How does this viewpoint account for the times when "capitalism" was, by all objective measures, worse for laborers? I.E. the early industrialization period when laborers worked 14-16 hour days alongside children in factories and mines, risking life and limb?

The brief nightmare where workers had enough power to demand better conditions is thankfully ending, and we can return the happy days where workers would slave away for just enough compensation to sustain themselves, and they'd be happy to do it because they had no better options.