Is Capitalism Ending poverty?

Is Capitalism Ending poverty?

Is capitalism ending poverty? Yes, according to THE ECONOMIST.

This vulgar and superficial house journal of free market fundamentalism recently carried an article stating that 1 billion people have been taken out of “extreme poverty” in the last 20 years, all as a result of global capitalism.

The article, “Towards the End of Poverty” (June 1st 2013) claimed that the reduction in global poverty had been due to the rate of economic growth taking place in countries like China and India which raised living standards and improved the conditions of those living there.

The author of the article believes, it is now Africa’s turn, with countries like Nigeria, Ghana and Angola enjoying high levels of economic growth through trade and investment while at the same time eradicating social problems associated with poor education, health and communications. By 2050, “extreme poverty”, the article concludes, will be a thing of the past.

The writer of the article then asks the anti-capitalists to stop bleating about the adverse effects of free trade and free markets and for capitalism to step forward “to take a bow” for being the success story of the 21st century.

Instead of voicing any criticism about the existence of huge disparities of wealth in the world, the hundreds of millions of unemployed workers and the daily deaths of thousands of babies due to preventable causes, the writer calls for more and more global trade to take place to eradicate extreme poverty once and for all.

Such an article praising capitalism to the hilt is a growing example of the crude “Taliban economics” adhered to by market evangelists; the belief that unfettered markets will create the greatest individual freedom and general wellbeing and whose adherents believe that any criticism of their economic theology is irrational, mad and dangerous to the survival of the human species.

The political consequence of this unwarranted praise for the profit system is clear; if capitalism can solve poverty, “extreme” or otherwise, then there is no need for an alternative social system. Logic has been turned on its head.

Capitalism, the cause of poverty is now praised as the cure for poverty.

No wonder when the ECONOMIST article was published, free market blogs and policy institutes along with tame journalists employed by the likes of FOX NEWS and FORBES magazine coupled with celebrities like Bono and Richard Curtis, were all out ringing the bells for capitalism.

So what is “extreme poverty”? Is it different to the poverty faced by the working class? And should capitalism be congratulated for being on the threshold of ending the poverty currently faced by billions of people on this planet?

What is extreme poverty?

Extreme poverty was defined by the Catholic priest, Joseph Wresinski as:

a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to services

The definition was adopted uncritically by the United Nations in 1996 refusing, like Wresinski, to accept the capitalist cause of the problem, while a new definition of “extreme poverty” was given a few years later by the World Bank as someone living on $1.25 a day, again without calling into question the profit system and its direct link to poverty.

Today, most cases of “extreme poverty” are said to be found in the sub-Saharan region of Africa while the poverty derived from being a member of the working class is ignored altogether.

In 2000 the UN set itself the goal to eradicate “extreme poverty” within the parameters of capitalism; the private ownership of the means of production and distribution, competing nation states and commodity production and exchange for profit. The major capitalist countries all signed up to this objective. Capitalism was going to deliver.

In September 2010 the UN General Assembly met to discuss whether or not the targets set out in 2000 had been met. A decade after the adoption of these goals, UN agencies reported that while 830 million people lived on the edge of starvation when the objectives were first adopted, this number had increased to more than 1 billion a decade later, even though there was enough food produced in 2010 to provide everyone in the world with at least 2720 kilocalories per day.

Of course the ECONOMIST and other supporters of capitalism avoid the stark reality of the continued existence of extreme poverty as they do of poverty associated with the working class. The article “Towards the End of Poverty” ignored the fact that the Millennium goal of the United Nations failed to deliver because of the impediments placed in the way of meeting human need by the profit motive.

And nothing has been said about the impact of another problem caused by capitalism, climate change, which will have in the future an adverse effect on many countries in the world particularly food production and access to water supplies.

So here are the facts that demonstrate the failure of free trade, free markets and global capitalism

1. Nearly half of the world’s population — more than 3 billion people — live on less than $2.50 a day. More than 1.3 billion live in extreme poverty (less than $1.25 a day).
2. 1 billion children worldwide are living in poverty. According to UNICEF, 22,000 children die each day due to poverty.
3. More than 1 billion people lack adequate access to clean drinking water and an estimated 400 million of these are children. Because unclean water yields illness, roughly 443 million school days are missed every year.
4. In 2011, 165 million children under the age 5 were stunted (reduced rate of growth and development) due to chronic malnutrition.
5. 870 million people worldwide do not have enough food to eat.
6. Preventable diseases like diarrhea and pneumonia take the lives of 2 million children a year that are too poor to afford proper treatment.
7. As of 2011, 19 million children worldwide remain unvaccinated.
8. A quarter of all humans live without electricity — approximately 1.6 billion people.
9. 80 percent of the world population lives on less than $10 a day.
(Statistics taken from UNICEF 2012)

What of the world capitalist class? In owning the means of production and distribution to the exclusion of the majority of the population the rich do not worry about poverty. They live lives of unimaginable wealth, luxury and privilege.

The wealthiest 1 percent now controls 39 percent of the world's wealth, and their share is likely to grow in the coming years, according to a new report. The world's total private wealth grew 7.8 percent in 2012 to $135 trillion, according to the Boston Consulting Group's Global Wealth report. The top 1 percent control $52.8 trillion, and those worth $5 million or more control nearly a quarter of the world's wealth

The examples of extreme poverty listed above are preventable. What stands in the way of a solution to extreme poverty is the private ownership of the means of production and distribution, nation states and the profit motive. In other words, what ensures these preventable problems in persisting from one generation to the next is capitalism.

And persisting they are. According to Thomas Pogge, a Professor of Philosophy at Yale:

Many more people-some 360 million- have died from hunger and remediable diseases in peacetime in the 20 years since the end of the Cold War, that is, roughly one third of all human deaths, 18 million, annually are due to poverty related causes, easily preventable and would be if capitalism had been abolished ( POLITICS AS USUAL 2010).

If World Socialism had been established by now, consciously and politically, by a Socialist majority then there would not be extreme poverty in the world today and the peasants “lifted out of extreme poverty” in China and India would not have to endure similar conditions to the early working class in 1840’s Manchester described by writers like Frederick Engels in his book THE CONDITION OF THE WORKING CLASS (1844).

Within the practical and reasonable framework of the common ownership and democratic control of the means of production and distribution by all of society free men and women would produce goods and services just to meet human need. No one would be without electricity, education, health provision, adequate housing and food, fresh water and communication systems.

It is a no good leaving poverty to politicians it is not in their remit to solve this dire and entrenched social problem. Nor can the philanthropists, celebrities and charities solve the question of poverty.

For like the ECONOMIST they have no understanding of capitalism and why and how it causes poverty. They can see the effects of the poison but have no knowledge of what causes the poison and how to stop it.

What is Poverty?

So what is poverty in the Marxian meaning of the word? Poverty is linked to class, class relations and capitalism as a class divided society.

Capitalism has not ended poverty in places like China or India merely replaced a largely agrarian system of class exploitation with wage slavery. The same process took place in Britain in the 18th century during the Industrial Revolution. It was not a philanthropic act. Exploitation in a Feudal economy was replaced by exploitation in a capitalist economy.

Nor is poverty a natural state of the human condition. Poverty is in fact caused by capitalism and commodity production and exchange for profit. Capitalism excludes from the market those who cannot pay for commodities and through the wages system enforces a rationing system onto the working class so that what they can buy with wages and salaries and what they and their families need to live decent and creative lives are two different things altogether.

The existence of poverty is begins by the working class being excluded from the ownership of the means of production and distribution. In being excluded from what they need to live worthwhile lives, workers are forced to sell their ability to work – their labour power – to an employer in exchange for a wage or salary.

During the productive process the workers produce commodities which have greater value than the raw materials, the machinery and the labour power that produced those commodities. Marx called the additional value produced by the working class, “surplus value” and is the source of the unearned income of rent, interest and profit going to the capitalist class.

And surplus value derives from the unique nature of the commodity labour power whose value is determined by the quantity and quality of socially necessary labour time that goes into its production. Surplus value is generated in production by the fact that the working class is paid not for its labour but for its ability to labour.

During the working day the working class works through two time periods; what Marx called necessary labour time and surplus labour time. During the period of necessary labour time the working class produces value equivalent to the wages and salaries workers require to buy food, clothing and accommodation and so on.

However, if the necessary labour time to produce the value of the wage is 5 hours out of a 7 hour working day, the working class is contractually obliged to continue to work an additional two hours for free; the period Marx called surplus labour time. It is during surplus labour time that the working class produces “surplus value” which is then realized as profit once the commodity is sold on the market.

Class and class exploitation cause poverty because, having no direct access to the means of production and distribution, the working class do not receive what they and their families need but only what their wages and salaries can buy. And this Marxian definition of poverty holds true no matter whether the living standard of the working class rises or falls, or whether the rate of pay increases or decreases and whether “extreme poverty” improves or gets worse.

So the ECONOMIST the philanthropists and the celebrities are wrong in believing we are on the threshold of a capitalist utopia; for capitalism cannot end poverty only cause it. While there exists the private ownership of the means of production and distribution and the profit motive there will be poverty for the majority of the world’s population and wealth and luxury for a minority basking in the praise of their political sycophants and paid gunslingers in the media.

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Object and Declaration of Principles


The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.

Declaration of Principles


1. That society as at present constituted is based upon the ownership of the means of living (ie land, factories, railways, etc.) by the capitalist or master class, and the consequent enslavement of the working class, by whose labour alone wealth is produced.

2. That in society, therefore, there is an antagonism of interests, manifesting itself as a class struggle, between those who possess but do not produce and those who produce but do not possess.

3.That this antagonism can be abolished only by the emancipation of the working class from the domination of the master class, by the conversion into common property of society of the means of production and distribution, and their democratic control by the whole people.

4. That as in the order of social evolution the working class is the last class to achieve its freedom, the emancipation of the working class will involve the emancipation of all mankind without distinction of race or sex.

5. That this emancipation must be the work of the working class itself.

6. That as the machinery of government, including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic.

7. That as all political parties are but the expression of class interests, and as the interest of the working class is diametrically opposed to the interests of all sections of the master class, the party seeking working class emancipation must be hostile to every other party.

8. The Socialist Party of Great Britain, therefore, enters the field of political action determined to wage war against all other political parties, whether alleged labour or avowedly capitalist, and calls upon the members of the working class of this country to muster under its banner to the end that a speedy termination may be wrought to the system which deprives them of the fruits of their labour, and that poverty may give place to comfort, privilege to equality, and slavery to freedom.