When it closed in 1945, Quincy Mine #2 was the deepest shaft in the world at 1.75 miles down.
When capitalists chase diminishing returns in a concentrated, temporary market, they often resort to injustice and violence.
We must not forget the dark chapters in the history of capitalism, where capitalists choose to be evil. These cases must be understood, to avoid repeat. Having recently traveled to all US labor history parks, there’s a specific, important pattern that repeats: winner-take-all concentrated competition drives unjust, ugly and violent tactics against labor. In MBA jargon, a large profit opportunity attracts over-investment of capital, technology improves, production soars, prices and profits drop, and management maximizes pressure on labor. This history has repeated itself in slavery, mills, mining, railroads and others shown below. But despite similar recurring predictive signs, the lesson is ignored, and history repeats, often tragically.
Many on the right believe that capitalism is always right, and some on the left believe capitalism is always wrong. Neither is true. Capitalism is amoral, meaning it cares not about morality. Capitalism exists only to provide profits to owners and investors. Yet as an organizing force, capitalism provides many incidental benefits. Healthy competition in well-regulated capitalism motivates people to learn, improve, innovate, cooperate, increase efficiency, redirect resources and develop better products & services, and more revenue can mean more and higher paychecks, a popular benefit.
So when does an amoral system become immoral? Why do well-educated, cultured, highly regarded captains of industry sometimes employ brutal, inhuman, unethical and often illegal tactics against their own employees? What are the specific labor market conditions that create cruelty?
Capitalism identifies a profit opportunity, organizes money, equipment and labor, runs the business, and returns a share of profit to investors. In theory, the total amount of money raised is appropriate to the amount needed to exploit the opportunity. In practice, myopic investors ignore many long-term opportunities, and greedy investors often over-invest in exciting new get-rich-quick opportunities. Whenever a profitable business opportunity is ‘over-subscribed’—too much money raised—, there will be few winners and many losers. Often the winners are those who move first, grow quickly and dominate their competitors, and capital flows to firms that offer quick, growing and reliable returns. Losers can be wiped out, bankrupt and unable to raise funds again.
Especially when a profit opportunity is both over-subscribed and fleeting, capitalism rewards those with the most aggressive tactics. Nice guys—who may seek consensus, take time building cooperative mutually beneficial agreements with stakeholders and who follow ethical and legal norms—finish last. The winner may be done exploiting the temporary opportunity and have moved on to the next one, before the nice guys have their plans and permits approved.
And when capitalists have funded multiple firms, each employing the most aggressive tactics and technology, to exploit a limited opportunity, the possibility arises that nobody will gain the scale needed to run profitably and that everyone will lose money. Capitalism often solves this through consolidation, where one firm will buy up their weaker rivals. But these ‘dog-eat-dog’ tactics and winner-take-all strategies between desperate, aggressive and cold-hearted rivals can lead to wars of attrition, where the goal is not to earn a profit, but to destroy one’s rivals, just to break even.
The economics of supply and demand shows that as production rises, prices fall. So a once highly profitable opportunity, can quickly become a cheap commodity and even a money-loser. This increases the time pressure to make money quickly and to dominate rivals. When prices drop, firms have only a few ways to defend their profits: pressure suppliers, cut costs with innovation or efficiency, increase market share or pressure labor. When similar sized rivals engage in ‘cut-throat’ competition with the same techniques, they will find that their labor force is the one area they have most control over and will exploit them ruthlessly.
Capitalism is not designed to be cruel, just efficient. Labor can move to better employers in better industries paying more money for better conditions. But, like capital, labor can also be attracted by overly optimistic promises of high earnings. Labor may move their families and invest in homes, making it difficult to relocate. One industry may be the only employer in an area, and, like capital, labor also wants to choose the winning firm. Many workers will simply work harder, expecting that will be enough for them to win, not realizing that the market conditions and their employers have guaranteed they will lose.
So, the conditions for abusive capitalism are:
- Too much money chasing a limited profit opportunity under extreme time pressure to return the investments.
- Too many firms competing for the same opportunity using extreme measures for market dominance.
- Too many workers given the size of the opportunity.
- Over-production, reducing profits over time.
- Geographic or other constraints limiting alternate opportunities.
- Government inaction, injustice or encouragement of concentrated competition.
Slavery
All slave traders and owners were capitalists, and there is no more evil example of capitalism gone wrong. While slavery pre-dates the US, it continued despite our revolutionary ideals and arguably worsened before emancipation. As the system changed over time, the conditions were met repeatedly resulting in various layers of horrific injustice, sustained for centuries.
Greed for new world riches was intense, and European monarchs and capitalists funded many competing enterprises. Since the great colonial powers often used the profits to fund wars on each other, they hired extremely aggressive men—including pirates—, and unsuccessful settlements faced starvation, raids and disappearance. To boost the supply of labor, capitalists emptied debtor’s prisons, kidnapped natives and enslaved Africans, all supported by the monarchy, blessed by both Catholic & Protestant churches, with racist lessons taught in the ‘great’ universities of Europe.
Although land was plentiful, profitable opportunities were not. A plantation required taking land from natives, defending it with a nearby fort and market access via a nearby port. Limited troops, roads and ships meant that in practice, competition was extreme for the best land for different crops. Once established, a slave-worked plantation quickly produced mass quantities, dropping prices and decreasing profits.
British capitalists first purchased “20 and odd” Angolan slaves at a fort overlooking Hampton Roads on 20 August 1619, but that now famous date underestimates the history of slavery here. The first recorded African slaves in what is now the US were brought by the Spanish to a failed colony on the coast of Georgia in 1526. DeSoto brought slaves to Florida too, and successful Spanish settlements like St Augustine had slaves in 1565. So African slavery here is almost 500 years old, but including Columbus’ enslavement of Native Americans in what is now the US Virgin Islands, slavery began here in the mid 1490s, well over 500 years ago. Slaves were valued so low by Yankee traders, that massive, preventable deaths were commonplace during shipping.
Attitudes towards slavery were gradually becoming more enlightened when the US declared independence, rejected the monarchy and established our democracy. In 1772, a once foul-mouthed, slave-trading British sea captain turned clergyman wrote “Amazing Grace”, inspiring abolitionism. In 1778, Thomas Jefferson banned the importing of slaves into Virginia, freeing those subsequently brought in illegally. In 1791, the largest slave rebellion since Spartacus broke out in Haiti, leading Napoleon to sell Louisiana territory to Jefferson in 1803 and to Haitian independence in 1804. In 1807, both Britain and the US banned importing slaves.
But capitalist slave-owners and slave traders adapted, turning to captive breeding and smuggling. The economic conditions of cruelty persisted. Since forced labor had no power, brutality was used for competitive advantage. Perhaps the richest family in the country at the time of the revolution were the Ridgelys renowned for their brutal treatment of 300 slaves at their diversified plantation near Baltimore. But after more fertile native land was stolen in the Deep South, larger, even more brutal plantations were funded by capitalists, creating the ‘second middle passage’ for slaves ‘sold down river’. There are pathetically few memorials to slavery in the south, but there’s a small marker for the huge ‘forks of the road’ slave market near Natchez, Mississippi. (Plantations are popular though, for debutante balls, wedding venues and home-styling tips, among the morally dead).
Even after slavery was abolished, agriculture continued to exploit farm labor brutally, through sharecropping & tenant farming, where workers were kept in perpetual debt to the owner. Cane River is a good place to learn how a plantation adapted to exploit farm labor in different ways from before the revolution to WWII. As black workers moved into industry after the war, agriculture began to exploit more migrant workers, especially Pilipino & Mexican workers on the west coast. National chains engaged in ruthless competition with local owners over the most productive fruit farmland in California—supported by unjust foreign labor policies—cutting labor costs to maintain profits as prices fell. César Chávez park is a good place to learn about the history and resulting farm worker strike.
Mills
Water-powered industrial mills also pre-date our country, but they were refined and boomed after the revolution. The company town developed near the first cotton mills in Rhode Island and were copied at similar sites in New Jersey and Massachusetts. Before electrification allowed factories to be built in cheaper locations, mill towns only formed in very specific places along rivers with large volume water falls near ports. This meant concentrated competition among many firms using the same techniques. Labor needed training and skilled, small fingers were more nimble than large. So, owners hired women and children. Immigrants arrived by the boat load. Supplies of cotton came from slave plantations often owned by the mill owners. The incredible boom in productivity led to collapses in prices. 70+ hour work weeks, strict control of women’s lives, economic control of labor through company housing, stores, entertainment and even churches, and child labor became used to sustain competitive advantage. Strikes were oppressed with dirty tricks and pressure tactics including media smear campaigns and violence. Safety was disregarded, as seen in disasters like Pemberton Mill near Lowell in 1860 when over 100 women & children were crushed by heavy machinery or 50 years later in the Triangle Shirtwaist garment district fire.
Mining
Mines often create cruel capitalism conditions. Investors see growing demand & high prices and over-invest, funding multiple aggressive firms with similar equipment. Labor and small operators flood the area, with everyone trying to ‘strike it rich’ with the mother lode. From black lung in coal country to radiation sickness in uranium mines, owners sacrifice miner lives and crush strikes with violence and dirty tricks. (Watch “Harlan County USA”). The world’s largest pure copper lode was found and mined in upper Michigan (see photo). At a Christmas party for striking families upstairs in Keweenaw’s Italian Hall, an anti-unionist outside shouted ‘fire’ and blocked the door: 59 children and 14 parents were crushed to death.
Railroads
Disregard for the lives of their workers became part of the gilded age tycoon culture. Despite repeated safety warnings, the wealthy club members on Lake Conemaugh voted to raise their dam an extra two feet to avoid dirtying their hems while crossing. The resulting flood wiped out the company town of Johnstown Pennsylvania, killing over 2,200. Speculation on railroad stocks led to frequent booms and busts and much over-investment, with only limited lines becoming profitable. Labor was also imported from China with strict laws prohibiting settling permanently. Railroad owners faced diminishing returns, and repeatedly pressed labor for concessions, provoking a massive strike led by Pullman porters. Rather than negotiate, management bought the US Attorney General and influenced President Cleveland to bring in the troops.
“In every age it has been the tyrant, the oppressor and the exploiter who has wrapped himself in the cloak of patriotism, or religion, or both to deceive and overawe the People.” — Eugene V. Debs
Lessons
First, understand that healthy, well-regulated capitalism is not the problem. Most business is conducted fairly, for the long run and mutually benefits owners, employees, customers and even society. Capitalists in healthy competitive markets cannot afford to alienate diverse customers or lose scarce labor to more enlightened competitors. So it is in their interests to support (in public) democracy, fairness and their workers.
Second, understand that cruel, unethical and illegal behavior by some capitalist owners against labor is not an anomaly. It is a predictable, repeating pattern, with known risks. When businesses carry enough cash, they plan for crime. When a capitalist decision maker has enough wealth or reputation riding on an outcome with diminishing likelihood of returns, there is an incentive to cheat, act unethically or commit a crime. Capitalism requires rules, and government must have oversight over CEOs, especially when the 6 conditions above are met (such as in Trump’s New York real estate market where labor was often stiffed).
Third, recognize that many of the same dirty tricks and cruel tactics have repeated for centuries. Capitalism rewards the cruelest victors of hyper-competition, and those owners become wealthy, respected and powerful. Inevitably, they put their own interests above the public, and use their leverage politically, socially, in the media and with workers. They corrupt judges, political representatives, universities, journalists and religious leaders. Left unchecked, they will control all three branches of government.
Anti-democracy is a tactic to cut labor costs. Slavery persisted, because slaves had no vote. Women began working at extremely low wages, because they had no vote. Over 300,000 migrant workers work in California at extremely low wages today, because they have no vote. (In my county, they would represent over 10% of eligible voters). Sharecropping or debt slavery persisted, because Jim Crow blocked the ballot box. Historically underrepresented voters continue to face discrimination through gerrymandering and unequal ballot access. Cruel capitalists do not want their labor empowered through voting.
Taking advantage of divisions in the labor market is a tactic to cut labor costs. Birmingham Alabama had a hyper-competitive steel industry—as the only location in the world with significant amounts of iron, coal and limestone nearby—, and owners organized to divide labor along racial lines to lower their costs: they codified racial segregation, including prohibiting black and white children from playing together. Racism has always been used by some capitalists to cut labor costs, and by keeping one group down, they don’t need to pay others as much as they deserve.
Gaslighting and control of public opinion have frequently been used to cut labor costs. The media is bought. Strike leaders are smeared. Pro-business views are amplified. And lies are spread fast, wide and deep. Employers also shape their workers’ views. I originally joined this site anonymously to share views that my ex-employer prohibited and policed in my social media.
Fourth, waiting until there is a sensational headline with significant death toll among children is too late for government to respond. Cruel labor conditions have persisted in this country for centuries, changing only with war, disasters, violent strikes or specific market collapse. The signs must be looked for, identified and acted upon promptly.
Fifth, the conditions for cruel capitalism are here today. Obscene amounts of capital can be raised instantly for new, stupid and unprofitable ideas. Firms can quickly acquire similar equipment and knowledge. Huge monopolistic firms have huge power in major markets. Time pressure is extreme, as profit opportunities can disappear in days. Labor can be recruited globally at the lowest price. Technology has eliminated the need for much labor anyway, and AI can now replace many jobs. Disruptive entrants constantly emerge to cut costs with ‘innovations’ like the gig economy where you work without traditional benefits. Labor has consistently lost its share of productivity gains to owners.
Sixth, democracy is the only way to control capitalism and correct its cruel excesses. Fascism may be able to remove taco trucks from your street corners, but it only exacerbates cruelty. It is no coincidence that many right-wing capitalists now openly oppose democracy and support fascism. They increased their fortunes by taking advantage of divisions in the labor market, and they increase their fortunes further by taking advantage of political divisions. If you do not believe that these greedy men want to rule your lives completely, you haven’t been paying attention.
But the response of our global democracies to these (and even greater) challenges has too often been anemic, non-existent or counter-productive. US citizens have a right to the truth, and liars should be liable. Market manipulation should be eliminated. Monopolies should be regulated or broken. Billionaires should be blocked from exercising undue editorial influence over news or social media. Dark money should be illegal. Polluters should be stopped. We need to wake up, unite, organize and demand a much more robust, progressive, democratic response to improve the lives of the majority, and correct the corrosive effects of cruel capitalist hyper-competition.
“To stir the masses, to appeal to their higher, better selves, to set them thinking for themselves, and to hold ever before them the ideal of mutual kindness and good will, based upon mutual interests, is to render real service to the cause of humanity.” — Eugene V. Debs
