Is it ethical to dedicate one’s life to making money through capitalist businesses, with the intent of later using it for social good?

Let’s leave aside the practical question of whether someone can effectively preserve their ethical code while engaging in a lifetime of potentially unethical behavior, or what the measure of “social good” is. To get to the heart of the matter, let’s assume that you will be the same person you are now in all respects, except that you will be equipped with the financial resources to effect a major change that is unquestionably good for society. The question is whether it is permissible to acquire those resources as a capitalist industrialist—someone who makes a profit from hiring others (at a salary or wage) to produce goods or services that are sold on the market.

In an age in which it is increasingly fashionable to pledge a fraction of one’s income to charity (like a carbon offset for your conscience) or even to take on miserable finance jobs to maximize donations, it seems that the answer ought to be in the affirmative. However, a radical, critical look at this issue suggests otherwise.

A Means to an End

Imagine that the year is 1830 and we ask, “Is it ethical to own and accumulate slaves in order to use the wealth to achieve socially positive ends?” We may very well be able to contrive a twisted scenario in which a particular person accumulating slaves could be a net positive for society. And yet regardless of how much good it purports to achieve, we react with horror because quite simply, the ends do not justify the means.

But the modern question on our hands is not very different, as wage labor is merely an indirect form of enslavement. As Noam Chomsky has quipped, “Free people do not rent themselves to others.”

The notion of wage labor as wage slavery is perhaps shocking to a modern audience in the capitalist West, yet was plainly understood by everyone from the Roman politician Cicero, who observed in his treatise De Officiis,

Vulgar are the means of livelihood of all hired workmen…for in their case the very wage they receive is a pledge of their slavery.

to Frederick Douglass, who in 1883 concluded:

Experience demonstrates that there may be a slavery of wages only a little less galling and crushing in its effects than chattel slavery, and that this slavery of wages must go down with the other.

Even the New York Times, that notorious bastion of anti-capitalist subversion, decried in 1869 the rise of Northern wage labor, “a system of slavery as absolute if not as degrading as that which lately prevailed at the South”.

Wage Slavery 101

What is it about wage labor that caused all these non-socialists to compare it to chattel slavery?

The first observation we make is that wage workers are exploited. If a business owner hires you at $X an hour, it is because they anticipate gaining more than $X from the product of your hour of labor. If this were not the case, the capitalist would have no reason to run the business. This gap between the value of an hour’s product and the hourly wage paid out to the worker, which Marx called the rate of exploitation, implies that a wage earner never gets the full value of their labor.

One might protest that by the turbulent nature of business, not every venture or hiring decision pays off, and so the owner is entitled to the profits for having taken on risk. But a burglar who breaks into your home also takes a risk; are they entitled to your laptop? Indeed, our point about exploitation still stands in the following sense: the expected value of your labor must exceed $X, for otherwise the businessperson would eventually go bankrupt with high probability.

From this point, what begins as a potentially modest amount of profiteering is then compounded by all manner of second-order effects, like the fact that capital grows itself, and that money buys political power. We will not delve into these aspects here, but they are all too familiar.

Let us return to the plight of the wage worker. While on the job — and we must remember that most of our waking adult hours are spent either on the job or recovering from it — you submit yourself to the near-totalitarian authority of your employer (modulo minimal government regulations). Working for a wage is only unlike chattel slavery insofar as workers rent themselves out rather than sell themselves. As Friedrich Engels put it, “The slave is sold once and for all; the proletarian must sell himself daily and hourly.”

At this point, the situation might be partly salvaged if workers could easily move between employers who competitively bid for their labor, thus bringing the prevailing wage very close to its true value. Indeed, the neoclassical justification for the wage system hinges on this argument. Yet for the wage worker, the truth is that exploitation and submission are involuntary. Since there is always a sector of the population that is unemployed and desperate for a job, workers engage in brutal competition for low wages; it is almost never the other way around, in which firms raise their salaries to obtain more labor. The libertarian notion of “entering into a free contract with your boss” is nonsense; this is not a contract between equals, but a threat to accept meager conditions or starve. As even laissez-faire mascot Adam Smith made clear in The Wealth of Nations,

What are the common wages of labour, depends everywhere upon the contract usually made between [workers and masters] … It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms.

All this is to say that on the road to accumulating wealth, you will be forced to do the ethically unthinkable: take advantage of people who are in many ways involuntary servants.

Consequentialist Arguments

The doctrine that underlies the above argument—that people should be treated as ends in themselves, never merely as a means to an end—is just Kant’s categorical imperative. Thus from a Kantian perspective, the answer to our question is “no, being a capitalist for social good is unethical” and the discussion ends here.

However, there are plenty of good consequentialist or utilitarian arguments against such a proposal as well.

Ineffective Altruism

First, lifelong wealth accumulation and redistribution is a strategy whose expected payoff is pathetically low. It is enticing to think that, if only the CEO of Amazon were one of us, $100 billion could be allocated to cure society’s ills instead of lining Jeff Bezos’s pockets. But what is the chance that you or I could be the next Bezos, Gates, or Buffet if we tried? This is pure fantasy.

The U.S. federal budget in 2017. (Congressional Budget Office)

Moreover, the low probability of building such an obscene empire of wealth (again assuming, against all odds, that your high-minded values manage to emerge unscathed) must be weighed against the actual impact of having $1 billion or $100 billion at your disposal. A quantity in this range constitutes tremendous individual wealth, but not an astonishing number in the public sector. Our federal legislators deal in the hundreds of billions, just in “discretionary” spending, every year. We are much more likely to affect, via organized politics, the flow of $100 billion away from war crimes, corporate tax breaks, and towards social welfare, than we are to do it by instigating the next technological revolution.

Indeed, to believe that one must enter the ranks of the elite in order to effect real change, is to misunderstand the nature of politics. It is, and has always been, grassroots movements—not the rise of progressive billionaires, or the election of individual politicians, or the goodwill of the upper-middle class—that have changed the fabric of society for the better. A striking recent example is the push for universal health insurance following the 2016 elections: thanks to the dedicated organizing work of socialists, progressives, and healthcare workers, support for single-payer healthcare is now a de-facto litmus test for enterprising 2020 Democratic Party presidential candidates. What is remarkable here is what did not happen: these politicians did not campaign for their current offices on the promise of single-payer, overthrowing crusty old legislators who opposed the measure. By and large, they changed their minds after assuming office, in response to the political will of the masses.

Reconstructing Society

Nevertheless, what if you manage to amass enough wealth to make a significant difference? This opens up a whole new set of ethical issues concerning how we spend those resources. In particular, when we go about our philanthropy without seeking systemic change, we exonerate and even reinforce the inhumane systems under which people suffer.

The point is not merely philosophical. Around the world, philanthropy is a signature feature of societies in which capitalism runs rampant. The Charities Aid Foundation reported that in 2016, Americans gave 1.44% of their GDP to charity—almost twice the rate of the next country. Meanwhile, the Nordic countries gave among the least: individuals in Sweden, Finland, and Norway gave 0.16%, 0.13%, and 0.11% respectively.

Though there are many reasons for discrepancies in philanthropy, one important reason is simple: the most capitalistic societies, as well as those that have been ravaged by capitalism through unfair trade and imperialism, are the ones in greatest need of charity. To be sure, the Nordic states are absolutely run on capitalist economies. Still, the social-democratic model exemplified by these countries—which includes universal guarantees of higher education and healthcare, and strong labor unions—ensures low poverty and a mediocre wealth gap by American standards.

Thus in the United States, when we hear that “many wealthy people and large corporations give back to their communities”, we ought to remember that this is a minuscule fraction of the profits they have taken from the rest of us—the workers and the public. There would be little need to implore Jeff Bezos to donate his wealth, if his workers received the full fruits of their labor; instead, what we see in reality is Amazon paying workers so little that they qualify for food stamps. The ‘charitable giving’ flows from workers and the taxpaying public to shareholders and corporate executives.

The encouragement of private philanthropy, therefore, fails on simple utilitarian grounds. As we just saw, it puts all the power in the hands of the wealthy. And it prolongs suffering by impeding the only sustainable solution: to reorganize society so that it is equal by design, and resources are democratically allocated for human need. As Oscar Wilde expounded in the opening lines of The Soul of Man Under Socialism,

The majority of people…find themselves surrounded by hideous poverty, by hideous ugliness, by hideous starvation. It is inevitable that they should be strongly moved by all this. … Accordingly, with admirable, though misdirected intentions, they very seriously and very sentimentally set themselves to the task of remedying the evils that they see. … They try to solve the problem of poverty, for instance, by keeping the poor alive; or, in the case of a very advanced school, by amusing the poor. But this is not a solution: it is an aggravation of the difficulty. The proper aim is to try and reconstruct society on such a basis that poverty will be impossible. And the altruistic virtues have really prevented the carrying out of this aim. Just as the worst slave-owners were those who were kind to their slaves, and so prevented the horror of the system being realised by those who suffered from it, and understood by those who contemplated it.

Presciently answering the original question on our hands, Wilde concludes,

It is immoral to use private property in order to alleviate the horrible evils that result from the institution of private property.

The System, Not the Individual

To be clear, the exploitation and suffering that we have discussed is, by and large, not the fault of regular people; living under our political and economic system means that if you want to make a living, but lack capital, then you are left with no choice but to submit to exploitation as a worker; otherwise, if you want to run a competitive firm, you are encouraged to exploit others (or go out of business).

Where does that leave the well-meaning person who wants to start a business—perhaps to use the accrued savings to do good, or to give people access to a product that can improve lives? In her advice to would-be bankers, Amber A’Lee Frost notes,

There are no clean hands in a dirty world…all attempts to live ethically under capitalism — whether by consumption, vocation, or any other means — will ultimately fall short. But there is absolutely no question that some hands are dirtier than others.

Thus, although it is ultimately the system that is to blame, those of us who are able to do something about it do bear some responsibility.

One strategy that is not incongruent with these ambitions is to start your business as a worker cooperative, a business arrangement in which those who work at the company also own the company and democratically make decisions about production and profits, thus minimizing inequality and exploitation within the firm.

If you already have money (or some time), consider putting it towards radical or progressive political causes and organizations. At the end of the day, if we recognize that philanthropy merely bandages over—and in fact, solidifies—unjust and irrational aspects of society, then we should also understand that a permanent solution for these ills requires changes in the way society functions. This, of course, requires political struggle.