No, Capitalism Has Not Lifted Millions Out of Poverty

Capitalists and their bourgeois spokespeople tend to rely on the same dozen or so arguments to silence and discredit proponents of socialism. They basically have a “Greatest Hits” collection of stock arguments they dutifully trot out every time: “Socialism goes against human nature!”; “Socialism is when no iPhone!”; “Socialism has failed every time!”; “Socialism killed 100 bazillion million people!”; “Stalin ate the babies of the poor!”

It is, indeed, curious that the ruling-class’s arguments have not changed much in the last 300 years. Karl Marx and Frederick Engels encountered many of these same arguments, FFS!

One argument that socialists commonly hear is that capitalism has “lifted millions of people out of poverty.” Other variations on this argument include the claim that capitalism has “eradicated global poverty,” or that capitalism has “cut poverty by 80–90 percent.”

Martin Jones, a resident of Freeport, Maine, echoes this talking-point in a recent letter to the editor in the Portland Press Herald (“If not capitalism, then what?”, Jan. 18, 2024).

“Capitalism in combination with democracy [sic] has been responsible for the greatest increase in prosperity and for lifting more people out of poverty than any other economic system in history,” Jones writes.

Jones, a former investment banker, is a columnist for the right-wing Maine Wire, the publication of the “free market” Maine Policy Institute. None of this information is conveyed in his byline, however.

Bestselling pop-psychologist, Steven Pinker, likewise, laments that “facts” about “137,000 people escaping extreme poverty per day,” are not more widely reported on.

Fuzzy Math

In order to examine this claim that capitalism has done more to “lift people out of poverty” than any other system, it is important to first understand how those who make it define “poverty.” According to the World Bank, anyone making less than $1.90 per day is considered “poor.” But this number is completely arbitrary. It is not grounded in any economic theory — nor is it based on any actual workers’ salaries. It is entirely meaningless.

The United Nations more accurately calculates the cost needed to meet the absolute minimum “basic nutrition and normal human life expectancy” at $7.40 a day. Using this more realistic number, Marxist Economics Professor Richard Wolff explains that the number of people living in poverty worldwide has actually increased — to 4.2 billion.

That’s right: Poverty has increased under capitalism. Rather than “lifting people out of poverty,” our cut-throat, “free market” capitalist system has actually cast people into poverty.

And the COVID-19 pandemic has only exacerbated the situation. Indeed, as Wolff explains, the pandemic, and the resulting recession it triggered, effectively wiped-out years’ worth of poverty reduction gains. “One hundred million people have fallen right back into extreme poverty,” said Wolff.

Indeed, how can capitalism’s proponents claim it has done more to eradicate global poverty when the system is, by nature, prone to economic recessions and depressions every five to ten years? Such a system is inherently unstable.

There are, of course, further statistics pointing to the rise in poverty. Sixty-three percent of Americans cannot afford a $500 emergency. Nearly half of Americans do not earn enough to afford a one-bedroom apartment. And, as of 2022, the average CEO pay is 344 times as much as a working-class person. Such a gargantuan pay disparity is in no way due to CEOs working 344 times harder than their workers.

For Actual Poverty Reduction, Look to China

However, there is one country that has successfully eradicated extreme poverty: The People’s Republic of China. That’s right: A socialist country.

China has lifted more than 800 million people out of poverty since the late 1970s. The policy, often referred to as China’s “Opening Up,” has proven to be the largest reduction in inequality in modern history. China accomplished this incredible feat through massive industrialization efforts and high levels of social spending.

True, China has accomplished this by opening up its economy to limited levels of economic and market-oriented activity. The program has drawn comparisons to the Soviet Union’s New Economic Policy (NEP), initiated by Lenin in 1921. Trotskyists like to point to China’s economic advances as evidence that it is not, in fact, sufficiently “socialist.”

An in-depth debate on the scourge of left-wing anti-communism in the Western left is beyond the scope of this essay. Suffice to say that no country (socialist or otherwise) can hope to achieve the level of industrial and economic growth that China has witnessed (or, for that matter, which the Soviet Union reached in the previous century), without first developing its productive capacity. And, for better or worse, socialist countries like China have no other recourse but to do so by, to some extent, playing the capitalists’ game within the field and under the conditions which they have created.

As Marx put it, “Men make their own history, but they do not do so under conditions of their own choosing.”

The point is if you are looking for an example of where millions of working-class people have been lifted out of poverty, you will not find it in a capitalist nation. You have to look to socialist China.

And this trend is not limited to China.

Cuba (another socialist country) has, likewise, made astounding gains in eliminating poverty. Cuba boasts a higher national literacy rate (99.8 percent), a higher life expectancy (76.9 years), and a lower infant mortality rate (5.1) than the considerably wealthier United States. And Cuba has accomplished this despite suffering for decades under a crippling U.S.-sponsored economic embargo, as well as numerous attempts to overthrow its leaders. (Fidel Castro survived over 600 assassination attempts by the U.S. government.)

It Takes Money to Make Money

Perhaps you see a pattern emerging here…?

As Professor Wolff explains, “No advanced economy has ever achieved low poverty rates without high levels of government social spending.”

Yet it is the capitalists who routinely fight against such social spending. Universal healthcare…? A higher minimum wage…? Greater union protections…? A Green New Deal to mitigate climate change and, you know … save humanity from impending extinction…? The ruling-class’s response to all of these forms of social spending is the same every time: “Sorry. We cannot afford such expensive luxuries. We don’t have the money.”

Indeed, this was the ruling-class’s entire argument against Bernie Sanders’s presidential campaigns: Too expensive. How are you going to pay for it?

But there is no such hesitancy or claims to fiscal solvency when it comes to funding imperial wars or financing Israel’s genocide in Gaza. When it comes to war, the money is somehow always there and readily available.

“Poverty has been reduced not by capitalism,” Wolff says, “but in spite of and against capitalists’ opposition.”

So… now that we have sufficiently relegated this baseless bourgeois myth — that capitalism has reduced global poverty — to the trash bin where it belongs … who’s ready for revolution?