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Capitalism, Growth and Freedom



Just under a century ago, in 1917, a communist revolution rocked Europe. Capitalism was taking a beating, and the Great Depression of 1929 only served to add to the growing disenchantment. Before long, socialist tendencies were spreading, both to the East, swallowing up the great land mass that is China, and to the West, as far as the United States. By the end of the twentieth century, however, everything changed: capitalism was back in fashion. The ‘iron curtain’ had fallen and both Russia and China had opened their doors to market forces. Capitalism was seen as the only system that could successfully deliver economic growth. In the words of The Economist writing in 2006, “having grown at an annual rate of 3.2 percent per head since 2000, the world economy is over halfway towards notching up its best decade ever…Market capitalism, the engine that runs most of the world economy, seems to be doing its job well.”

“Freedom for women began much earlier in history than we tend to believe – and much earlier than did economic growth.”


Within just two years of this spate of optimism, and a century on from the first communist revolution, capitalism was once again back on trial. A global ‘Great Recession’ and increasing concerns about inequality, which came to a head with the publication of Thomas Piketty’s somewhat Marxist sounding Capital in the Twenty-First Century (2014), gave free markets a bad name. However, whilst critiques of capitalism and the free market approach might seem a natural reaction to recent events, they have not come without challenge. Supporters of capitalism have jumped to its defence, contending that the economic problems we face are not a result of too much capitalism but of too little. This includes a ‘crony corporatism’ that has eaten its way through the forces of competition, and oversized banks that took for granted government support, leading to the tendency to take on too much risk (Allison, 2012). The solution, we are told, is greater competition, fewer barriers to entry for aspiring entrepreneurs and less reliance on government: more capitalism, not less.

With the renewed economic case for capitalism has also come a defence of capitalism as a moral system. The old ideas of Milton Friedman and Ayn Rand have been reborn, as commentators from Arthur Brooks (2012) to the Legatum Institute’s Harriet Maltby (2015) have argued that capitalism should be recognised as the route to personal freedom (see also Tomasi 2012). Capitalism, they argue, is not only capable of delivering economic growth; it is also in tune with our goals as human beings: freedom to strive to make the best of what we have, to be rewarded for that striving, and not to be hindered in that pursuit by others.

This all leaves us with a question: to what extent are the two central goals of capitalism – economic growth and the pursuit of freedom – in synergy with each other, and which should be our top priority? The answer might seem obvious, but, as Amartya Sen’s Nobel Prize winning contributions have shown, it is far from it (see Sen, 1999). In this short article, and as both an economist and a feminist, I will reflect on the question from a gender angle. In what follows, and drawing upon both history and theory, I will make the case for placing freedom first (for further reading see Duflo, 2012; World Bank 2011; Fawcett Society, 2013; Eswaran, 2014).

“There is good reason to believe that the freedoms achieved by young women early on in history were just as important for the economy’s growth as were the more well-known inventions of ‘great men’ such as Watt and Arkwright”

History: Freedom drives growth

The cross-country correlation between economic riches and women’s empowerment may lead one to presume that economic growth can be relied upon to deliver freedom, whether for women or for other groups. After all, on the face of it, it seems obvious that the economic rise of Britain and the US preceded the feminist waves of the twentieth century. Therefore, economic growth should, one could suggest, be our top priority (as freedom will naturally follow). However, as I have argued elsewhere, freedom for women began much earlier in history than we tend to believe – and much earlier than did economic growth (see Bateman, 2014). In fact, seeds were being sown at least as far back as the fourteenth century, the century marked by the Black Death.

Through its devastation, the Black Death brought significant labour shortages and, with it, a higher market wage. Where labour markets were sufficiently well developed, as was the case in England and the Netherlands, this had a major impact on women, providing new opportunities in the workforce. The result was economic independence – teenage girls were, for example, able to work, thus taking control of their lives and avoiding the fate of being ‘married off’. With it, women married later in life and entered marriage on a (relatively) equal basis to their husband. By the sixteenth century, the average age of first marriage for English women had reached the remarkably modern age of 25-26 years old – and, in fact, never dipped below the age of 24 until the nineteenth century (Wrigley and Schofield, 1989).

It was the economic freedom that women began to achieve early on in England that helped to pave the way for the nation’s economic rise. According to Jan Luiten van Zanden and Tine de Moor (2010), working and then marrying later in life meant that women had smaller families and so parents could better afford to educate their children and to save, helping to provide the economy with both the human and capital resources needed to grow. The resultant lower population pressure also prevented downward pressure on wages, which not only helped to limit poverty but also gave businesses an incentive to mechanise. According to the economic historian Robert C. Allen (2009), the combination of higher wages and cheap coal was a decisive element in triggering the Industrial Revolution. In particular, it meant that industrialisation and sustained economic growth became tenable.

In sum, there is good reason to believe that the freedoms achieved by young women early on in history were just as important for the economy’s growth as were the more well-known inventions of ‘great men’ such as Watt and Arkwright. Freedom for young people – and particularly women – is the untold story of the Industrial Revolution and of the start of modern economic growth.

Theory: Freedom supports the invisible hand

Not only does history suggest that freedom provides the best foundation for achieving other economic goals, such as economic growth, but so does economic theory – albeit in a way that is all too often taken for granted. Central to the capitalist agenda is the notion of the invisible hand – the idea that the pursuit of self-interest will naturally result in the best outcome for the economy as a whole. With free markets, selfishness becomes a productive force: one that creates businesses, jobs, investment and invention. For the invisible hand to work its magic – for it to deliver the prosperity it promises – freedom is, however, vital. In the simplest of terms, freedom is a necessary condition if the capitalist machine is to deliver maximum economic return. Here, it is impossible not to recognise the importance of gender (see Bateman, 2015).]

Throughout the world, it is women who are most at risk of having their personal freedom jeopardised. Where women lack freedom, they are often forced into marriage and condemned to a life in which they have little control over their fertility – a life in which they are unable to make the kinds of choices that could help to lift their family out of poverty, including how often they become pregnant. Child poverty follows. By contrast, where women are able to make their own decisions about work, marriage and fertility, they are able to make choices that are in their own and their family’s best interest. They are, for example, able to choose to have a smaller family if it helps to improve the life chances of existing children. Such freedom not only raises the family’s living standard, but also contributes to more general economic growth: population pressure does not wipe out economic gains, and parents are better able to afford to educate their children and to save, providing a skilled workforce and funds for investment.

If women are given basic freedoms – freedoms that allow them to make their own choices, particularly when it comes to fertility – they will naturally act in ways that help to secure their own family’s standard of living, and which, in turn, generate (unintended) positive effects for the wider society. Sadly, too many women across the world are denied even basic freedoms. This negatively affects women themselves; but it also debilitates the working of the invisible hand, thus striking a blow to the very heart of capitalism. It is for this reason that every true believer in capitalism should also be a feminist.

In conclusion, the prosperity and progress that women have helped to bring about since the fourteenth century, if not before, exemplifies how achieving personal freedom comes before economic growth. Moreover, this is far from being an isolated case. It is thus safe to conclude that whether we look to history or to the theory of the invisible hand, freedom, not economic growth per se, should be at the top of every economist’s agenda. Empower the individual – whether female or male – and everything else will follow. In a world where freedom is increasingly under threat, particularly for women, the adverse economic consequences deserve to be heard now more than ever.


Allen, R.C. (2009), “The British Industrial Revolution in Global Perspective”, pp.135-155, Cambridge University Press.

Allison, J. (2012), “The Financial Crisis and the Free Market Cure”.

Bateman, V. (2014), “Sorry Germaine Greer, Feminism began long before you and your Female Eunuch”, The Telegraph

Bateman, V. (2015), “Empowering women in poor countries is the solution to western economic woes”, CapX

Bateman, V. (2015), “Why economists need to talk about sex”, CapX (2015).

Bateman, V. (2015), “Why every good capitalist should also be a feminist”, CapX.

Brooks, A. (2012), “The Road to Freedom”, Basic Books, New York: USA.

De Moor, T. and van Zanden, J.L. (2010), “Girl power: the European marriage pattern and labour markets in the North Seas region in the late medieval and early modern period”, Economic History Review, 63(1), pp.1-33.

Duflo, E. (2012), “Women Empowerment and Economic Development”, Journal of Economic Literature, 50(4), pp.1051-1079 (2012)

Eswaran, M. (2014), “Why Gender Matters in Economics”, Princeton University Press.

Fawcett Society (2013), “The Changing Labour Market: Delivering for Women, Delivering for Growth”.

Maltby, H. (2015), “Capitalism is setting us free”, CapX, available at http://www.capx.co/capitalism-is-setting-us-free/

Sen, A. (1999), “Development as Freedom”, Alfred A. Knopf, Inc. New York, USA.

The Economist, 2006, “Happiness and how to measure it”, available at http://www.economist.com/node/8450035

Tomasi, J. (2012), “Free Market Fairness”, Princeton University Press.

World Bank (2011), “The World Bank World Development Report 2011: Gender, Equality and Development”

Wrigley, E.A. and Schofield, R.S. (1989), “The Population History of England 1541-1871”, p.423


Victoria Bateman

is a Fellow in Economics at Gonville & Caius College, University of Cambridge, Fellow of The Legatum Institute, London and author of the book ‘Markets and Growth in Early Modern Europe’ (2012).

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