Capitalism Has Not “Lifted Billions Out of Poverty” Nor Has Economic Growth “Benefited The Environment”

A Spectre is Haunting Late-Capitalism

I came across this particularly frustrating and troublesome article about a month ago, espousing bourgeois sophistry to the highest degree. This article sticks out to me, not because the author is unable to locate the root cause of our global environmental crises, but that he indeed DOES understand the root cause of our environmental crises…and chooses to instead regurgitate pretty-looking statistics while omitting the other side of those statistics from his narrative. To me, the only thing worse than denialism is apologism.

The author cites that:

“In 2015, the World Bank found that for the first time ever, less than 10% of the world’s population was living in extreme poverty. Between 1990 and today, the number of people living in extreme poverty fell by more than one billion.”

This statement is factually correct; however, it only sounds nice until you look deeper into the issue at hand. These kinds of stats are a favorite among neoliberal conservatives and “classical liberals” to cite because it frames capitalism as a global force for good, but all this statistic is really doing is rewording a negative outcome into a positive one.

If the above quote is factually correct, then why do I have particular qualms with it? Well, for starters we know 75 percent of the world’s poorest countries are in Africa, and it is estimated that Africa will be home to 90 percent of the world’s destitute children by 2030 (Isa 2017). With respect to poverty reduction, the number of Africans living above the $1.25 a day threshold has only been reduced by a meager 8 percent since 1990 (United Nations Development Program 2016).

This $1.25 guidepost for poverty was originally instituted by the UN’s “Millennium Goals” to standardize a measure of global poverty, but $1.25 is way below the minimum standard for realistically livable conditions. There have been some augmentations to the poverty line since the original “Millennium Goals” to upwards of $1.90 a day, however this is still significantly beneath the minimum for livable conditions. Therefore, many public health researchers like Peter Edward adhere to what is called the “the ethical poverty line” which accounts for a much more realistic dollar-a-day threshold.

“If we want to stick with a single international line, we might use the “ethical poverty line” devised by Peter Edward of Newcastle University. He calculates that in order to achieve normal human life expectancy of just over 70 years, people need roughly 2.7 to 3.9 times the existing poverty line. In the past, that was $5 a day. Using the World banks new calculations, its about $7.40 a day. As it happens, this number is close to the average of national poverty lines in the global south. So, what would happen if we were to measure global poverty at this more accurate level? We would see that about 4.2 billion people live in poverty today. That’s more than four times what the World Bank would have us believe, and more than 60% of humanity. And the number has risen sharply since 1980, with nearly 1 billion people added to the ranks of the poor over the past 35 years. The UN’s sustainable development goals, launched in September, are set to use the $1.90 line to measure poverty. Why do they persist with this implausibly low threshold? Because it’s the only one that shows any meaningful progress against poverty, and therefore lends a kind of happy justification to the existing economic order” (Hickel 2015).

If we consider the totality of the circumstances concerning the poverty line, then the statement earlier from the article regarding the “the number of people living in extreme poverty fell by more than one billion between 1990 and today” is nothing short of right-wing propaganda. It is propaganda, not because it is false (it’s a factual statement); it is propaganda precisely because of what it leaves out, intentionally, to mislead the reader into believing capitalism is the necessary life-support system for the poor. Contrary to popular belief, the poor not having enough money isn’t the problem; In fact, global poverty can be ended with $175 billion (Harack 2011) which is less than 1% of the total annual income of all the richest countries in the world combined. Global poverty can be ended with money, but the root cause is the structural incentives and procedural dynamics of market economics. Simply put, there is no incentive to end poverty…it’s just not profitable. However, the article argues that the profit motive of capitalism, if left to its own devices, will be “so productive and wealth-producing” that it will lift the impoverished into greater standards of living by default.

This argument is valid because capitalism is indeed productive, but is this argument sound? In which direction is capitalism productive? Is it productive in regards to human needs, or is it productive for its own sake? I think Peter Joseph puts it best:

“The market economy is based on cyclical consumption and it really doesn’t matter what is being produced, how it is being produced, or why. If demand or production slows, so too does the movement of money, and when this happens, the economy contracts, systematically reducing the standard of living for many. Economically, this means capitalism is structurally oblivious to humanity’s existence on a finite planet. The system wants to produce, not conserve. In fact, if you think about it, you will discover an interesting paradox to market logic: the fact that capitalism is a scarcity-based economic system that actually seeks infinite consumption…In other words, it favors a threshold of goods scarcity to secure competitive profits, theorized as a model to properly manage scarcity, optimizing resource use and distribution. Yet, at the same time, the system demands more and more human dissatisfaction and “want” in order to function and grow…Its rewards consumption, with no inherent incentive to conserve anything” (Joseph 2017).

Capitalism and its logic of infinite growth cannot conceive of the needs of people or the biosphere and reduces both to mere commodities to exploit. Furthermore, the capitalist propaganda article mentions that:

“Economic growth has solved problems, not created them. The cleanest places are not the poorest countries, but the richer economies that have cleaned up their act. As societies become richer, individuals can afford to stop worrying about food and sanitation, and to start worrying about the environment.”

Now I could go on about how human activity is causing the 6th mass extinction event to the biosphere (Tillman, 2016) (Ehrlich, 2017), how global fish stocks have been depleted upwards of 90 percent since 1950 due to pollution and overfishing (Neslen, 2016) (Madina, 2016), how over 80 percent of the worlds natural forests having been deforested (Terragni, 2014) and global tree loss has actually INCREASED by 51 percent in 2016 (Weisse, 2017), (also the article slyly mentions “changing attitudes have meant rich countries are increasingly preserving forests and reforesting” but what this really means is the rich countries are merely exporting the damage to the global south, where the deforestation and other statistics are truly applicable), however waxing and waning about these rather depressing statistics is not the point of my response. In fact, I understand the point of the article, as its core message addresses the need to lift people out of poverty, and that if we stop developing — stop economic growth — then the poor will be stuck where they are perpetually.

The issue I take with this analysis, again completely valid, is that the author equivocates “economic growth” with “human development” and subsequently implying the only way to develop the standard of living for the poor is to do it “economically.” I think this is a shaky premise, for the reasons I have just outlined, but also because capitalist apologists need to stop conflating “wealth creation” with “technical development.” Yes, it is true that capital accumulates and concentrates, and this concentration of capital is able to allocate resources to develop technology BUT…the concentration of capital is not the genesis of development and innovation; capital merely provides a fertile breeding ground for innovation. True technical innovation is born of those who have education and training in science, technology, engineering and mathematical fields; innovation may appear attributable to capitalism because we live in a society based on proprietary accumulation and protection, asset exchange-value, labor-for-income, and opportunistic monetary self-maximization. All things being equal, innovation is born of technical skills provided with a respectable standard of living, regardless of the social or economic system in place. Wealth creation/economic growth is simply not the same as technical innovation/infrastructural development.

But the true knock-out punch to the implicit assumption that capitalism and economic growth is somehow a force for good against climate change is the notion of negative economic externalities. The definition of an externality with regard to economics is a “side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved” (Oxford Dictionary 2018). An excellent example of a negative economic externality would be a report from the International Monetary Fund, which concluded that “global use of fossil fuels costs taxpayers and consumers 5.3 trillion a year” (Wernick 2015). But here is the knock-out punch:

“a 2013 report on behalf of the Economics of Ecosystems and Biodiversity (TEEB) program sponsored by the United Nations Environmental Program, found that NO MAJOR INDUSTRIES IN THE WORLD COULD BE CONSIDERED PROFITABLE FROM THE STANDPOINT OF EXTERNAL COSTS. In other words, if our core industries actually had to pay for fixing the external problems they create, they simply would not be profitable. The major profits gained are occurring without regard for the long-term destruction they are creating” (Joseph 2017).

References

Ehrlich, Caballos, Dirzo. 2017. “Biological annihilation via the ongoing sixth mass extinction signaled by vertebrate population losses and declines.” National Academy of Sciences of the United States of America.

Harack, Ben. 2011. How much would it cost to end extreme poverty in the world? https://www.visionofearth.org/economics/ending-poverty/how-much-would-it-cost-to-end-extreme-poverty-in-the-world/.

Hickel, Jason. 2015. Could you live on $1.90 a day? That’s the international poverty line. https://www.theguardian.com/global-development-professionals-network/2015/nov/01/global-poverty-is-worse-than-you-think-could-you-live-on-190-a-day.

Isa, Abdulwahab. 2017. BOI MD laments 75% poverty rate in Africa. https://www.newtelegraphng.com/2017/11/boi-md-laments-75-poverty-rate-africa/.

Joseph, Peter. 2017. The New Human Rights Movement: Reinventing the Economy to End Oppression. BenBella Books.

Madina, Marta. 2016. Future of world fish production depends on urgent action to combat falling fish stocks. Madrid: Oceana.org.

Neslen, Arthur. 2016. Global fish production approaching sustainable limit, UN warns. July 7. https://www.theguardian.com/environment/2016/jul/07/global-fish-production-approaching-sustainable-limit-un-warns?CMP=share_btn_tw.

Oxford Dictionary. 2018. externality. https://en.oxforddictionaries.com/definition/externality.

Terragni, Olivia. 2014. 80% Of Earth’s Forests Have Been Destroyed. October 5. http://greenactionnews.net/blog/2014/10/05/80-of-earths-forests-have-been-destroyed-who-is-clear-cutting-the-most/.

Tillman, Clark, Williams, Kimmel, Polasky, Packer. 2016. “Future Threats to Biodiversity and Pathways to Their Prevention.” Nature.

United Nations Development Program. 2016. UNDP and Poverty Reduction in Africa. http://www.africa.undp.org/content/dam/rba/docs/Outreach%20Material/Poverty%20Fast%20Facts%202013.pdf.

Weisse, Mikaeloa. 2017. Global Tree Cover Loss Rose 51 Percent in 2016. October 23. http://www.wri.org/blog/2017/10/global-tree-cover-loss-rose-51-percent-2016.

Wernick, Adam. 2015. IMF: ‘True cost’ of fossil fuels is $5.3 trillion a year. https://www.pri.org/stories/2015-06-07/imf-true-cost-fossil-fuels-53-trillion-year.