Anarchist FAQ/Why do anarchists oppose the current system?/1.2
B.1.2 Is capitalism hierarchical?
Yes. Under capitalism workers do not exchange the products of their labour they exchange the labour itself for money. They sell themselves for a given period of time, and in return for wages, promise to obey their paymasters. Those who pay and give the orders—owners and managers—are at the top of the hierarchy, those who obey at the bottom. This means that capitalism, by its very nature, is hierarchical.
As Carole Pateman argues:
"Capacities or labour power cannot be used without the worker using his will, his understanding and experience, to put them into effect. The use of labour power requires the presence of its 'owner,' and it remains mere potential until he acts in the manner necessary to put it into use, or agrees or is compelled so to act; that is, the worker must labour. To contract for the use of labour power is a waste of resources unless it can be used in the way in which the new owner requires. The fiction 'labour power' cannot be used; what is required is that the worker labours as demanded. The employment contract must, therefore, create a relationship of command and obedience between employer and worker... In short, the contract in which the worker allegedly sells his labour power is a contract in which, since he cannot be separated from his capacities, he sells command over the use of his body and himself. To obtain the right to use another is to be a (civil) master."
You need only compare this to Proudhon's comments quoted in section B.1 to see that anarchists have long recognised that capitalism is, by its very nature, hierarchical. The worker is subjected to the authority of the boss during working hours (sometimes outside work too). As Noam Chomsky summarises, "a corporation, factory of business is the economic equivalent of fascism: decisions and control are strictly top-down."  The worker's choices are extremely limited, for most people it amount to renting themselves out to a series of different masters (for a lucky few, the option of being a master is available). And master is the right word for, as David Ellerman reminds us, "[s]ociety seems to have 'covered up' in the popular consciousness the fact that the traditional name [for employer and employee] is 'master and servant.'" 
This hierarchical control of wage labour has the effect of alienating workers from their own work, and so from themselves. Workers no longer govern themselves during work hours and so are no longer free. And so, due to capitalism, there is "an oppression in the land," a "form of slavery" rooted in current "property institutions" which produces "a social war, inevitable so long as present legal-social conditions endure." 
Some defenders of capitalism are aware of the contradiction between the rhetoric of the system and its reality for those subject to it. Most utilise the argument that workers consent to this form of hierarchy. Ignoring the economic conditions which force people to sell their liberty on the labour market (see section B.4.3), the issue instantly arises of whether consent is enough in itself to justify the alienation/selling of a person's liberty. For example, there have been arguments for slavery and monarchy (i.e. dictatorship) rooted in consent. Do we really want to say that the only thing wrong with fascism or slavery is that people do not consent to it? Sadly, some right-wing "libertarians" come to that conclusion (see section B.4).
Some try to redefine the reality of the command-and-obey of wage labour. "To speak of managing, directing, or assigning workers to various tasks is a deceptive way of noting that the employer continually is involved in re-negotiation of contracts on terms that must be acceptable to both parties," argue two right-wing economists. So the employer-employee (or, to use the old, more correct, terminology, master-servant) contract is thus a series of unspoken contracts.
However, if an oral contract is not worth the paper it is written on, how valuable is an unspoken one? And what does this "re-negotiation of contracts" amount to? The employee decides whether to obey the command or leave and the boss decides whether the employee is obedient and productive enough to remain in under his or her control. Hardly a relationship based on freedom between equal partners! As such, this capitalist defence of wage labour "is a deceptive way of noting" that the employee is paid to obey. The contract between them is simply that of obedience on one side and power on the other. That both sides may break the contract does not alter this fact. Thus the capitalist workplace "is not democratic in spite of the 'consent of the governed' to the employment contract... In the employment contract, the workers alienate and transfer their legal rights to the employer to govern their activities 'within the scope of the employment' to the employer." 
Ultimately, there is one right that cannot be ceded or abandoned, namely the right to personality. If a person gave up their personality they would cease to be a person yet this is what the employment contract imposes. To maintain and develop their personality is a basic right of humanity and it cannot be transferred to another, permanently or temporarily. To argue otherwise would be to admit that under certain circumstances and for certain periods of time a person is not a person but rather a thing to be used by others. Yet this is precisely what capitalism does due to its hierarchical nature.
This is not all. Capitalism, by treating labour as analogous to all other commodities denies the key distinction between labour and other "resources" - that is to say its inseparability from its bearer - labour, unlike other "property," is endowed with will and agency. Thus when one speaks of selling labour there is a necessary subjugation of will (hierarchy). As Karl Polanyi writes:
"Labour is only another name for human activity which goes with life itself, which is in turn not produced for sale but for entirely different reasons, nor can that activity be detached from the rest of life itself, be stored or mobilised... To allow the market mechanism to be sole director of the fate of human beings and their natural environment... would result in the demolition of society. For the alleged commodity 'labour power' cannot be shoved about, used indiscriminately, or even left unused, without affecting also the human individual who happens to be the bearer of this peculiar commodity. In disposing of a man's labour power the system would, incidentally, dispose of the physical, psychological, and moral entity 'man' attached to that tag."
In other words, labour is much more than the commodity to which capitalism tries to reduce it. Creative, self-managed work is a source of pride and joy and part of what it means to be fully human. Wrenching control of work from the hands of the worker profoundly harms his or her mental and physical health. Indeed, Proudhon went so far as to argue that capitalist companies "plunder the bodies and souls of the wage-workers" and were an "outrage upon human dignity and personality."  This is because wage labour turns productive activity and the person who does it into a commodity. People "are not human beings so much as human resources. To the morally blind corporation, they are tool to generate as much profit as possible. And 'the tool can be treated just like a piece of metal -- you use it if you want, you throw it away if you don't want it,' says Noam Chomsky. 'If you can get human beings to become tool like that, it's more efficient by some measure of efficiency... a measure which is based on dehumanisation. You have to dehumanise it. That's part of the system.'" 
Separating labour from other activities of life and subjecting it to the laws of the market means to annihilate its natural, organic form of existence—a form that evolved with the human race through tens of thousands of years of co-operative economic activity based on sharing and mutual aid—and replacing it with an atomistic and individualistic one based on contract and competition. Unsurprisingly, this relationship is a very recent development and, moreover, the product of substantial state action and coercion (see section F.8 for some discussion of this). Simply put, "the early labourer... abhorred the factory, where he [or she] felt degraded and tortured." While the state ensured a steady pool of landless workers by enforcing private property rights, the early manufacturers also utilised the state to ensure low wages, primarily for social reasons—only an overworked and downtrodden labourer with no other options would agree to do whatever their master required of them. "Legal compulsion and parish serfdom as in England," noted Polanyi, "the rigors of an absolutist labour police as on the Continent, indented labour as in the early Americas were the prerequisites of the 'willing worker.'" 
Ignoring its origins in state action, the social relationship of wage labour is then claimed by capitalists to be a source of "freedom," whereas in fact it is a form of (in)voluntary servitude (see sections B.4 and A.2.14 for more discussion). Therefore a libertarian who did not support economic liberty (i.e. self-government in industry, libertarian socialism) would be no libertarian at all, and no believer in liberty. Capitalism is based upon hierarchy and the denial of liberty. To present it otherwise denies the nature of wage labour. However, supporters of capitalism try to but—as Karl Polanyi points out—the idea that wage labour is based upon some kind of "natural" liberty is false:
"To represent this principle [wage labour] as one of non-interference [with freedom], as economic liberals were wont to do, was merely the expression of an ingrained prejudice in favour of a definite kind of interference, namely, such as would destroy non-contractual relations between individuals and prevent their spontaneous re-formation."
As noted above, capitalism itself was created by state violence and the destruction of traditional ways of life and social interaction was part of that task. From the start, bosses spent considerable time and energy combating attempts of working people to join together to resist the hierarchy they were subjected to and reassert human values. Such forms of free association between equals (such as trade unions) were combated, just as attempts to regulate the worse excesses of the system by democratic governments. Indeed, capitalists prefer centralised, elitist and/or authoritarian regimes precisely because they are sure to be outside of popular control (see section B.2.5). They are the only way that contractual relations based on market power could be enforced on an unwilling population. Capitalism was born under such states and as well as backing fascist movements, they made high profits in Nazi Germany and Fascist Italy. Today many corporations "regularly do business with totalitarian and authoritarian regimes -- again, because it is profitable to do so." Indeed, there is a "trend by US corporations to invest in" such countries. Perhaps unsurprisingly, as such regimes are best able to enforce the necessary conditions to commodify labour fully.
- The Sexual Contract, pp. 150-1
- Letters from Lexington, p. 127
- Property and Contract in Economics, p. 103
- Voltairine de Cleyre, Op. Cit., pp. 54-5
- Arman Alchian and Harold Demsetz, quoted by Ellerman, Op. Cit., p. 170
- David Ellerman, The Democratic Worker-Owned Firm, p. 50
- The Great Transformation, p. 72
- Op. Cit., p. 219
- Joel Bakan, The Corporation, p. 69
- Op. Cit., pp. 164-5
- Op. Cit., p.163
- Joel Bakan, Op. Cit., p. 89 and p. 185