitive hierarchies in adaptive ways from as young as nine months, and they do this because they assume that rank will lead to more resources.
What's important to note is that the nature of the hierarchy is not set in stone. The kind of hierarchy that comes into existence can vary, depending on the context and the participants.
Research by Lotte Thomsen of Oslo University shows that human status hierarchies don't only reflect formidability-based dominance but also consensual deference for legitimate authorities, leaders and competent and prestigious experts. These kinds of hierarchies can facilitate social coordination and serve as models for culturally transmitted learning, stimulating freely conferred respect.
In other words, even though capitalism has been depicted as fundamentally nefarious in virtue of its hierarchical nature, whether the hierarchy is destructive or constructive depends on how it is implemented – capitalism isn't necessarily oppressive in nature.
On the contrary, it is the only system that has reliably led, throughout history, to progress in terms of quality of life.
Origins of capitalism
The claim that capitalism is a comparatively recent phenomenon borne only out of the West is also false because the starting point of capitalism as an economic system predates the thinking of Adam Smith – the philosopher and economist who is considered the father of capitalism. This calls into question the idea that capitalism is a purely Western tool of domination.
Xenophon's writings predated Smith by 2,000 years, and he documented the market practices of ancient Persia – an economy that made use of market mechanisms.
Xenophon also wrote about Cyrus the Great in 550 BC, Iran, who was taught as a prince how to judge market transactions on the basis of whether they were conducted in alignment with property rights and consent, which forms the basis of free market thinking.
Enterprises, banks, advanced commercial practices, and free markets can be traced 4,000 years back to countries we would now view as part of Syria. The development of these civilisations shows that markets have been fundamental to human progress all along.
Archaeologists have found many tablets from Babylonia and Assyria that are receipts of economic ventures. This reveals the economic activity of private profit-seeking merchants, sophisticated investment ventures, as well as market price setting. Diaries also show how these prices changed on a monthly, or even weekly, basis in Babylonia.
Historians have found enough evidence to suggest that the market economy was a Middle Eastern innovation.
"..that market mechanisms played their part in the Babylonian economy seems now to be unquestionable."
– Robartus Johannes van der Spek, Dutch Historian
Free markets, in one form or another, also formed in three cradles of human civilisation – India, China, and Mesoamerica. We know that China has continuously vacillated between free market policies and statist control, with the greatest progress taking place during its free-market periods.
Chinese thought was also captured in the Guanzi, a 7th century BC text that describes how profit-seeking merchants studied demand and supply in the marketplace. Confucius advocated for less taxation and Mencius argued that price setting shouldn't be influenced by the state, while private property should be protected – all features of free market thinking.
Prosperity historically linked with capitalism
Europe only became technologically superior in recent times. Prior to Europe's adoption of modern capitalism, it was the Middle East, China, and India that were responsible for growth and technological innovation.
Even the Aztecs and Mayan people in Mesoamerica had economies with the features of a free market. What this shows is that prosperity has historically been linked with capitalism.
Evidently, capitalism has been misrepresented as a Western tool of oppression when it in fact aligns with our natural inclinations and predates the development of the West. If we are to conduct a fair and accurate critique of capitalism, then it doesn't serve us to attack a strawman.
This article was first published on BBrief on 15 December 2020