Rhetoric:Capitalism Has Brought Hundreds Of Millions Out Of Poverty

The claim is supported only thanks to repeatedly redefining ‘poverty’ and diminishing the methods for reducing it. Not only has global poverty not been shrinking, but by some measures, poverty has actually become worse. Oxfam for example has discovered that in many nations wage inequality has increased and that the share of labour compensation in GDP has declined because profits have increased more rapidly than wages. Anarchists in particular have likewise responded thoroughly to the claim that neoliberalism has been decreasing poverty. An academic at the University of London has done likewise, noting that global poverty is significantly higher than most people believe due to the ridiculously low poverty line used by the World Bank:

It’s obscenely low by any standard, and we now have piles of evidence that people living just above this line have terrible levels of malnutrition and mortality. Earning $2 per day doesn’t mean that you’re somehow suddenly free of extreme poverty. Not by a long shot.

— Jason Hickel,

Some capitalists might insist that two dollars a day is still an acceptable amount without the U.S. context. It is very difficult to believe that such a petty amount would somehow be enough to afford adequate nutrition, shelter, clothing, and healthcare, to name only the basic amenities, anywhere in the world. Such a small reception of money furthermore only correlates noticeably with increased child mortality in superexploited countries, and the claim only becomes harder to believe when taking into account how inflation is sometimes worse in other countries than it is in the U.S. Were one to use a more reasonable poverty standard (such as $7.40), ‘we see that the number of people living under this line has increased dramatically since measurements began in 1981, reaching some 4.2 billion people today.’ It must also be noted that most actual poverty reduction since 1981 has occurred in the PRC, which is hardly a free market society (five-year plans are still drawn up, and the state still owns most strategic industries). As Hickel puts it:

Moreover, the few gains that have been made have virtually all happened in one place: China. It is disingenuous, then, for the likes of Gates and Pinker to claim these gains as victories for Washington-consensus neoliberalism. Take China out of the equation, and the numbers look even worse. Over the four decades since 1981, not only has the number of people in poverty gone up, the proportion of people in poverty has remained stagnant at about 60%. It would be difficult to overstate the suffering that these numbers represent.

— Jason Hickel,

Thus, most of the world remains in deep poverty. As one Harvard economist put it:

There are roughly 5 billion people on the planet who are poor by any OECD standard of poverty—and, as I have argued elsewhere—by a reasonable global standard of poverty—but who, the dollar a day definition of poverty says at not poor. An increased “focus” on the dollar a day poor reduces attention to the legitimate and pressing need to improve the lives of these 5 billion. A goal for “eradicating extreme poverty” that excludes the concerns and needs of 5 billion people from the development agenda in favor of the elitist agenda of dollar a day is not progress.

— Lant Pritchett,

Even the IMF has confessed that neoliberalism has only worsened inequality while hampering growth. Only by using a variety of rhetorical tricks, strange economic logic (adding a millionaire to a homeless family would mean that their ‘average income’ increased), and outright distortions, can capitalist intellectuals claim that their economy has reduced poverty. It has not. Some of the capitalists’ citations are just pseudoscientific: there is an entire source that is, for example, based in the World Bank’s flawed methodology (the flaws explained already in the video cited earlier in this paragraph). Their first source is simply an unfinished working paper that was not peer reviewed and was not published in any scientific journal (it was instead released by the Peterson Institute for International Economics, which is a capitalist think tank), and their second source is just another working paper from the same source. (Curiously, this one source takes 40% of its funding from corporations, as they theirselves admitted in the report; it seems that they are not only ideologically invested in claiming that capitalism is saving everyone, but are financially invested as well.) Unsurprisingly, several other sources contradict their conclusion. (Strangely, elsewhere on the same website they have an essay stating that the ‘majority of the world population is still very poor. What the cutoff for extreme poverty is helpful for is to focus the attention to those who are the very poorest.’)

Finally, according to a study published in the World Social and Economic Review, eliminating global poverty will be functionally impossible without a significant reduction in global inequality:

Poverty eradication, even at $1.25-a-day, and especially at a poverty line which better reflects the satisfaction of basic needs, can be reconciled with global carbon constraints only by a major increase in the share of the poorest in global economic growth, far beyond what can realistically be achieved by existing instruments of development policy — that is, by effective measures to reduce global inequality.

— David Woodward,

Closely related to this myth is that capitalism or specifically neoliberalism has lifted hundreds of millions of Chinese out of poverty: credible only if merely adding more millionaires counts as ‘poverty reduction’; as the anarchist FAQ previously linked stated: Chinese (and Indian) inequality actually increased during the 1990s. As of 2015, Hong Kong in particular has a rather interesting way of showing their prosperity: massive income disparity, low wages, hundreds of thousands of citizens living on rooftop slums and subdivided flats, and Oxfam has estimated that the poverty rate amongst those 65 years and older is at 40%. Contrary to popular misbelief, Hong Kong does not have an ungoverned economy, but it certainly doesn’t have a socialist one either. Their business sector has always been highly influential, and the local government has collaborated with them frequently. The profit‐cutting concessions to the masses there, such as public healthcare, were granted only on behalf of the lower classes; they were not the demands of ‘generous’ or ‘ingenious’ entrepreneurs.

Likewise, when the bourgeoisie imposed neoliberalism on Easterners we saw only increases in poverty. For example, in the former Yugoslavia’s ‘two regions that were the main supposed beneficiaries of [so‐called] humanitarian intervention, the result in one — Bosnia — has been a failed ministate and NATO‐power neocolony, administered by a “High Representative” appointed by the European Union, with official unemployment around 45% and ¼ of the population living in poverty, [which the bourgeoisie] splintered ethnically into two statelets that are held in place by coercion only, and with much corruption and crime.’ Since the 2010s, almost 60% of the Ukrainian population lives below the poverty line (according to data of the M.V. Ptukha Institute of Demography and Social Surveys, the National Academy of Science of Ukraine). While Ukrainian wages did increase, so did the prices, and the population became poorer by over a third.

In sum:

Development practitioners and economists alike have been severely criticised the international poverty line, as the current line of $1.90 is absurdly low for anybody to subsist on and is unlinked to any wellbeing outcomes. Perhaps more damning is the fact that the narrative that poverty has halved only works if you include the People’s Republic of China, where virtually all the economic growth that created the new global middle class in the 1990s took place, and one of the few places the Western model of market driven development interventions was unapplied. The international poverty line is calculated by simply taking an average of the poverty lines of the ten countries at the bottom of the Human Development Index: the poorest in the world. Despite the fact that there is massive variance in how much is needed to have something resembling a life in different countries, the line is applied everywhere. Congratulating ourselves and considering our model vindicated if someone is earning slightly more than $1.90 per day, glossing over the human misery that undoubtedly still persists is both immoral and inaccurate.

— Anonymous,

For erudite socialists, it ought to be clear that such apologisms were insincere anyway: ‘the periods in which capitalist production exerts all its forces regularly turn out to be periods of overproduction, because production potentials can never be utilised to such an extent that more value may not only be produced but also realised; but the sale of commodities, the realisation of commodity‐capital and thus of surplus‐value, is limited, not by the consumer requirements of society in general, but by the consumer requirements of a society in which the vast majority are always poor and must always remain poor’ or more succinctly, ‘[t]he rich could not be rich without their employés to live on. Being robbed of the bulk of their produce to swell the fortunes of the employer, the wage workers must remain poor.’ We see this as the white bourgeoisie imposes tariffs on the superexploited countries, creating a cycle of dependence on the purchasing power of the privileged nations while driving uneven development and preventing the superexploited’s own industry from taking off.

For centuries (e.g. ‘poverty is in their eyes merely the pang which accompanies every childbirth, in nature as in industry’ and ‘the economists have been proving for five decades and more that socialism cannot abolish poverty, which has its basis in nature’) capitalists have been claiming that poverty is merely a ‘natural’ phenomenon, but the truth is that subsistence was the rule for most of our unrecorded history, not poverty. The overwhelming majority of our unrecorded history consisted of us living in hunter‐gatherer tribes, but famine was less frequent compared to agricultural civilisation; in Africa’s preindustrial communalism for example the situation was such that nobody starved while others either stuffed theirselves or threw away anything uneaten. The commencement of private property allowed a wealthy minority to claim arable land as theirs and consequently increase poverty and famine. Capitalism, like the hierarchies that preceded it, is only a transhistorical mode of production and thus sees poverty as eternal, when in truth poverty is only necessary for capitalism, which we know to be a transitory mode of production.

Further reading

• The Lie of Global Prosperity: How Neoliberals Distort Data to Mask Poverty and Exploitation