Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Dec 18, 2025 3:06 PM

The Biden administration proposes a global minimum tax on corporations to end the “global race to the bottom.” Leaving aside the wisdom of letting France tax U.S.-based corporations, this phrase recalls one of the regnant canards of our time: Capitalism inevitably lowers living standards and grinds people down into poverty.

The myth of the “race to the bottom” is among the multitudes of errors, distortions, and outright lies of the 1619 Project but has escaped notice, because so few recognize it as a fib.

Princeton sociology professor Matthew Desmond’s essay – “American Capitalism Is Brutal. You Can Trace That to the Plantation” – summarizes the standard argument well:

In a capitalist society that goes low, wages are depressed as pete over the price, not the quality, of goods; so-called unskilled workers are typically incentivized through punishments, not promotions; inequality reigns and poverty spreads. In the United States, the richest 1 percent of Americans own 40 percent of the country’s wealth, while a larger share of working-age people (18-65)live in povertythan in any other nation belonging to the Organization for Economic Cooperation and Development (O.E.C.D.).

This is but one of many “errors of historical fact” and “misuse of historical sources” that Desmond should retract in this essay. But for our purposes, the key error is that, in a free-market economy, pete over the price, not the quality, of goods.” A brief reflection will show that the assertion is so erroneous that even Desmond does not believe it.

If Desmond truly believes that consumers only care about finding the lowest price, that raises a series of questions:

When Desmond takes his wife, Tessa, out to eat, does he always take her to the cheapest restaurant – McDonald’s for her birthday, White Castle for their anniversary?When Desmond buys a gift for his mother, does he always purchase the least expensive jewelry – the worst-cut diamond?When Desmond is in the market for a new car, does he always purchase a used Yugo (the vehicle imported from Communist Yugoslavia that Car and Driver called “the worst car in history”)?

The answer to these questions, presumably, is no. Yet Desmond and others discard the reality of their “lived experience” to make the faith-based argument that all other Americans single-mindedly focus costs regardless of quality. It’s unclear where they get this notion: No survey of consumer debt would indicate that the American people are especially obsessed with saving money.

In real life, price is only one consideration for a consumer in any society. The buyer always wants to purchase the largest quantity of the highest-quality good at the lowest price. The seller wants to sell the lowest quantity of the least-expensive good at the highest price. In order to find the biggest market, pete with one another to find the pelling niche. The market allows for both Aldi’s and Whole Foods, Hyundai and Mercedes, Great Value and Gucci. And marketing tests show that Americans are wary of buying anything that is priced too low precisely over concerns about its quality. There is no “race to the bottom,” because consumers are not heedless of their safety.

True, e down over time in the capitalist system. Marian Tupy of HumanProgress.org notes:

In 1968, for example, a 23” Admiral colour TV cost $2,544 or 125 hours of labour in the manufacturing sector. In 2018, a 24” Sceptre HD LED TV cost $99.99 or 4.7 hours of labour in the same sector (all prices are in 2018 US dollars). That’s a reduction of 96 per cent in terms of human effort.

The same could be said of microwaves, air conditioners, and everything from household appliances to luxuries. By contrast, the services that have caused Americans the most material pain over the last four decades are healthcare and education – those subject to the greatest government intervention, precisely the direction Desmond wishes to take all industries.

But what about quality? The 1968 Admiral TV’s cathode ray tube pare with the picture quality produced by 2018 technology, much less warrant a price 25-times as high. I love my 5,000-record collection on vinyl as much as any collector, but it doesn’t sound better, last longer, or take up less room than a file of MP3s.

Free exchange benefits Americans by raising the purchasing power of workers’ wages. Economist Joseph Schumpeter described capitalism as “first and last an engine of mass production which unavoidably also means production for the masses.” Its main “achievement does not typically consist in providing more silk stockings for queens but in bringing them within reach of factory girls in return for steadily decreasing amounts of effort.”

That is, capitalism reduces cost through innovation, improvement, and abundance. New technologies don’t simply replace old ones; they sometimes subsume bine them. Take, for instance, this paring entertainment technology of the 1980s with today’s smartphone:

If anything, the picture understates the wondrous advancement of technological progress: The cell phone not only replaces pay phones and all the items pictured but also televisions, gaming systems, calendars, personal planners, photo albums, clocks and wristwatches, road maps, GPS units, rulers and tape measures, passes, notebooks, board games, pitch pipes, books, newspapers and magazines, filing cabinets, and snail mail. Few homes in the 1980s could afford all of these items, let alone for the price of a smartphone – which 85% of Americans now own (up from 35% in 2011).

These are curious status flags in the “race to the bottom.”

And Desmond misses the fact that individuals invented, improved, or replaced all of these products in the hope of making a profit in the marketplace through free exchange. Furthermore, they made our lives better even while misguided theorists falsely accused them of exploitation and despoilation parable to chattel slavery. As the Book of Proverbs says, “In all toil there is profit, but mere talk tends only to poverty” (14:23).

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Acton Commentary: Hollywood’s Radical Che Chic
Was the real Che Guevara a lover of “humanity, justice and truth”? In mentary today, Bruce Edward Walker reviews Steven Soderbergh’s new four-hour “Che” film epic and discovers “a cinematic paean to one of the twentieth-century’s most infamous butchers.” Read the mentary at the Acton Institute website. ...
Vatican Condemnation of anti-Semitism Unchanged Despite Misstep on Holocaust Denier
The pope has certainly earned his salary this week. In his attempt to heal a schism, he inadvertently set off a fire storm. As most everyone knows by now, the pontiff lifted the munication of four bishops illicitly ordained by the late Archbishop Marcel Lefevbre in 1988, whose dissent from the Second Vatican Council drew a small but fervent following. One of these bishops, Richard Williamson, is a holocaust denier. To understand the saga, it is necessary to peel back...
Dr. Andrew Abela Receives 2009 Novak Award
Maltese-American marketing professor, Dr. Andrew Abela, is the winner of the Acton Institute’s 2009 Novak Award. Dr. Abela’s main research areas include consumerism, marketing ethics, Catholic Social Teaching, and internal munication. Believing that anti-free market perspectives seem to dominate discussion about the social impact of business, Dr. Abela is working to explore Christian ethics further to show how these issues can be resolved more humanely and effectively through market-oriented approaches. To aid this work, Dr. Abela is currently preparing a...
PBR: History Casts Doubt
In response to the question, “What is wrong with socialism?” I can hardly do better than Pope John Paul II, who wrote in Centesimus Annus, “the fundamental error of socialism is anthropological in nature,” because socialism maintains, “that the good of the individual can be realized without reference to his free choice.” The socialist experiment is attractive because its model is the family, a situation in which each gives according to his ability and receives according to his need—and it...
PBR: Monsma and Carlton-Thies Speak Out
In response to the question, “What is the future of the faith-based initiative?” As part of Christianity Today’s Speaking Out (web-only) feature, Stephen V. Monsma and Stanley Carlson-Thies, of Calvin College’s Henry Institute and the Center for Public Justice respectively, address the future of the faith-based initiative under President Obama. Monsma and Carlton-Thies outline five “encouraging signs” and one “major concern.” The encouraging signs include the naming of the office executive director (Joshua DuBois) and advisory council (including “recognized evangelicals”...
More on ‘The Moral Bankruptcy Behind the Bailouts’
“Government budgets are moral documents,” is the often quoted line from Jim Wallis of Sojourners and other religious left leaders. Wallis also adds that “When politicians present their budgets, they are really presenting their priorities.” There is perhaps no better example of a spending bill lacking moral soundness than the current stimulus package being debated in the U.S. Senate. In mentary this week, “The Moral Bankruptcy Behind the Bailouts,” I offer clear reasons how spending more does not equate to...
Acton Commentary: The Moral Bankruptcy Behind the Bailouts
Amid the Washington clamor for more and bigger bailouts, a few brave voices among elected officials and government veterans are being raised about the moral disaster looming behind massive government spending programs. If we ignore these warnings, writes Ray Nothstine in today’s Acton Commentary, we may be “continuing down a path that may usher in an ever greater financial crisis.” Read the mentary here and share ments below. ...
PBR: The Faith-Based Initiative
Last week’s National Prayer Breakfast featured a speech by President Obama which was his most substantive address concerning the future of the faith-based initiative since his Zanesville, Ohio speech of July 2008. In the Zanesville speech, then-candidate Obama discussed “expansion” of the faith-based initiative, and some details were added as Obama announced his vision for the newly-named Office for Faith-Based and Neighborhood Partnerships. The announced priorities of the office are fourfold: The Office’s top priority will be munity groups an...
PBR: Socialism Tyrannizes
In response to the question, “What is wrong with socialism?” In answering this question we could point to the historical instances of socialist regimes and their abhorrent record on treatment of human beings. But the supporters of socialism might just as well argue that these examples are not truly relevant because each historical instance of socialism has particular contextual corruptions. Thus, these regimes have never really manifested the ideal that socialism offers. So on a more abstract or ideal level,...
Of Men, Mountains, and Mining
Here’s a brief report from The Environmental Report on mountain-top removal mining, and the increasing involvement of religious groups weighing in on the question. One of these groups is Christians for the Mountains. A quote by the group’s co-founder Allen Johnson was noteworthy, “We cannot destroy God’s creation in order to have a temporal economy.” One other thing that struck me about the interview is that the AmeriCorp involvement smacks of “rebranding” secular environmentalism. Add the magic words “creation care”...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved