A few years ago I listened to a professor from a prestigious law school speak on the modern economy. This learned scholar was baffled that people voluntarily shop at Wal-Mart and Home Depot. He asked: “Why do so many people patronize large, impersonal retailers who destroy downtowns and sell goods that destroy the human spirit? Why do consumers and workers willingly permit themselves to be oppressed by capitalism?”

His answer was one that’s given with appalling frequency by many statist scholars: false consciousness. This is the notion that people act contrary to their true interests because they don’t know what’s good for them. Refusing to abandon juvenile notions about the horrors of private property and free markets, radical leftists instead resort to accusing the masses of collective stupidity. “Workers are falsely conscious,” intoned the law professor. “Their participation in capitalist institutions and their refusal to revolt against them reflect only the awesome power of capitalism to deceive its victims.”

Good heavens! Not only does capitalism oppress the body and soul, it oppresses the mind as well—so much so that its cruelly abused victims remain oblivious to the injustices visited upon them.

The Economist’s Reaction

My initial response to hearing allegations of false consciousness is to dismiss the concept out of hand. People, as economists inelegantly say, are rational. They’re not so stupid as to be oblivious to being abused.

But the more I reflect on the matter, the more I realize that false consciousness is real. Contrary to statist claims, however, false consciousness arises only in politics and not in the private sector.

When are you most likely to be adequately informed to make choices? When are you most likely to put forth the mental effort necessary to weigh all available information and then exercise the discipline required to make decisions that are best over the long haul? It’s when you have a significant personal stake in the outcome and when your decision matters.

One of the great benefits of the rules of private-property rights and freedom of contract is that they oblige each decision-maker to bear the bulk of the costs—and permit each decision-maker to enjoy the bulk of the benefits—of each of his decisions. Also, by concentrating decision-making power in individuals rather than dispersing it among collectives, private property gives each individual genuine influence over the outcome of events. Private-property rights promote true, not false, consciousness.

Consider, for example, a woman who voluntarily puts aside a professional career in favor of staying home to raise her children. Many leftists explain this decision as evidence of false consciousness—as evidence that the woman is hoodwinked by the capitalist patriarchy into thinking that raising children is at least as worthy as pursing a career outside the home.

Nonsense. The stay-at-home mom makes her choice very carefully. After all, the woman herself bears a large portion of the benefits and costs of the decision, and her decision is decisive: it alone determines what she will do. If she chooses to pursue a career, she pursues a career; if, instead, she chooses to become a homemaker, she becomes a homemaker. These two features—bearing personal consequences and exercising a decisive ability to choose which alternative to pursue—mean that the choice made by any woman in such a situation should be presumed to be the product of rational thought and of a mind cleared of distortions.

Likewise for the other decisions that statists assert to be distorted by false consciousness: people’s decisions to shop at Wal-Mart, workers’ decisions to take jobs at non-unionized firms, consumers’ decisions to smoke cigarettes, and women’s decisions to be surrogate mothers. Each such decision has direct consequences for each decision-maker, and each such decision is firmly in the hands of the person who makes it—no one else can lawfully veto it. No other set of circumstances is as likely to prompt humans to be rational, competent, and clear-headed decision-makers.

Political False Consciousness

Compare the private decisions that statists so distrust to those decisions that statists applaud, namely, political decisions. Unlike private decisions, people make political decisions with no incentive to choose wisely. While private decisions are individualized (that is, no person must share decision-making authority), political decisions typically are made collectively, with no individual exercising decisive influence. For example—and most notoriously—no voter determines the outcome of an election. Therefore, unlike in private settings, Jones can vote for A and get B instead. This is so regardless of how passionately Jones desires A. Knowing that his vote will not swing the election, why should Jones bother to become adequately informed about the relevant issues?

In addition, and again unlike in private settings, voters (and legislators and bureaucrats) are permitted to help determine how other people will lead their lives. When the issue in an election is, say, whether or not Sunday alcohol sales should be allowed, each voter is given the opportunity to push the government to override the private decisions of individuals, each of whom knows best whether buying alcohol on Sunday is best for him or her.

False consciousness, then, indeed is real. But it afflicts people as voters rather than people as private decision-makers. Only in voting booths are people prone to act consistently contrary to their true interests. Again, if the outcome of an election is unaffected by how you vote—and if the bulk of the consequences of electoral outcomes fall on people other than you—you gain nothing by casting an informed and prudent ballot. Your vote, like everyone else’s, will be uninformed and ill-considered.

Statists have it backwards. Capitalism doesn’t foster false consciousness; politics does. The political process encourages ignorant and imprudent decisions that often run counter to the best interests of the very voters who cast their ballots in support of such decisions. One of the many splendid benefits of private property and free markets is that these institutions give each person an unambiguous incentive to make wise decisions—that is, not to suffer false consciousness.