In January 2018, Patrick Deneen published Why Liberalism Failed. That summer, Barack Obama put it on his reading list, writing that while he disagreed with most of its conclusions, it offered “cogent insights into the loss of meaning and community that many in the West feel.” Deneen, in that book, argued that liberal democracy was at fault for the loss of meaning and community because it had to “re-train” people “to think of themselves as individuals separate from nature and one another.” But while Deneen is a man of the right, similar arguments appear on the left. In a 2023 essay for the Socialist Project, Michael Lebowitz, a Marxist economist, wrote that “capital, in short, constantly drives to crowd out all traces of the system of community.” 

Despite some surface-level differences, their diagnoses (and these sorts of arguments generally) remain similar — capitalism leads to a diminished civil society and less social interaction. But discussions of the decrease of community are not limited to ideological extremes. Indeed, concerns about the decline of community in America, for example, have been commonplace for decades now. Perhaps the most famous example of this is Robert Putnam’s book Bowling Alone, which explored the growing isolation of individuals in America amid the collapse of civic organizations.

It’s unclear, however, how accurate this story of the relationship between declining community and capitalism is. In fact, research tends to indicate that increased market exposure predicts greater prosociality and trust. 

Can Markets Build Social Trust?

In a nationwide field experiment, sociologist Delia Baldassarri scattered nearly 6,000 “lost letters” across 188 Italian communities and found that strangers returned them more frequently at places where market exchange was most developed. A 2023 study, drawing on survey data from more than 30 countries, determined that people in regions with more market activity were less willing to excuse cheating on taxes or claiming benefits they weren’t owed. To that end, the authors concluded there is no empirical evidence that markets undermine civic morality.

In principle, this argument also seems to follow. As Murray Rothbard explained in his 1962 treatise Man, Economy, and State, there is little need to conjure a mystic force to explain the origins of society, which very much appear to stem from the relationships that develop through voluntary exchange.

Individuals recognize, through the use of reason, the advantages of exchange resulting from the higher productivity of the division of labor, and they proceed to follow this advantageous course. In fact, it is far more likely that feelings of friendship and communion are the effects of a regime of (contractual) social co-operation rather than the cause.

Here, we see Rothbard inverting the critics’ account of cause and effect. To lay out the criticism of capitalism in general terms (using Deneen or Lebowitz as paradigms), community predates the market, which then dissolves community. Rothbard reverses the causality. People first come together because of the mutual benefit occurring from exchanges. Over time, the habits of fair dealing, the repeated encounters, and the mutual dependence that these exchanges create become a foundation for further trust and friendship. In Rothbard’s view, then, the market is one of the very means of tying strangers together in the first place. And Rothbard’s conception of the relationship between the market and community is precisely what the evidence above suggests. Far from training people to see themselves as “separate from nature and one another,” markets teach people that their interests are bound up with those of others, and, thus, they should treat others with that in mind.

Related to Rothbard’s point, there is also this further assumption embedded within criticisms that capitalism leads to social atomization; these critics assume that human beings are naturally communal and cooperative, and that the market thereby corrupts them, leading them to individualism. But this gets human nature backwards. For nearly all of human history, our natural disposition has been toward extreme tribalism. People trusted their immediate kin, but violence was otherwise the default posture towards strangers. The market, by contrast, is a profoundly unnatural institution. It asks individuals to do something that our evolutionary instincts cry out against: to deal fairly and peaceably with strangers to whom they have no blood ties. And given that almost all of humanity’s material progress has come since markets have spread, we should pause at suggestions that markets are what have caused contemporary problems such as alienation and isolation. Markets don’t just make us wealthier; they make us wealthier because they create a system predicated on working and trusting strangers.

But just because markets, as the evidence suggests, lead to an increased trust in strangers does not mean they cannot also still lead to a degradation of community. For instance, one could respond that generalized trust is a thin good. Returning a lost letter is quite different from the tight-knit bonds within a church, for instance. But this objection does not hold up well either. If markets were what dissolved thick, local bonds, we would expect those bonds to have fared better where markets were suppressed. But they didn’t. Political scientist Marc Morjé Howard found that citizens of former communist countries remain far less likely to join voluntary associations than their counterparts in established democracies, a legacy of decades in which the state replaced civil society and crowded out the voluntary institutions that sustain it.

What’s Really Weakening Community?

Perhaps it is worth concluding with some hypotheses about what is actually causing the decline in social interaction across liberal democracies, particularly in America. One explanation is that modern zoning codes, which rigidly separate residential neighborhoods from commerce, have legislated away the very third spaces that led to unplanned social interaction. Another is the expansion of the welfare state into functions that were once performed by civil society. Before the twentieth century, Americans facing sickness, unemployment, or the death of a breadwinner turned to mutual aid societies, fraternal lodges, churches, and one another. As historian David Beito has documented, these voluntary associations once enrolled millions of Americans and provided everything from life insurance to doctors’ care. But as government assumed these responsibilities, the practical necessity of belonging to such institutions disappeared, contributing to the decline of those associations.

There are real problems with the decline of community, both in America and broadly across liberal democracies. But the claim that capitalism is a major, let alone the primary, cause of the decline of community is unsupported both by logic and  the relevant empirical evidence.

Figures like Deneen or Lebowitz have blamed markets for weakening social bonds, concluding that we should further empower the state with more control over social life. But the evidence suggests that restricting markets may do little to restore those relationships — and could undermine some of the institutions that sustain them.

Markets have taught people to trust and cooperate with strangers to an extent our tribal instincts never could have managed alone. The societies that suppressed markets did not preserve community; they hollowed it out. The forces actually emptying America’s public squares are less likely to be commerce than the ever-expanding state. 

Accordingly, restoring community requires more freedom, from building a corner café in a residential area to forming a mutual aid society in place of the welfare state. Far from being the enemy of community, the market may be one of its most underrated allies.