Socialist Studies Socialist Studies

Capitalism and Poverty

Capitalism and Poverty

The knives were out for Oxfam’s recent report: "AN ECONOMY FOR THE 99%" (18 Jan 2017). The capitalist-supporting journalist at the INDEPENDENT, Sean O' Grady, chided Oxfam for drawing attention to the fact that eight men own the same amount of wealth as the poorest half of the world’s population.

This is not a new attack on Oxfam. In June 2014, Oxfam published a report,” A Tale of Two Britain’s” which showed the poorest 20% having a combined wealth of £28.1 billion - an average of £2,230 each, in contrast to the top five richest families who between them had property, savings and other assets worth £28.2 billion. Then, the Tory blogger and journalist, Tim Montgomerie, attacked Oxfam as “socialist” organisation for wanting to eradicate poverty.

O'Grady said that the statistic given by Oxfam was naive and somewhat irrelevant. He said that a simple world-wide division of the accumulated wealth of these six individuals would not go very far, although this was not what Oxfam was saying. He went on to state that we were stuck with this inequality because only utopian schemes like a world tax authority could force a “fairer” distribution of wealth.

O' Grady then asked what wealth meant anyway, believing that no definition was possible. Finally, he went on to claim that the world was becoming “fairer and more equitable”; a trend, he said, that was supported by research from economists using the Gini-coefficient or the Pareto curve. He said that capitalism was pulling the poor out of poverty in their millions. He gave the example of countries like China and India where peasants once eked out an existence as subsistence farmers but now worked “in a sweat shop for $1 a day”. He ended his sermon by telling us that a large part of the world’s population has never had it so good.

O’Grady was being serious. Although, we could ask the question, as many people did, if O’Grady had ever tried to live on $1 a day. Had O’Grady ever worked in a sweat shop or lived in an urban slum? His argument was exactly the same one used by English political economists in the 1830s against early socialists when highlighting the squalor and degradation of working class conditions in the new Northern Cities like Manchester (see The Condition of the Working Class in England, 1844, particularly Engels’ comments on political economists like Malthus). In the 1830’s it was the workhouse for the good of the, today it is the sweatshop!

Oxfam did not say the wealth of the eight multi-billionaires should be distributed among the rest of the population. They were making a point about growing gulf of wealth ownership that exists within capitalism.

However, Oxfam’s error is to believe that this inequality can be resolved within capitalism by enlightened politicians and philanthropic gestures from the capitalist class. It cannot. Neither is Oxfam “socialist” in wanting to see wealth distributed. They are in a long line of social reformers who believe you can have capitalism without the effects of capitalism. As the constant failure of social reformers demonstrates only too well, you cannot have socialist distribution of wealth based upon the private ownership of the means of production and distrubution. It just cannot be done.

O’Grady asked what constituted ‘wealth’. Is there a definition? Yes, the Marxian one. Wealth is the production of things for social use produced by co-operative and social workers acting on nature. However, this is not the case under capitalism. Under capitalism, though, wealth appears as though it is a “vast collection of commodities” (CAPITAL VOLUME 1). To the naïve, wealth is merely money. Nevertheless, under capitalism social wealth is created from the exploitation of the working class. Workers produce value in the productive process to cover their wages and salaries and a surplus value which goes to the capitalist class in the form of rent, interest and profit. The wealth creators are not the employers but the working class.

One of the more arrogant suppositions put forward by defenders of capitalism, is that the working class would not be able to produce and distribute sufficient social wealth without the capitalist class, competition, markets, the price mechanism and the profit motive. However, workers do run capitalism from top to bottom albeit not in their class interests. The workers carry on their backs a parasitical capitalist class that owns but does not produce.

A more equal distribution of wealth is not the answer. Unlike the social reformers, socialists do not accept that a fairer redistribution of wealth will work within capitalism. Governments serve the interst of the capitalist class not the working class. Tax havens, good accountants and financial advisors also mean that the wealth of the capitalist class is protected. And capitalists are also able to buy economists, politicians and journalists, like O’Grady to fight their corner. As Jenny Marx, one of Marx’s daughter’s remarked, the enemies of socialism “have millions to spend on their lives, while we are only able to afford the postage stamp”.

The socialist definition of poverty is not the same as the economists’ definition of poverty. Poverty exists because of the private ownership of the means of production and distribution by a minority class to the exclusion of the rest of society. Poverty means being cut off from direct access to what someone needs to flourish, to lead a worthwhile life and to take part fully in the affairs of society. Class ownership of the means of production and distribution is protected by the machinery of government prevents this occurring.

Is capitalism ending poverty? On the basis of the socialist definition of poverty, capitalism can never end poverty. Capitalism, in fact, causes poverty. It is only when there is common ownership and democratic control of the means of production and distribution by all of society that poverty will end and there will be the socialist principle “from each according to their ability to each according to their needs”.

This brings us on to the need for socialism. If we are going to create a society for everyone, particularly the majority currently imprisoned within the wages system only production and distribution for direct use will solve poverty and all the other social problems generated by the profit system. And production and distribution for use can only take place within a system of common ownership and democratic control. Socialism has to be struggled for politically. Capitalists and their governments actively try to prevent workers hearing and acting on socialist ideas. Socialism requires conscious and political action by a socialist majority through a democratic socialist party. To end poverty we do not need government or charity redistribution of wealth: instead we urgently need the establishment of socialism.

Back to top

Socialist Studies

email: |