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Laissez-Faire Capitalism and Workers' Rights

Laissez-Faire Capitalism and Workers' Rights

2 Mins
January 26, 2011

Question: From reading about the Industrial Revolution and past attempts at laissez-faire capitalism, it seems that the latter led to extremely poor working conditions and an environment where the workers have essentially no rights in terms of the workplace. From the Objectivist standpoint, how does laissez-faire capitalism protect workers' rights? How does it combat against the exploitation of the workers? And how does it combat the poor working environments of the Industrial Revolution, as seen in the factories of the time?

Answer: Workers' pay in the laissez-faire era of the 19th century rose steadily with the innovations that increased productivity and lowered prices. One has to realize that at the beginning of the industrial revolution, poor people chose to work under very difficult conditions, because that compared favorably to the alternatives available. We see this in the third world today, where the fortunate poor are "exploited" by capitalists, and the unfortunate poor scrounge for survival in shanty towns and on ever-smaller plots of land in the countryside. The really fortunate live in well-run countries where "exploitation" takes hold long enough for development to take hold. Look at the history of Hong Kong for a 20th-century example of laissez -faire (or something very like it) at work. What happened to unemployment and workers' pay in Hong Kong between 1950 and 1990? The radical improvement was the effect of laissez-faire, as was the radical improvement in America over the 19th century.

Please look into the facts about laissez-faire. It suffered much calumny from people who did not actually have reasonable facts to bring against it.

Under laissez-faire, workers have the same rights as everyone else: to life, liberty and property. As applies to the workplace, they have the right to choose their contracts. They have the right to have their property and lives rigorously protected. They have the right to meet with anyone, including other workers, to try to organize for improved contracts and work conditions.

Workers don't have the right to deny other workers the right to contract (which is what happens when "collective bargaining" is enforced by majority rule among the workers). Workers have the right to strike, but they don't have any right to get their old jobs back if they do so. Striking is a risk: it should be an attempt to demonstrate to the owners of the firm the real value of the workers. It should fail when the workers can be easily and effectively replaced.

Workers also have the right not to be taxed to provide those not working and for the next "hot" ideas coming out of Harvard. They have the right to buy cheap products from overseas if they like. Many people ignore the improvements that laissez-faire would bring, just by ending the burden of the modern welfare-regulatory state.

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