Tyler Cowen argues against (pdf) Elizabeth Anderson's view (pdf) that capitalist bosses exert oppressive power over workers and, implicitly, against my view that capitalist work is alienating. This, I suspect , is one of the many issues in the social sciences where both sides are right to some extent.

Tyler is right that competition for workers can drive up working conditions, and it is surely true that those conditions are vastly better in the west now than they were in the early days of the industrial revolution.

Nevertheless, I fear that Tyler might be claiming too much.

First, though, some facts. The evidence that capitalist work is oppressive doesn't consist merely in extreme cases of bosses' tyranny. Alex Bryson and George MacKerron have measured people's experienced happiness during 39 different activities, and found that paid work comes 38th of 39; only being ill causes more unhappiness.

This is consistent with the unemployed having lower life-satisfaction than the employed. Life-satisfaction is a different thing from experienced utility. It consists (in part) in having a role in life and being unemployed removes a source of this role - even though it is painful to fulfill it.

I reckon there are four reasons why the mechanisms Tyler describes aren't strong enough to sufficiently improve the working environment.

The most obvious is mass unemployment. Even after years of recovery, the wider measure of US unemployment is still high, at 11% of the workforce. And in the UK on top of the official 1.9m unemployed there are 2.2m "inactive" wanting a job and 1.3m part-timers wanting full-time work. That's a total of 5.4m or one in six of the labour force. This means that the labour market is a buyers' market, which allows many employers to drive down standards or at least not worry sufficiently about improving them.

Secondly. I fear that Tyler is under-rating the importance of job-specific human capital. We know that this is widespread simply because workers who lose their jobs earn less (pdf) when they return to work. This in turn means that workers lack bargaining power to get better conditions because they are locked into their employer. This might help explain one of Bryson and MacKerron's findings - that better-paid workers are no happier in work than worse paid ones. It could be that such workers, having more job-specific human capital, feel that they lack bargaining power.

In this context, perhaps Tyler (and everyone else!) is misdescribing monopsony. Maybe monopsony is a feature not so much of firms but of transactions: a firm might have monopsony power with respect to workers with job-specific human capital, but not with respect to those with more portable skills*.

Thirdly, the wheels of competition don't grind very finely. Nick Bloom and John Van Reenen show (pdf) that there is a long tail of badly managed firms. If competition doesn't drive out bad management, why should we assume that it drives out poor working conditions?

A final problem is one of a lack of ecological diversity. Imagine if most countries in the world were communist dictatorships in which people were free to emigrate. Competition to retain people would alleviate the harshness of government. But nobody would pretend that it maximized well-being, simply because of the lack of attractive alternative governments.

Maybe a similar problem afflicts capitalism. Managerialism, short-termism, hierarchy and theory X are so widespread that it's hard to escape them: for example, Marina Warner's complaint about managerialism in universities applies to many universities, not just to one or two.

Now, it might be that there is nothing much that can be done to lessen the alienating and oppressive elements of capitalism: maybe work really is Adam's curse. But we should at least investigate this question. Although I disagree with Tyler about the extent to which there is a problem here, I have a much stronger complaint against those who don't even want to consider the issue - which includes pretty much all politicians.

* A caveat. Job specific human capital might create a bilateral monopoly; the firm needs the workers' specific skills as much as the worker needs the firm. I suspect, however, that in many cases the firm's second best option is better than the worker's, which gives the firm bargaining power.