Is This The Most Confused Blogger Around?

It was the name of the blog that first grabbed my attention on a page full of links - it leapt out at me: "Capitalism Creates Poverty" - and I thought, wow, I have to take a look, because no one actually believes that capitalism created poverty, do they? Sure I know many proclaim it, but when pressing them I've never known anyone to really actually definitely believe it.

But having perused one or two of his posts, I can see this guy really does believe it - so much so that his whole raison d'etre appears to be based on the notion that capitalism is this evil, dangerous driver of people's plight.

Alas, all the time this guy's base fallacy endures, he's always going to be peddling the wrong propaganda. What he needs to learn is that capitalism, or the market as we'll call it, is not an overarching sentience, it is an amoral descriptive term that simply describes the aggregation of everybody's wants and needs. The only concern of the market is what humans value, which is discovered by what they demand, who can supply it, and at what price.

If we demand recycled metal, the market will see to it that someone provides it; if we demand machines to draw out cash from our bank accounts, someone will provide it. The free market doesn't do anything to people, it simply provides what people demand.

It is, therefore literally impossible for the free market to make people poor, or cause poverty, as many confused people claim. It is the places in which the free market hasn't yet taken effect that poverty arises - it is the lack of the free market that causes poverty, just as it is the lack of food that causes hunger.

Someone else growing their own food is not the cause of a starving person's hunger in the next village, because that person was hungry beforehand. Of course, a person who shares the food they've grown, or better, teaches his neighbour how to grow his own food has helped alleviate his neighbour's hunger, but he has not caused the hunger, because they were both hungry before they learned to grow food.

The World Bank defines absolute poverty as anyone in the world who lives on less than $1.90 a day. It's true that most people live on more than that, and that unfortunately there are still too many people that currently still haven't escaped absolute poverty, but what you have to remember is that poverty is the natural state of human beings for pretty much all of the past 200,000 years of our existence.

The primary difference between someone in poverty and someone well off is a matter of productivity. It is not a matter of one getting a huge slice of pie and the other getting a tiny proportion, it is that there are two pies and they are different sizes. The free market helps the guy with the smaller pie by enabling him to be more productive, but it requires some co-operation with people that have bigger pies.

Try asking the question in the opposite way

We are constantly hearing columnists and social commentators enquiring about why the poorest people in the world are still poor when so many people have become so prosperous (relatively speaking) in comparison. It's a vital question, and one of which we should be mindful every day.

But an equally interesting question is the opposite one: why, in fact, are so many people so prosperous? You see, prosperity is not the default state of human beings - poverty and hardship is. For most of our history we have been struggling through poverty and hardship.

The story of human history for the past 200,000 years goes roughly like this. For the past 199,800 of those 200,000 years we had low global populations, and humans lived in meagre conditions, with lots of primitivism, low life expectancy and frequent infant mortality.

People’s earnings stayed around the subsistence levels (save for a tiny minority of aristocracy and ruling classes in more recent times) until something came along to change all that in the nineteenth century. What happened was that people started to become more scientific, more empirically minded, richer, and populations began to increase more rapidly (it’s still going on).

What caused this sudden cheetah-like sprint of progression was primarily two things – science and capitalism. This science and capitalist-based progression can be explained by a simple rule of thumb – people innovate, improve and provide answers to problems – and the more people, the more innovation, improvements and problems solved.

The more ideas and the more people to share those ideas with, the more humans prosper, and the quicker they do so, despite some unstable or resource-insufficient areas where high population is proving to be an issue.

Now let’s be clear; science and capitalism haven’t created a materialist utopia (far from it), nor a panacea against moral ills, and they are not without their negative spillover effects – but their prominence has seen an exponentiation effect that has brought more progression in the past 200 years of human history than in the previous 199,800 years. In those 200 years, earnings, health, wealth, knowledge, science, technological capacity, and overall well-being have improved at an astronomical level not seen in any period of time that predated it.

Science and capitalism show themselves to be good vehicles for human progression, beneficial tools for lifting us out of poverty, curing diseases, feeding the impoverished, communicating globally, and generally enhancing our knowledge of the world. Given that out of the last 200,000 years we have only been out of poverty for 0.1% of it, the question we hardly ever hear regarding why so many of us are so prosperous must at least have equal consideration to the widespread, repeated question of why so many are still in poverty.

The answer to that question is, in the simplest terms, that quite naturally in the event of a progression-explosion there were always going to be countries that had the right conditions and personnel to experience these changes in fortune first. Many economists will simply argue that these countries still in poverty need to be opened up more to the global market.

This is true, and they certainly have the natural resources to do so. But I think that's only half the battle - the other side of it is the science. Countries that have resources to trade but with poor scientific potential will probably be the ones to reach prosperity last, particularly given that scientific capabilities involve a lot of investment from government.

As has happened in the past 150 years in the UK and USA, and as had happened more recently in about a fifth of the time in places like Japan, Taiwan, South Korea and Hong Kong, developing countries get a foot on the ladder of prosperity and begin to become more open to the vital market forces of globalisation that will bring them economic growth and increased prosperity.

Many developing nations haven’t had their progression-explosion yet – and yet even though they have many resources with which to trade, if they lack the political stability, social conditions, capacity for trading more freely (not to mention being beset by religious jingoism), they may carry on lacking the essential scientific acumen that accompanies capitalism, and as a consequence, they may well take a while yet to climb out of the quagmire.

Once upon a time, the kind of hardships seen in India and Bangladesh now were seen in the UK then. We in the UK once used to be an underdeveloped country too. But as we saw the increased growth of capital, the advancements in technology, and the increased opportunity to trade and innovate, we and several other leading countries gradually climbed out of poverty and hardship into greater wealth and prosperity, and are subsequently being joined by many other countries, with many more to come.