Why Does Capitalism Fail to Liberate the Working-Class?

Is capitalism really the key to human freedom—or just a clever illusion? In this episode of American Socrates, we challenge the myth that capitalism guarantees liberty. From sweatshops to Silicon Valley, we explore how freedom is distributed unequally in a class-based society. Drawing on global case studies and political theory, we ask: who really benefits from capitalist freedom—and who pays the price? We also unpack the myth that criticizing capitalism means endorsing tyranny, and offer a hopeful vision of real freedom: democratic, dignified, and shared.

Keywords: capitalism and freedom, does capitalism promote liberty, capitalist myth, economic freedom vs political freedom, freedom in capitalism, Thomas Sowell, real democracy, American Socrates podcast, critique of capitalism

Transcript

You are and should be free. That's what we tell ourselves. You're free to chase your dreams. Build your future. Speak your mind. Free to climb the ladder. Start a business. Take control of your life. But if you're like most people, you probably don't feel all that free. What you mostly feel is tired behind. Cornered by forces you can't quite understand. You feel like life is something that's happening to you. You missed the part where you were supposed to take charge. Or as Pink Floyd put it, somehow you missed the starting gun.

And still the story echoes ever onward towards the next generation. This is freedom. You're free to take any job you want, so long as you sell yourself. You're free to move anywhere you want as long as you can afford the first month and last month. And a security deposit. You're free to quit, though. Your health care disappears the second that you do that. And if you speak up to complain about this, if you say something feels off here, someone will always seem to pop up to answer, Hey, you chose this. No one's stopping you. I did just fine. This was all voluntary.

Capitalism promises you freedom. And when you feel trapped, it tells you, well, that was your fault. Because you're not in chains. You're not being dragged into a coal mine. You're not under martial law. No one is standing behind you with a gun. But there's a truth that we've forgotten how to say out loud. And that is being told. You're free while your choices are pre-determined by your class.

Well, that's not really freedom. That's oppression. One that's polite, invisible, and blamed entirely on you. In this system, your freedom is really just a brand. You have the freedom to consume. You have the freedom to compete. The freedom to fall through the cracks. The freedom to go die in a ditch. But what you don't have is the freedom to not do those things. No one is supposed to take care of you. And in states and communities where this logic has fully taken root, no one does. But that's not real freedom. There's no freedom to rest. There's no freedom to choose with dignity. There's no freedom to live without fear. That freedom seems to be reserved for those who own, not those who labor.

So today, I thought we'd pull the thread on one of capitalism's most seductive myths. Does capitalism really make us Freire, or does it just force us to accept the cage?

Welcome back to American Socrates. I'm your host, Charles and Rupert.

The idea that capitalism equals freedom didn't come out of nowhere. It has a history. And like all good myths, it began with a half-truth. When capitalism first emerged in Europe, right alongside the decline of feudalism. It really did look like liberation. For centuries before that, your life had been dictated by birth. You were either born a peasant, you were born a noble, you were born a serf. And that was it. Your role was fixed and your loyalty was owed to your landlord, the monarch, the priest, something like that.

But capitalism changed that game. Suddenly, people could sell their labor. They could buy and own property. They could move from town to town. They could follow opportunities. They could accumulate their own wealth. The rigid social order began to flex and then to bend and then maybe break at least a little. And for many, especially in the rising merchant classes, it did feel like a breath of cool air in a really stagnant summer heat. It should always be remembered that the early founders of capitalist thinking were actually leftist radicals. Even John Locke's early ideas about private property were subversive to royal authority. Adam Smith too, believed that capitalism would bring wealth and prosperity to the masses. To read his Wealth of Nations, it sounds more like what we would call socialism today than what we call capitalism. Jean-Baptiste Say was a member of the French Revolution, fighting for the cause of liberty, equality and fraternity.

All of these early capitalist advocates thought that they were bringing about a liberal revolution. And so the story formed a powerful story about liberty and prosperity. If you want to be free, you have to let markets be free. You have to let prices float. You have to let labor shift. You have to let people trade. You have to let the government stay out of the way. And if so, it will bring more business and more money to everybody.

At least that's the core of classical liberalism. The less interference, the more freedom, the greater the wealth. Smith used to talk about the invisible hand, how individual self-interest could ultimately coordinate the whole of society without the need for anyone to be at the head of it, like a monarch or even a democracy. It was J.B. Say who argued that because human wants are infinite. Demand is also infinite. And so the only problem he saw in economics was with supply. Meaning that there's always an infinite demand for everything. So there's always an infinite demand for people's labor. There's never a point where people would lack jobs. Every employer out there wants to hire as many people as they can get their hands on. There's never enough. So with that idea in mind, capitalism only breaks when people are lazy. That is the only reason that there is unemployment at all is because people refuse to work.

Later, Friedrich Hayek comes along, warning that planning the economy has to lead to tyranny. And more recently, we see Thomas Soul quoted constantly by right-wing libertarian pundits and influencers, who claims that regulation and redistribution are always mere steps away from authoritarianism, from the Gulag.

They all tell the same story. Freedom lives in the market. Government is the threat. But here's the problem with all that their story assumes that we all start on kind of a level playing field, and that we all have opportunities without end. That is to say, we all have the same ability to choose to invest, to fail with a broad safety net beneath us. And that's not true. It was never true.

Not in Smith's time and not today. Workers in the early industrial cities weren't living freely. They were largely starving in slums. Slaves and colonized people weren't liberated by markets. They were treated as markets themselves. And even today, we don't all start equal. Some people are born with huge trust funds. Others are facing eviction notices. Some of us inherit hundreds of thousands of dollars by the time that we're 18. Others inherit debt by the same age. And yet, the story persists. Every election cycle and every editorial, in every TV panel, you're apt to hear some talking head out there saying freedom means getting the government out of the way. Freedom means letting businesses innovate. Freedom means personal responsibility.

Okay, yeah, that sounds great. And it sounds super American, but it hides the question. Freedom. For whom exactly? Remember, the freedom of the slave was the abolition of the slave masters. Right to own them. To exploit them and to use them. Every freedom is someone else's bondage. And when we say freedom in the abstract, we are telling a half-truth at best.

Let's pause here for a moment and ask something deceptively simple. What is freedom? It sounds like a really dumb question. Oh, everyone knows what freedom is, right? But push a little deeper and you'll see that there are at least two very different types of answers. The first version is what philosophers sometimes call negative freedom. It's freedom from interference. This is the kind of freedom that capitalism usually promises people.

No one's going to be able to tell you what job you have to do. No one's going to tell you what you can buy. No one's going to force you to speak a certain way or believe a certain things. You are free from that kind of coercion. This is what the defenders of capitalism love to invoke.

People like Milton Friedman argue that capitalism expands negative freedom, but keeping the state from getting too powerful. If the government doesn't control your wallet, they can't control your thoughts. But there's a second version of freedom. What's often called positive freedom. The freedom to do things, not to be just left there alone, but to actually be able to go out and live well, to rest when you need to rest, to learn what you want, to learn, to care for others. If you need to care for others to shape your future in a way that you enjoy, to participate in the decisions that govern your life.

This is the kind of freedom that Amartya Sen talks about. For Sen, freedom isn't just about the absence of chains. It's about having real capabilities to make meaningful choices. If you don't have food, health care, shelter, or education, how free can you really call yourself? In theory, capitalism gives you both freedoms. In practice, it often splits them. If you're wealthy, capitalism gives you both in abundance. You have the freedom to avoid government interference and the means to do almost anything you want to do, any way you want to do it to anyone. You want to do it. There's little wonder why there's a noted correlation, then, between wealth and sociopathy.

But if you're poor. Capitalism might give you only one without the other. No one's forcing you to work three jobs, but you end up working three jobs because the alternative is going hungry, being evicted, or something worse. So you're free to choose, but only between a bunch of bad options. You're free to quit, but you're not free to lay down your burdens. You're free to speak. But also you're free to be ignored.

Imagine ignoring the rich. Imagine your boss or someone like that gets ignored. Imagine how that would be. In this kind of world, freedom becomes a hollow word, one that hides inequality instead of revealing it or fixing it. So yeah, capitalism no doubt does enable freedom, but it also obscures how it takes certain freedoms away. And we need to uncover that which we can do by asking whose freedom really counts here? And what kind of freedom do we really mean? Let's test the myth.

If capitalism makes people freer, then we should expect the most capitalist countries to have the most freedom. They would have the most choices, the most opportunities, the most personal control over their individual lives. The very opposite of the rigidity and authority that we should see in an oppressive socialist regime. So let's just take a look around the world. The U.S. is often held up as the gold standard of capitalist freedom. It has the biggest GDP, but people who live there are often living on the edge of ruin. We have one of the most deregulated labor markets in the developed world. Companies can fire workers at will. Health care is entirely privatized. Education is increasingly commercialized. The safety net has been shredded and is still tearing, and corporate rights are treated as superior to individual rights. So what does all that freedom look like? It looks like 60% of Americans living paycheck to paycheck.

It looks like a quarter of adults skipping medical care because of the cost. It looks like millions having to work 2 or 3 jobs just to afford their basic necessities. It looks like being free to decline a job offer. Your insulin cost $300 a vial. In theory, Americans are free to choose. In practice, we are choosing between forms of slow collapse. But let's contrast that with, say, Sweden, which has much higher taxes. They have stronger labor protections. They have one of the most robust welfare states on earth. What we like to call government interference here in the USA.

Sweden guarantees universal health care. Paid parental leave. Free university for anyone who wants to go. And generous unemployment support to a free market fundamentalist. This should be a nightmare. A bureaucratic cage with terrible economics that destroy people's lives. But in reality it gives people more freedom, at least where it counts. You can take time off to care for your children without going broke. You can leave a bad job without losing your health care. You can start a business without worrying how you're going to pay the rent during the slow months. That's not less freedom. That's functional freedom. And more importantly, Sweden still has markets. It's a mixed economy. It just uses public policy to ensure that freedom isn't only there for the wealthy.

Germany has some of the most powerful labor protections in the world. Companies are required to consult with worker councils on any major decisions. Collective bargaining is kind of a norm. Education and vocational training are fully public, and health care is universal. Through a tightly regulated insurance model. You'd think that this would make the economy rigid and uncompetitive. But instead, Germany has one of the strongest manufacturing sectors a thriving middle class and far less inequality than in the USA. And freedom. Well, in many ways, the Germans are freer than Americans. They have guaranteed vacation time. They don't live in fear of medical bankruptcy, and they can quit jobs or change careers without having to risk everything.

So let's look at a country that tried to model itself on American capitalism. Chile. Chile was once the poster child for free market reform, thanks in part to advice from Milton Friedman's Chicago Boys and then forced by the brutal military dictatorship of Augusto Pinochet. Public pensions there became privatized, utilities became deregulated. Education was turned into a commodity, and for a while the economy did grow largely in thanks to a flush of American investment. But under the surface inequality, exploded. Health care and education became unaffordable for many. And in 2019, that pressure burst into mass protests. What began as a subway fare hike turned into a nationwide revolt against decades of economic insecurity. The country eventually voted to rewrite its constitution and guarantee social rights.

That's how fragile capitalist freedom really is. When it works only for the few, it eventually collapses under its own contradictions. One last country we ought to look at is India. India is often celebrated as a booming democracy with a fast growing capitalist economy. It's home to some of the world's richest people. Its tech sector is booming. It's frequently hailed as the next global superpower. But beneath that image lies a brutal contradiction. 

In 2023, India had over 700 million people living on less than $5.50 a day. That's the World Bank's threshold for moderate poverty. Not extreme poverty, just people in poverty. And while billionaires like Ambani built skyscraper homes with 27 floors, there were millions of informal workers, from street vendors to day laborers.
They have no job security, no insurance, no pensions, and often no protection from exploitation. India has embraced capitalism and many of its most extreme forms. They have free trade liberalization, massive privatization of public goods, deregulated labor markets, tax cuts for corporations, and austerity budgets for public services. And the result? Well, you have the freedom to be your own boss while you sleep on the street. During Covid 19, millions of workers were forced to walk back to their villages, sometimes hundreds of miles on foot, because the cities they helped build just had no plans to protect them.

That is what capitalist freedom really looks like when it's stripped of social support. And yet, Western pundits still point to India's economic dynamism as a model worthy of envy. But again, we have to ask a model for whom? Because capitalism has lifted people out of poverty in India. That is true. But it has also entrenched inequality. It has marginalized rural communities. It has weakened labor rights and concentrated power in the hands of a few super rich oligarchs.

So again, is this freedom or is this just the illusion of choice inside a system that offers no real alternative for the overwhelming majority of people? So what do these case studies show? The freedom isn't just about how big the market is, it's about how much real freedom people have in ultra-capitalist systems like the US or post-dictatorship Chile. Freedom often means you're on your own, which is fine if you're already rich in social democracies like Sweden or Germany. Freedom means you have a foundation to stand on. No matter how rich you are. So maybe the myth has it all backwards. It's not capitalism that guarantees freedom. It's our democratic institutions. It's worker power and public goods that make freedom real.

Let's return to the promise that capitalism makes. That it makes you more free. Who exactly is the you here? Because if you're a CEO, an investor, a landlord, then this is absolutely true. Capitalism is a freedom generator. You're not just free from interference. You're free to interfere in the lives of other people. You're free to set their wages. You're free to kill their jobs. You're free to raise their rents, pollute their rivers, lobby their politicians. Rewrite the rules of the game to suit yourself. The money simply buys time. It buys protection. It buys prestige. It even buys the illusion that you earned it all based on your merit. But if you're a worker, your freedom is mostly cosmetic. You're free to say no to a job, but not to live without one. You're free to speak your mind, but not to keep your job. Afterwards. You're free to buy what you want, but only after you pay rent. Utilities, student loans, gas, uniforms, and insurance. Pay for your groceries. Your freedom comes with a price tag. And if you just simply can't afford it, well, then you just don't get to have any.

This is the silent architecture of capitalism that freedom floats only at the top, while scarcity is piped down to the bottom. And if that still sounds like freedom, let me put it to you like this. Capitalism is like being trapped in an escape room. You didn't know that you were actually in. At first, it feels like just. This is life. You've got bills to pay. You've got a job. You've got choices to make. You decorate your corner of the world. You upgrade your little phone. You tell yourself I'm doing okay. But every decision you make is already part of a larger puzzle. The wages, the commute, the health care tied to your job, the debt you took on in order to get that job in the first place. All of that is by design. You think you're solving the room, but the room is actually solving the puzzle of you.

Every hour you spend chasing success is just another gear turning in the system that you didn't build. And that doesn't work for you. And while you're busy trying to figure out how to win this game, the owners get to sit back and watch from above. They sit there cocktails. They congratulate themselves on how cleverly they have built this little mousetrap. The irony is then that the door is unlocked, but it leads only to the next room. Uh, slightly bigger room with a slightly different puzzle. And every room promises you the same thing if you just work hard enough. If you make all the right moves, if you grind 24 over seven, then you'll be free.

You'll get to be one of these people that watches the others run around in the rat race. But you never will. Not really. The rooms are designed to keep you occupied, to keep you scrambling, to make you believe that the struggle is somehow freedom. That precarity is meritocracy. That if you fail, it's your fault for not trying hard enough. That's the deep dishonesty of capitalist freedom. It defines liberty by the absence of chains. But it never admits that hunger, debt, anxiety, and burnout are chains and enough themselves. And the longer you stay in this room, the more normal it feels. You stop noticing the walls. You start decorating them. Instead, you compete with the others inside. You resent the ones who stopped playing. But there's another kind of freedom out there. A more real one. A freedom not measured by how well you survive the puzzle. But whether we can take down the walls together, the freedom where no one gets locked in a room in the first place.

But to see that you have to stop playing the game first. There's a quiet thread behind every conversation about capitalism and it goes something like this. Sure, capitalism isn't perfect, but if we give it up, what's the alternative? Communism? Authoritarianism? Bread lines, mass surveillance. Don't you know that socialism has killed more people in the last 100 years than the entire history of the world? The fear runs deep. We're told that even questioning capitalism is a risk to our freedom our freedom of speech, our freedom of enterprise, our freedom of movement, our freedom to chase our dreams. This is the myth that keeps capitalism safe. If you criticize it, you must want tyranny. But that's both false and incredibly convenient for the people who profit from the system as it's built.

Let's take a closer look. Suggests public health care. Well, then you're accused of marching towards Soviet style control. If you argue for workplace democracy, you're labeled a threat to job creators. If you point out that billionaires have too much power in our system, then you're smeared as envious or worse. As someone who's actively wanting the Gulag. Thomas Sowell loves this kind of tactic. He famously said, there are no solutions. There are only trade offs. And on freedom and equality, he's told us freedom has cost and you must choose between freedom and equality.

But that's a false dilemma dressed up as some kind of realism. And it's been debunked for over a century by people who actually have lived under the boot of power, people like Emma Goldman or Peter Kropotkin. Goldman, who was imprisoned, exiled and silenced for her radical views, saw through this lie completely. She wrote, and I quote, "talk about freedom and liberty. The workers may be free in name, but they are in reality the slaves of the system." To her, capitalist freedom wasn't freedom at all. It was just the freedom to obey. The liberty to starve. The choice to submit to someone else. Goldman didn't believe freedom and equality were opposites. She believed they were inseparable. The history of progress is written in the blood of men and women who have dared to espouse an unpopular cause, she said. And what was her cause? Well, it wasn't gulags. Not state control, but true liberty, where human beings are free from domination, whether that be from their boss by the state or the market.

Kropotkin, a Prince who turned anarchist, and scientists took the same myth apart from another angle. He argued that capitalism rests on the profound misunderstanding of nature. The ruling class says that competition is natural and cooperation is some kind of weakness. But Kropotkin spent years studying animals and human societies and came to a completely different conclusion. He writes, "Sociability is as much a law of nature as mutual struggle." In his eyes, freedom arises not from isolated struggle, but from mutual aid, from a society where people lift each other up instead of stepping on each other to try and get ahead themselves. He didn't see freedom and equality as enemies. He saw them as co-founders of human dignity. In fact, he believed that only a society rooted in equality could protect individual liberty at all. Otherwise, liberty just becomes a privilege reserved for those with property.

And isn't that the society we live in? That's the problem. Then, with souls framing. It defines freedom as the absence of interference. But it ignores that deeper truth that poverty, exploitation, debt, desperation are in and of themselves interferences. And they're just as real as government power, perhaps even more real. Let's turn this around and ask, what if the real danger isn't that criticizing capitalism leads to tyranny, but that not criticizing it leads to a quiet and invisible form of domination? The system where you're free to speak, but only if it doesn't cost you your job. You're free to choose, but only from options that have been curated by your paycheck. You're free to pursue happiness, but only after you've earned the right to get some. That's not freedom. That's a shell of freedom. A haunted echo of what Liberty actually sounds like. 

Goldman and Kropotkin weren't selling utopias. They were calling our bluff. They believe freedom isn't what markets allow you to buy. It's what your dignity allows you to claim. And they knew, as we should know now, that true freedom can't exist in a system that's built on coercion or dependence or on fear. We began this episode with the promise that capitalism would make us free, that if we just kept the markets open and kept taxes low, kept regulation out of the way, then freedom would flourish and we could make a good living by simply working hard. But by now, hopefully, you can see there are cracks in that promise.

Real freedom isn't just the absence of restriction, it's the presence of possibility. Real freedom doesn't come from being left alone. It comes from being lifted up. It comes from living in a society where your value isn't measured by your productivity, where you aren't reduced to being a worker or a consumer, or a data point where democracy doesn't stop at the ballot box, but it actually enters the workplace, the economy, the daily rhythm of your life, that kind of freedom.

Capitalism, at its core, cannot deliver it. It was never designed to deliver it. But that doesn't mean we're powerless. I know what it feels like to live under something so massive that you have to wonder, what difference could I possibly make?

But the truth is, systems don't change overnight. They change when millions of people shift their expectations all at the same time together. So if you want to know what you can do about this, well, you could start by changing what you look for. You can stop measuring freedom by how many brands are on the shelf, or how fast your package arrives in the mail. You can start measuring it by how much dignity the people around you have, how much real power they hold in their own lives. You can support their unions. You can push for public goods. You can vote for candidates who talk about economic democracy and not just economic growth. And maybe most importantly, you need to support other people. You can help your friends when they burn out. Join a co-op. Forgive someone's debt if they owe you money. You can start conversations that make people uncomfortable in all the right ways. Because freedom isn't something that you're going to be given. It's something that you're going to have to build for yourself and for your children.

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