Women vs. Capitalism: Why We Can't Have It All in a Free Market Economy

by Vicky Pryce

The free market as we know it cannot produce gender equality. This is the bold but authoritative argument of Vicky Pryce, the government's former economics chief.

Women vs Capitalism is a fresh and timely reminder that, although the #MeToo movement has been hugely important, empowerment of the mind will not achieve full power for women while there remains economic inequality. Pryce urgently calls for feminists to focus attention on this pressing issue: the pay gap, the glass ceiling, and the obstacles to women working at all. Only with government intervention in the labor market will these long-standing problems finally be conquered.

From the gendered threat of robot labor to the lack of women in economics itself, this is a sharp look at an uncomfortable truth: we will not achieve equality for women in our society without radical changes to Western capitalism.

Genres: Feminism, Nonfiction, Womens, Economics

192 pages, Hardcover

First published January 1, 2020

Reviews

[Martin Omedo · Rating 3 out of 5]

It is often argued that the free-market, as enshrined within the capitalist system, is self-correcting by its nature in case of a market failure through its own devices. According to Adam Smith, it is the “invisible hands” of the market at play. The governments, in such circumstances, are not allowed to intervene.

Can the free market solve the gender inequality issues in the market and labour systems by its own devices?

Vicky Pryce in her magnum opus offers a different point of view which goes against the conventional wisdom that surrounds the free market. According to her, the capitalist market system is not designed to deal with gender inequality issues that she deems a market failure if left to its own devices.

According to her, markets are good at finding the value of some things, but not others. Women and their social responsibilities are, in this case, one of those “others”. The externalities that GDP as currently designed can’t measure. The capitalist free market is inherently short termist (profit above all), which prevents these issues from being measured, understood and confronted.

Also, the inability of the free market to solve the gender inequality market failure results in the disproportionate distribution of labour amongst gender in various levels of management resulting in what Vicky terms “bounded rationality” the idea that individuals are limited in their ability to make rational decisions by the information available to them, and the cognitive limitations of their minds.

She offers a radical proposal that will require a redefinition of the current form and structure of the capitalist market. According to her, first, the government has a justified reason to replace the invisible hand of the market and introduce a quota system in the labour markets. There is an urgent need to reform capitalism so that it stops failing women.

Secondly, while the #MeToo movement and other initiatives like “Time’s Up” have provided an arena for feminist activism and analysis, contemporary feminists should be focused like laser beams on economic empowerment.

[Kat Riethmuller · Rating 3 out of 5]

Takeaways:
Market forces have proven incapable of creating gender equity.
Male workers have a crucial head start over female workers.
Women are conspicuously absent from corner offices.
The dearth of female leaders marks a failure of the capitalist system.
Motherhood plays an obvious role in the pay gap.
Wage differences grow from a disparity in economic power.
The gender gap extends beyond traditional employment to entrepreneurship.
Unconscious bias is a persistent foe.
Quotas are a powerful way to enforce gender equality.
Pay transparency is another tactic for closing the gender gap.

Summary:
Market forces have proven incapable of creating gender equity.
Labor markets simply haven’t closed the pay gap between men and women. Worldwide, women are becoming more educated, yet female workers remain disproportionately locked into poorly paid positions – and locked out of the highest paying jobs. Women have made strides, according to the World Economic Forum. Yet the pace is so slow that, absent an acceleration, it will be a century before women close the economic gap with men. Signs of hope exist, including the appointment of two women to high-powered roles: Christine Lagarde as the president of the European Central Bank and Ursula von der Leyen as the president of the European Commission. Alas, both were last-minute choices, undermining their credibility and underscoring long-held biases about the ability of women to lead.

It’s time to tell a very uncomfortable truth: Capitalism cannot bring about gender equality. 
Overall, when it comes to landing higher paying jobs, women continue to struggle. One plausible explanation is that gender equality is a long-term project, and the short-term nature of quarterly profits and political election cycles is simply incompatible with tackling a complex and entrenched problem. Another possible reason is that old habits die hard: A YouGov survey conducted in 2018 found that one-third of employers continued the outlawed practice of asking female applicants if they were pregnant or planned to have children in the near future. The question is illegal, yet many managers refuse to relinquish the notion that female applicants should be required to divulge their reproductive status and plans.

Male workers have a crucial head start over female workers.
In some instances, such as at the BBC, female workers make less than their male counterparts for performing the same tasks. But the real culprit in the pay gap is the concentration of women in lower paying roles and in lower paying sectors. Airline pilots, for instance, are almost entirely male. At Ryanair, 97% of the highest earners in 2018 were men; at EasyJet, the count was 89%. The discrepancy occurs not just in the airline industry. At JPMorgan Chase, female managers occupied just 9% of senior positions. At the UK division of consulting firm McKinsey, the pay gap stood at 23% in 2018.

Patterns of gender inequality today are far more subtle than they used to be, and it is not always easy to detect, let alone correct for, conscious and unconscious gender bias in society.
The pay gap also reflects the unappreciated economic value of a stay-at-home mother. A nanny alone costs an average of ₤29,000 [$37,000] a year. Add in other domestic chores, such as cleaning, cooking and child care, and a housewife’s value keeps rising. One tongue-in-cheek estimate, published in The Daily Telegraph in 2014, tallied up a timecard that included such roles as tutor, private nurse, driver and therapist, and it concluded that a mother’s salary should exceed ₤159,000 annually. Meanwhile, women who earn college degrees pass on important economic advantages to their children: They tend to marry better educated spouses, wait longer to have children, and then read more books and buy more musical instruments for their offspring.

Women are conspicuously absent from corner offices.
Overall, women make up just 3.6% of chief executive officers globally. In Britain in 2016, women led just seven of the FTSE 100 firms. Two years later, only six of the FTSE 250 firms had female CEOs. Despite new attention on the issue, the share of women bosses is shrinking. The top 250 firms in the United Kingdom employed just 19 female CEOs. Women remain scarce in board seats, too. This obvious shortage of women in the upper echelons of corporate hierarchies both illustrates and reinforces the glass ceiling. With few women filling those positions, there’s less chance of promotion for talented women and little hope of an increase in the number of female bosses and directors.

There is clearly a great deal to be done to improve women’s pathways to senior executive positions.
In some instances, government regulation has compelled companies to put more women in leadership roles. Germany enacted a quota at DAX companies that resulted in women making up nearly 40% of the members of supervisory boards. The United Kingdom ordered a study of the gender gap and found a number of deeply ingrained attitudes: In many cases, corporate leaders thought one woman on the board was plenty. Some also felt females wouldn’t mesh well with male board members, and others pointed to a lack of qualified women available to take on those roles.

The dearth of female leaders marks a failure of the capitalist system.
Discriminatory practices in employing and promoting women might serve the short-term needs of capitalism, but they ignore the longer term goals of markets. For example, if a female worker can’t return to her job after giving birth, her productive capacity is lost. Perhaps the practice is more convenient for her employer, but it hurts the overall efficiency of the labor market. The pay gap serves as proof of this market inefficiency. According to one study by the European Union, true gender equity in EU labor markets would boost the bloc’s economic output by 27%.

Pay gaps remain, as we have seen, because of the persistence of obstacles to women’s labor force participation.
Waiting for the labor market to self-correct is fruitless. Only with intervention can this market defect be fixed. Critics on the right argue that markets don’t make mistakes and that government interference is far more destructive. The truth is that raising pay and opportunities for women will produce a cascade of salubrious economic effects. If a woman’s earning power increases, her entire household will be better off. What’s more, she’ll spend more and pay more taxes, creating positive ripple effects throughout the economy.

Motherhood plays an obvious role in the pay gap.
Among British workers in their early to mid-20s, no pay gap exists between men and women. By their late 20s, however, men make about 10% more than women. And the gap keeps rising throughout their careers. Free market proponents argue that this reality isn’t a result of sexism but of simple biology: Many female workers interrupt their careers in their 20s and 30s to have children and then put their jobs on the back burner into their 40s as they focus on their families.

Training, progression, promotion are much harder to come by if you work part-time.
Even a brief break for parenting can undermine a woman’s long-term earning power. Many mothers who return to work part-time find themselves in jobs that don’t fully use their skills. What’s more, the regular raises received by full-time workers elude part-timers. This reality bespeaks the need for a focus on cultivating part-time workers rather than relegating them to the career slow track. As it stands now, the labor market’s incentives send a clear message to female employees: Rush back to work as soon after giving birth as possible, and don’t take a part-time job.

Wage differences grow from a disparity in economic power.
In some cases, employers are embracing progressive perks for new mothers. At its London office, Goldman Sachs offers extended maternity leave and a breastfeeding room. This is progress to a point, but Goldman Sachs’s highly paid employees are hardly the norm. To truly narrow the pay gap, such benefits must extend to workers throughout the wage spectrum. More companies should send the strong message that mothers are valued employees, even with the complicating factor of an extra person to care for at home.

Because the burden of parenthood falls disproportionately on women, the balance of economic power between men and women is distorted.
The pay gap becomes a self-perpetuating phenomenon. In most families, the man makes more than the woman. So when it’s time to decide which parent should take parental leave, which parent should return to work part-time or which partner should leave the work force altogether to raise the children, the answer is obvious: The woman makes less, therefore her job is less crucial to the household’s finances.

The gender gap extends beyond traditional employment to entrepreneurship.
If women can’t get a fair shake in labor markets, why don’t they work for themselves? That answer is a fraught one, too. There’s a clear funding gap for women-owned businesses. The European Bank for Reconstruction and Development estimates a shortfall of ₤285 million in loans for small businesses owned by women. Meanwhile, even in advanced economies, only tiny numbers of women are entrepreneurs. Just 1.5% of Israeli women own companies, compared to 6.2% of Israeli men. And only 1.4% of Swedish women are entrepreneurs, compared to 5.3% of Swedish men.

Entrepreneurship is a must in a free market economy, but if the support for women entrepreneurs just isn’t there, the system will not allow it to happen at its optimal level.
The entrepreneurship gap, like the gender gap in labor markets, means untapped economic potential. In Britain, if women launched and built enterprises at the same pace as male entrepreneurs, they could unlock some ₤250 million in economic activity. Closing the divide requires more focus on female entrepreneurship in schools. Also, women entrepreneurs face no shortage of gender bias as they try to build their businesses. Many female business owners tell tales of struggling to be taken seriously by investors and clients. Risk-taking, it seems, is seen as a male endeavor, not the purview of women.

Unconscious bias is a persistent foe.
Unwitting bias remains the enemy of female workers and entrepreneurs. Sheryl Sandberg, a top executive at Facebook, argued in her book Lean In that women should strive for change from within their corporate cultures. Others counter that chipping away at sexism from inside sclerotic organizations is a waste of time, and that women should leave big companies and do their own thing. One argument in favor of the latter approach is the concept of the “glass cliff” – the notion that promising female leaders find themselves assigned hopeless tasks that doom them to failure. One such example was British prime minister Theresa May taking on the Brexit negotiations, perhaps the thorniest of glass-cliff assignments.

On the other hand, a company run by a woman is more likely to hire more women, promote more women and steer female managers away from glass cliffs. Entrepreneur Conna Walker launched a clothing label when she was just 17. A decade later, women dominated her profitable venture. Walker’s argument for hiring women is that they understand the company’s female customers.

Quotas are a powerful way to enforce gender equality.
Labor markets and the entrepreneurial ecosystem have proven powerless to accelerate the pace of gender equity. So governments need to step in and require minimum levels of female employment in senior positions. While quotas remain a contentious issue, the reality is that without them, women will remain locked out of executive roles. Quotas should be imposed with real thought. They would vary by industry, and they would carry deadlines to urge compliance as well as penalties to punish scofflaws. And once a sector has shown real change, the quotas could be phased out and ultimately retired.

Anything approaching gender equality is still a long way off, and the environment won’t improve any faster until we have more women rising to be decision makers.
Another necessary remedy is increasing the number of women working as economists. The Royal Economic Society has resolved to focus on gender equality. In 2000, one-quarter of British economics departments employed no women. Today, just one-quarter of UK undergraduates studying economics are female. Women are more likely to go into a field if they see other women in that area of specialization. In addition, women are less likely than men to study mathematics, and there’s a perception that studying economics requires proficiency in math. By the reckoning of The Economist, just one-fifth of senior economists in Europe are female. Such a lack of gender diversity can create flawed decision making and analysis across the discipline.

If women aren’t given equal access to all sectors and to leadership, they will be most vulnerable to the coming AI and automation revolutions, as their jobs will be threatened with extinction.
Especially in the United States, there’s a notion among economists that the market can’t be wrong – and, therefore, if there are no women working as economists, the market has declared that women don’t want to be economists. In one survey, nearly half of female economists said they had not spoken up at conferences in their disciplines out of fear that they might be mocked, assailed or ignored. Fewer than one-fifth of male economists reported similar trepidation about asking questions of, or presenting research to, their peers.

Pay transparency is another tactic for closing the gender gap.
Women are less likely to negotiate their salaries, and opaque compensation structures have disadvantaged women by leaving them unaware of just how much their male counterparts earn. At the BBC, an initiative to divulge salaries revealed that women were making less than men in similar jobs. The pay gap at the BBC ended up closing not because female employees received raises but because male workers, threatened with wage cuts, left. Women employees, for their part, are organizing to sue for back pay.

At least what pay transparency there is in various countries has exposed the gap in women’s economic empowerment in a pretty stark way.
The British government in 2017 began requiring all employers with 250 workers or more to disclose salary gaps. As a result, thousands of wage reviews showed a pay gap of about 9.7%. Predictably, construction and finance had large differences of 20% or more, but even seemingly gender-neutral workplaces, like British universities, had persistent wage disparities. If women remain disproportionately trapped at the bottom of the labor ladder, they’ll bear the brunt of displacements from automation. Advanced societies must recognize that markets won’t end gender pay inequities; they should move aggressively to address the gap.

[Gabriel Stein · Rating 4 out of 5]

I am in two minds. On the one hand, the book highlights how much there still is to do before we achieve broad gender equality, in Britain as well as in other capitalist economies. Here, I agree entirely. On the other hand I am instinctively opposed to the author's preferred solution, namely quotas. Occasionally, there is also the impression that in an otherwise strong marshalling of statistical and anecdotal evidence, she slightly overstates her case (e.g., Theresa May was not handled a poisoned chalice and was not bound to fail as Prime Minister) and once or twice assumes correlation means causation. All that being said, an excellent book and spot on regarding the problem.

[Sarah · Rating 4 out of 5]

A very interesting read and I do wonder if the author would consider writing a similar book regarding how things have changed since 2019, what with the pandemic, multiple social movements and the prevalent rise in online working.

I've docked 1 star simply due to the author's rather obvious contempt for video games and her dismissal that she would've thought that "women would have something better to do", an ironic reinforcement of gendered stereotypes with the implication that video games is "boy's stuff" in a book about breaking down the wall between what consists of work more engendered to men and women, respectively.

[Ang · Rating 3 out of 5]

On the one hand, Pryce is clear-eyed about the ways capitalism is failing women.

On the other hand, POSIWID. (The purpose of a system is what it does.)

I personally don't think that reforms and regulations will EVER fix inequality in the system, because the inequality is baked in.

(This is UK focused, and written in 2019, before the pandemic and Trump 2 made things even worse for women.)

[Ietrio · Rating 1 out of 5]

A governmental bureaucrat telling you that only the government god can bless you with equality, ironically precisely the government that is the actual source of inequality between sexes. Or in short: pay your taxes, because Pryce does not want delays in her pension payments.

[Valerie · Rating 4 out of 5]

3.5. Most of this seems fairly obvious?