Does capitalism make us unhappy? No, but also yes

Money of various denominations and countries

Americans are more unhappy than ever. Is capitalism to blame?

If you ask social media, the answer is obvious. Polls show a similar shift in attitudes, especially among Gen Z: 54% of young people view capitalism negatively, according to a 2021 poll.

But if we’re going to make this argument, it’s important to get the details right. Why, specifically, is capitalism bad for human happiness?

The simplest explanation is that capitalism gives rise to enormous inequality and forces us to struggle for survival, and that makes people miserable. But that hypothesis might be a little too simple.

Massive inequality, poverty and precarity aren’t unique to capitalism. They’ve been features of every society since the dawn of agriculture. Does this imply that no one has ever been happy, except for a tiny minority of the privileged?

The data don’t support such a stark conclusion. If you look at a worldwide survey of happiness by country, it’s true that the richest countries are near the top and the poorer ones are on the bottom. However, happiness doesn’t correlate strictly with GDP or income.

Countries with a wide range of median incomes all cluster around similar numbers. The United States, the richest country in the world, is only the 26th happiest. Some less-wealthy countries, like Costa Rica, surpass us. Mexico, with one-eighth the median income of the U.S., is only two places behind. It appears that wealth doesn’t influence happiness as much as you might guess.

Of course, poverty is harmful. If you can’t afford enough to eat or a roof over your head, you’ll be unhappy. However, inequality isn’t harmful – at least, not intrinsically. It doesn’t hurt you by the mere fact of its existence, like disease or war. If your neighbor is ten times richer than you but is practicing stealth wealth, living in a modest house and wearing non-designer clothes, you’ll never realize.

Inequality only hurts if you’re aware of it. In that case, it naturally inspires feelings of envy (I want what he’s got!) and inadequacy (am I not as good as him?), both of which make us unhappy.

This is an ancient instinct, older than humanity. As a famous experiment shows, even monkeys feel unhappy because of inequality. They’re happy to get a cucumber slice as the reward for a task, unless they see another monkey getting a tasty grape for doing the same job. Then they throw a tantrum.

This is where capitalism comes in. We’re bathed in more advertising than ever, both in the sheer quantity of ads and in their intrusiveness. Marketers spend trillions of dollars to cram commercials into our eyeballs everywhere we look. Capitalism incentivizes this behavior in a way that no previous economic system did.

And that matters, because the purpose of advertising is to make us unhappy. Its goal is to make our lives feel incomplete so we’ll spend money trying to plug the hole. No matter how much you have, it sends the message that you’re falling behind and need more.

Ubiquitous social media also supercharges our ability to peer into other people’s lives. Once, the only people you could easily compare yourself to were your neighbors on the same block. At most, you could read a gossip column or watch a TV show about the lives of celebrities. Now you can see in real time how the richest people on the planet live. That widens the circle of people you compare yourself to, and as the saying goes, comparison is the thief of joy.

Social media can even make us perceive inequalities that don’t exist. We all feel the temptation to curate our lives for social media: to post only about the good parts, and to polish them up and present them as favorably as possible. That can make it seem, when you scroll through your friends list, as if everyone’s life is going great except for yours. It’s comparing someone else’s highlight reel to your cutting room floor.

It goes beyond curation into outright deception. Some “influencers” resort to selective editing and other tricks (like renting a private jet just to pose in the cabin for a photoshoot) to create the false impression that they’re leading a life of luxury.

Both advertising and social media contribute to unhappiness in this way. Capitalism doesn’t just create inequality, it strives to shove it in our faces at every turn, and that does make people unhappy.

Human psychology is such that we tend to be discontented and envious if we have less than our neighbors, and that’s true no matter how much money or how many possessions you have. Capitalism thrives on this mindset, because envy fosters the desire to compete and consume. But human suffering is the raw material that powers it.

Capitalism tells us lies about what makes us happy: more work, more money, more stuff. If you believe those lies, you’ll be running on an endless treadmill, seeking fulfillment through consumption but never finding it, going deeper into debt for no gain. Or, like many white-collar workers, you’ll get caught up in hustle culture, working grueling hours and killing yourself with stress when you already have more than enough for a good life.

The things that truly make human beings happy aren’t for sale. They include autonomy, meaningful relationships, leisure, creativity, and natural beauty. We’ll still need to work, if only to provide for our basic needs, but making more money on top of that doesn’t make people any happier.

Yet millions of Americans believe that happiness comes from being rich. They’re mortgaging their lives in service to this falsehood, encouraged by marketing that stokes feelings of greed and envy, and ruining the planet in the bargain.

The first step in fixing this problem is to recognize the illusion for what it is. All our extravagant consumption is neither a right nor a necessity. We can be perfectly content leading much simpler lives. The sooner we learn that, the happier we’ll be.


  1. Katydid says

    Interesting point about the role of advertising. I’ve been considering it, and I think you’re absolutely right.

    I went to college before cable tv was common, and my college was in a rural valley where we really didn’t get local network tv reception without a huge antenna on the roof. The dorm lobbies had television, but they were seldom on because we just lived our lives without it. We could get radio reception just fine, and people had cassettes and vinyl records. Occasionally someone would buy a newspaper and leave it lying around the lobby or one of the common rooms on each dorm floor.

    Back then, the internet was something you’d log into the VAX mainframe and jump through 10 – 12 steps to get connected, text-only, and sometimes there was nobody there. No pictures, no ads, no influencers.

    Were we content? Pretty much, yeah. In good weather we’d go sit on the grassy hill by the library or on the large dorm terrace and talk/drink/listen to music. Once a month, one of the lecture halls showed movies (VHS existed but nobody had a tv, forget about a VHS player). We’d go hang out in the student union playing video games (like Pac Man) or pool. Once a month or so, there’d be a live band on campus.

    I can believe a huge reason for Gen Z’s unhappiness is the ridiculousness they see and believe they’re entitled to. Phones and constant connection to people pretending they live like the rich and famous, plus celebrities, can’t be good for the psyche.

  2. Silentbob says

    There’s an old tale – so old I don’t know the original source; maybe religious? – that goes like this:

    An American investment banker was taking a much-needed vacation in a small coastal Mexican village when a small boat with just one fisherman docked. The boat had several large, fresh fish in it.

    The investment banker was impressed by the quality of the fish and asked the Mexican how long it took to catch them.

    The Mexican replied, “Only a little while.”

    The banker then asked why he didn’t stay out longer and catch more fish?

    The Mexican fisherman replied he had enough to support his family’s immediate needs.

    The American then asked: “But what do you do with the rest of your time?”

    The Mexican fisherman replied,

    “I sleep late, fish a little, play with my children, take siesta with my wife, stroll into the village each evening where I sip wine and play guitar with my amigos: I have a full and busy life, señor.”

    The investment banker scoffed:

    “I am an Ivy League MBA, and I could help you. You could spend more time fishing and with the proceeds buy a bigger boat, and with the proceeds from the bigger boat you could buy several boats until eventually, you would have a whole fleet of fishing boats. Instead of selling your catch to the middleman, you could sell directly to the processor, eventually opening your own cannery. You could control the product, processing and distribution.”

    Then he added: “Of course, you would need to leave this small coastal fishing village and move to Mexico City where you would run your growing enterprise.”

    The Mexican fisherman asked, “But señor, how long will this all take?”

    To which the American replied: “15-20 years.”

    “But what then?” asked the Mexican.

    The American laughed and said,

    “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich. You could make millions.”

    “Millions, señor? Then what?”

    To which the investment banker replied:

    “Then you would retire. You could move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

  3. Dunc says

    Whilst it’s true that massive inequality is certainly very common throughout history, I think it’s worth bearing in mind that the current historical context is a bit more complicated… The 20th century saw a couple of generations who experienced quite dramatic reductions in inequality (in North America and Western Europe, at least), and so developed a sense that things really could get better for the large mass of ordinary people, and the expectation that they would continue to do so. That makes the current rise in inequality all the more galling.

    People can accept inequality when that’s all they’ve ever known, and they believe that’s simply the nature of the world. They’re much less happy to accept it when they and their parents were brought up in a more equal society, and were constantly told that things would only get better. It’s the betrayal of that expectation that’s the worst.

    People don’t miss what they’ve never had, but if you give it to them, let them get used to it, and then take it away again, be prepared for screaming.

  4. Katydid says

    The idea of super-productivity didn’t just pop out of 20th-century capitalism. Benjamin Franklin published books of aphorisms about working hard and waking early to fit more into the day (e.g. “Early to bed, early to rise, makes a man healthy, wealthy, and wise.”) Before him, the Puritans had a work ethic that stressed maximizing work to maximize profit.

    In contrast, Thoreau was notable because he broke the mold by hanging around in a cabin by a pond and doing a lot of thinking about stuff. And Art Buchwald, in the 1980s, is credited as the first to say “The best things in life aren’t things.”

    • says

      That’s true, although one thing I’d say in Franklin’s defense is that in his era, society really did need huge inputs of manual labor to function.

      The thing about the Puritan work ethic is that it’s persisted after there’s no longer any need for it. By rights, we should all be working 10-20 hours a week by now and letting machines do all the hard labor. Instead, the poor and even some of the white-collar rich are working harder than ever, and we’ve just increased our consumption to match.

  5. Dunc says

    Katydid, @ #4: it’s important to remember that Thoreau was only able to hang around by a pond thinking about stuff because he had women to cook and clean and wash his clothes, and money to finance it all. See also Nietzsche, who was such an ubermensch that he couldn’t even go for a walk by himself, and depended entirely on women to keep him alive.

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