Capitalism Offers the Best Answers for Poverty

Published on March 13, 2007 By Gideon MacLeish In Current Events

As many of you know, I used to be a hard core socialist. I was the socialist of all socialists. I was involved with radical communist organizations in the city of Chicago, and I read Marx and Che Guevara (as well as biographies of both). But as time went by I began to see just how wrong I was.

See, to this day, I care deeply about the plight of the poor. If my study of socialism taught me anything, though, it taught me that the answer to poverty does not lie in socialist revolutions, it does not lie in toppling the working class. The fact is, no economic system on the planet is perfect. But of all the imperfect systems, capitalism offers better answers than most other solutions.

See, the Soviet Union taught us the painful lessons of what is wrong with socialism. People DID suffer in the Soviet Union. People DID starve. And freedom of speech was stifled to an extent that our bourgeoise eurodweebs will never understand. The KGB didn't give out "F's" on research papers. They didn't deny entrance to universities. They shipped their dissidents off to one of the most forbidding areas of the planet. Was that a necessary byproduct of socialism? I believe it was; dissension in a socialist society has a tendency to destroy what work product the state is able to produce.

The truth is, people suffer in a capitalist society. And admittedly sometimes they suffer more than they should. But a smaller percentage suffers, and to a lesser extent than in socialist nations.

Our own history shows the strides our nation has made against poverty. In the past, I've compared and contrasted the life of the working class in urban America in 1900 to that of most Americans today. Back then, everyone in the household worked. Including children. Education was a privilege poor children could not afford, unless they could learn in the scant hours of daylight after their long shifts at the factories had ended. Families took in borders. And still their standard of living did not rise to that of all but the poorest of America's poor.

The reasons why capitalism is a better system are multitude. First and most obvious is that capitalism offers hope for the future. In a socialist system, it is unlikely that I could be anything but a manual laborer. My father was a manual laborer, and his father before him. While I might have had the fortune of escaping that rat race, it's pretty unlikely.

Second, capitalism increases productivity. If I am paid for my work product, my work product increases. That doesn't matter if I am a farmer or a salesman. If producing more means I get paid more, I am going to produce to increase my pay

Third, capitalism spawns innovation. If I am paid more for higher productivity, I will discover ways to increase my productivity. If I'm a farmer, I'll look to increase crop yields. If I am an investment banker I'll look for ways to increase my investments.

A greater amount of goods on the market means a lower cost per item. It is a simple matter of supply and demand. This means that the poorest do not need to work as hard to purchase items necessary for survival. And because they are paid for their work product, they can get better jobs or better positions in their current jobs to go even further.

Lastly, more money for the rich means more disposable income. More disposable income (usually) means more giving. How many libraries in this country were funded in part by Andrew Carnegie? How many schools in this nation have computers bearing the names of Bill and Melinda Gates? How many doors have been opened because of the wealth of capitalists poured out into the community?

And it doesn't end in our country. When the tsunami hit India, look at the amount of PRIVATE donations that poured in. Look to Africa, where Oprah Winfrey's school is opening new doors for some young African women. Look at UNICEF, look at the Red Cross, look at the countless organizations funded by the dollars of Americans with dispensary income.

Capitalism is far from perfect. But in the absence of perfection, it is the best we have to offer. And I am proud to call myself a capitalist. And one day, when I have the money to distribute, a lot of poor will be glad I did!

Comments (Page 2)

Gideon MacLeish

on Mar 14, 2007

I agree with cacto that basic welfare is a responsibility of a moral society.

Of a society, yes. Where we disagree is in government being its caretaker.

I have long contended that if welfare were privately funded and administered, oversight would be easier and fraud would be less widespread. As it is we are giving out massive welfare to illegals (technically only to their US born children, but we ARE giving welfare to illegals nonetheless. The last reliable estimates I read put the number somewhere over $1 billion a year), and many families are opting to remain on welfare rather than seek gainful employment for as long as they can, then remain in low paying jobs so their other benefits aren't cut.

Our government, though, keeps piling program upon program, and the truth is, the industrious welfare bums can live pretty close to a middle class existence on the taxpayer's dime.

As a Libertarian, I would rather see "social programs" among the last of government programs to be fully de-funded. But I believe that we should systematically and methodically scale them back, replacing them with other programs, until only a "safety net" program remains to take care of needs resulting from truly unforeseen circumstances.

cactoblasta

on Mar 14, 2007

I'd be interested, though, in doing a comprehensive study on the issue. It would be interesting to see how our poor stack up across the board with the poor in Australia and Europe.

Most quality of life scales focus heavily on that sort of thing - I think the UN runs one which is fairly well respected. Europe and Australia tend to beat the US quite handily, largely because our societies are flatter.

In Oz we don't have the uber-rich, but we don't tend to have much uber-poor either. Cheap and fast/free and slow healthcare services, free education and guaranteed dinars from the government every fortnight mean only the really determined will starve to death or die from preventable illness (junkies and incurable street people in general tend to do this).

Australia has its aboriginals of course, so we're hardly a paradise. The amount of corruption in gov-funded aboriginal community organisations is truly astonishing. There's been practically no progress on the aboriginal front in the last 30 years, and it's probably the biggest blight on mildly socialist societies - even if funding doesn't work we don't tend to try anything else.

Of course highly capitalist societies don't really do much themselves - ie with the native americans or whatever the euphemism is - so maybe it's just a human problem.

cactoblasta

on Mar 14, 2007

I have long contended that if welfare were privately funded and administered, oversight would be easier and fraud would be less widespread.

Yes, and I contend we had that situation in the 19th century, and it was a horrible and bleak world for much of humanity. If the German Chancellor hadn't started social security I shudder to think of the communist hells we'd all be living in after the Revolution.

Gideon MacLeish

on Mar 14, 2007

I have a proposal for you, cacto.

I like the way you debate and discuss, even though we see different sides. What say we look at starting a "debating club" like the writer's club. We could have a point/counterpoint format, and maybe get Brad in on it and have the discussion front paged. I think it would definitely be good for the site.

What say you? You up for it?

Gideon MacLeish

on Mar 14, 2007

In Oz we don't have the uber-rich, but we don't tend to have much uber-poor either. Cheap and fast/free and slow healthcare services, free education and guaranteed dinars from the government every fortnight mean only the really determined will starve to death or die from preventable illness (junkies and incurable street people in general tend to do this).

See, and I contend that we don't have many uber poor in the US, either, and that most of those are junkies and incurable street people. We have walk in clinics in all major cities, and emergency rooms have to treat anyone who walks in their door. Every child in America has free K-12 education, with free lunches, and, in most schools, free breakfast. No guaranteed money from the government, but low wage jobs are available almost anywhere in the country. Compare/contrast the plight of the working poor in the US today vs. 1900 (I have done it in a previous blog), and life among our poor doesn't even begin to compare.

I know you have some experience with the US; certainly more than I have with Australia, but how much time have you spent IN the impoverished areas, getting to know the people behind the statistics? You actually have to put forth effort to starve to death in the United States; while our social programs might not be as extensive as those in Australia, we have extensive provate charities that usually work quite hard to make sure nobody goes to bed hungry. Even in my most impoverished childhood years, when my mother was fencing food stamps to feed the alcohol addiction of my abusive stepfather, we always had food on the table. It wasn't always fancy, but it was always there.

cactoblasta

on Mar 14, 2007

That really depends. There's only a few issues that really interest me any more. If you do launch it, I might reply from time to time, but I don't write many articles and I don't intend to change that.

I know you have some experience with the US; certainly more than I have with Australia, but how much time have you spent IN the impoverished areas, getting to know the people behind the statistics?

I have no experience with the US, actually. I just have the knowledge any mildly educated citizen of this world has on US politics, history and policy, augmented a little by what I read on JU.

You actually have to put forth effort to starve to death in the United States; while our social programs might not be as extensive as those in Australia, we have extensive provate charities that usually work quite hard to make sure nobody goes to bed hungry.

Yes, which is odd really considering the US generally doesn't perform that well on the scales. I think it may be due to your expensive tertiary education and the general lawlessness of your inner city slums. But realistically there's not much you can do about them in a mega-city like New York, Los Angeles or San Francisco.

It's not an area I've done a lot of research on, but from what I can remember of development studies (a rapidly abandoned minor I started a few years back) these scales tend to demand more than just a fed population to bring you to the top of the scale.

Gideon MacLeish

on Mar 14, 2007

I have to concede the general lawlessness of the inner city slums, but the expense of tertiary education comes with a qualifier, as it is available to most who want it.

Oddly enough, those who have the least access to our tertiary education system are the MIDDLE class. The wealthy have enough money to pay, and the poor usually qualify for government grants, scholarships, etc. But even the middle class have access to the system, it's just a little harder.

Our college system includes two year and four year colleges. The prices of colleges vary widely; in a decent junior/community college, one can pay less than $4000 a year for tuition, books and fees. Sure that's pricey, but what's it worth to you? For the very poor, a Pell Grant will pay the entire bill, and they are STILL eligible for state aid, student loans, and other forms of aid to meet their living expenses. For the very rich, it's just a drop in the bucket. Again, it's the middle class who get stiffed, but still, to a family making $50,000 a year, $4000 a year may be tight, but it's usually doable. And the student can walk away with a two year degree that can transfer to a four year school.

I'd seriously like to look at Australia's system sometime. I couldn't say without extensive evaluation whether it is better or worse. But I CAN say the American system often gets an unfair bum rap; after all, I grew up among the poorest of the poor, and I've managed to get a decent education and good employment. Not to say that anyone can, but I do believe that most can.

Dr Guy

on Mar 14, 2007

I agree with cacto that basic welfare is a responsibility of a moral society. The emphasis is massive on the Basic though.

With respect, no it is not.

The basic welfare is the responsiility of the society. Moral is not a factor, until you get into religion. Or Anti-religion. (Humanism).

cactoblasta

on Mar 14, 2007

Our college system includes two year and four year colleges. The prices of colleges vary widely; in a decent junior/community college, one can pay less than $4000 a year for tuition, books and fees. Sure that's pricey, but what's it worth to you? For the very poor, a Pell Grant will pay the entire bill, and they are STILL eligible for state aid, student loans, and other forms of aid to meet their living expenses. For the very rich, it's just a drop in the bucket. Again, it's the middle class who get stiffed, but still, to a family making $50,000 a year, $4000 a year may be tight, but it's usually doable. And the student can walk away with a two year degree that can transfer to a four year school.

Tuition fees at Australian unis for citizens are all paid by the government from the very beginning, and then automatically repaid later when the student's income hits certain levels. Fees are between 3-5k a semester (science and medicine cost more due to the increased equipment requirements). Textbooks are slightly subsidised (around 10%) but rarely more than 500 a year depending on course. For example in my 5.5 years of university (I did a combined degree with a year's exchange) I've spent less than a grand on textbooks.

I'd seriously like to look at Australia's system sometime. I couldn't say without extensive evaluation whether it is better or worse. But I CAN say the American system often gets an unfair bum rap; after all, I grew up among the poorest of the poor, and I've managed to get a decent education and good employment. Not to say that anyone can, but I do believe that most can.

Go for it. The states set their own curriculums and the universities are laws unto themselves (except they get federal funding). The universities are open to anyone and entrance scores are based on popularity rather than academic rigour. The best uni in the country - the Australian National University (ranked in the top 50 in the world) has the lowest entrance requirements of any 'elite' university in the country.

I'm sure all the appropriate info is on the government education websites... if you can find it. Our gov is just as good at obfuscation as anyone else's.

ParaTed2k

on Mar 14, 2007

basic welfare is a responsibility of a moral society

I agree with this too. However, is "society" the government? Does "basic welfare" include any food the recipient chooses? Does "basic welfare" include the "right" to an ambulance when there is no real medical emergency, but "are you kidding, taxis cost money"?

If we really wanted to be a moral, good, or even responsible society, we would do an honest evaluation of who really needs help to meet their basic needs before we decided how much each recipient should receive. If we really want to be a moral, good, or even responsible society we would expect everyone else to do for themselves. If we really wanted to be a moral, good, or even responsible society, we would decide if we want to donate to charities, and how much... then expect them to use the money wisely.

There is nothing moral, good or responsible about robbing a person of their right and drive to do for themselves. Creating a need so that the government can fill it is a society of thieves and scoundrels.

Bahu Virupaksha

on Mar 17, 2007

Well written and well argued. I too could say the same about myself as I too was a somewhat blinkered sympathiser of Socilaism during my grad school days and since then have come to appreciate the good side of what can be called Capitalism, for want of a better word. For me the greated plus of Capitaslism is that it respects both individual choice and the inherent autonomy of human beings. I remember Reading von Hyek's Road to Serfdom several years back and that opened my horizon to the infinite possibilities of reasoned choice.

The only problem is that the state can sometimes act in the interest of the economically powerful and this could harm the interest of society. And inequlity can increase.

on Mar 20, 2007

Hmm, I thought it was greed and corruption, not socialism that was the Soviet Union downfall. Greed and corruption are also the problem with Capitalism. Hasn't capitalism failed before? I think the best cure for poverty is community care and support, being neighbourly.

Draginol

on Mar 26, 2007

The difference is that capitalism takes advantage of people's greed to help everyone else. Socialism requires that people not be greedy for it to work.

In a capitalistic society, a man makes a product or service for profit. The value of that product or service depends on how desired it is by society at large.

In a socialistic society, a man makes a product or service for "the good of society". The value of that product or service is largely irrelevant as the income will be redistributed "fairly" to everyone.

in the former case, the industrious man or woman has an incentive to work very hard to produce the best and most products/services they can. In the latter case, the man or woman has no incentive to work hard since the fruits of their labor will be taken and re-distributed to "those who need it more".

In the capitalistic society, ability determines success. This creates a competitive environment for people to be the best they can be. In a socialistic society, need determines success. This creates a competitive environment for people to be as needy as they can be.

That is why socialism never works and capitalism usually does. Capitalism still requires a strong government to enforce laws of fair play so, on its own, capitalism can't create a wonderful society. But it is certainly preferable to socialism.

CapitalistPig

on Apr 11, 2007

The only problem with capitalism is that it requires so many poor people to suffer horribly before it pays off. Look at any country which has embraced capitalism and you'll see a period of transition where large proportions of the population starve or are worked to death. It happened in the UK, in Europe, and in the US.

This is a painful misrepresentation of reality. Capitalism didn't create any hardship or poverty, it inherited it from the earth. And nothing has done more to alleviate it. Capitalism didn't starve or work anyone to death, this is a malicious lie. For instance, in Britain before the Industrial Revolution, life for the poor was a wretched subsistence which was characterized by filth, disease, starvation, depravity, low life expectancy and high infant mortality. When the Industrial Revolution came, life expectancy immediately rose (it has now more than doubled - an unprecedented feat in the history of mankind) and infant mortality rates immediately dropped. What we see now as cruel hardship was in fact, for most of these people, an improvement in life. The difference between eating and not eating. Their conditions, which seem terrible today, were largely as a result of crude technology, which meant production efficiency was a tiny fraction of what's possible today, and so wages were much lower, which meant parents often chose for their kids to work, too. But before the Industrial Revolution, most of those kids wouldn't have gotten much past 10 years old, and those years were generally spent poor, miserable and with a stomach half full at best.

When people are worked to death, that's called "slavery" and has nothing to do with Capitalism.

I think capitalism must be tempered to be of any benefit. If you look at the figures it was only after the introduction of basic welfare provisions in the late 19th century that capitalism began to benefit more than just a small proportion of the population. It's that little flattening effect that makes the relentless drive upwards worthwhile.

You are absolutely wrong, Capitalism must be absolutely untouched, save for basic laws to protect the basic rights of the individual, for it to be of maximum benefit. Everything wrong you see in the economy today is as a result of state interference. The case for laissez-faire Capitalism is huge, both morally, theoretically and practically. Go read "Capitalism" by George Reisman, "The Capitalist Manifesto" by Andrew Bernstein, or "Capitalism - the Unknown Ideal" by Ayn Rand. For example, the great Depression of the 30s was caused directly by state interference in the economy - primarily the introduction of the Federal Reserve. Everything "odius" about the economy is in its statist side - all the corporate welfare and the government favors (Halliburton) and the lobbying and the politics and the like. All of it, totally detrimental to the natural flow of capital.

Capitalism, when adopted in a country, fully benefits anyone who is willing to make the effort, as long as there is no corrupt state interference. In fact, this corrupt influence is what you see in most 3rd world countries that adopt it. Welfare statism and the mixed economy ushered in a new era of serious social unrest as well as intellectual and philosophical disintegration. As soon as you start stealing money by force from the most productive to give to the non-productive, apart from the fact that this is immoral, all you are doing is setting up the conditions for a full-scale war of pressure groups, all fighting each other for the same finite resources, political attention and legislative favor. The extent to which this reduces productivity and slows the growth of the economy is staggering. Capitalism is how wealth is produced - the more capital invested per head of a population, the better lives they lead, period.

Free Capitalism is the ONLY system which fully recognizes and respects mans inalienable right to his own life and his own mind. As such, it is the ONLY moral system known to mankind. Property rights are elemental and give rise to the right of man to own his own life. No other system does this - they're all forms of mass slavery.

CapitalistPig

on Apr 11, 2007

As a self-confessed 'bourgeoise [sic] eurodweeb' I tend to see the socio-economic/political systems more as a continuum with a theoretical (but never actually existing) 'pure' capitalism at one end, and a theoretical (but never actually achieved) communism at the other. They essentially represent the possible extremes on the individualism/collectivism axis. I am more interested in what lies towards the middle.

Why? One "extreme" represents the fullest respect for individual rights possible, another "extreme" represents the least respect for individual rights possible. Which do you choose? I choose "maximum respect for individual rights". Don't you? If not - what gives you the right to force less rights on me? And how will you do it - at gunpoint? In fact, this is what characterizes everything but laissez-faire Capitalism. In our mixed economy, I must pay "the state" some of my fairly earned money to pay for things I didn't agree to, like welfare - and what happens if I don't pay? They can send me to jail. What if I don't want to go? They can take me by force. What if I resist?

THIS is what you agree to when you reject freedom/laissez-faire Capitalism. On the far left, is genocide in the tens of millions (Marxism). In the middle, is a kind of woozy fog in which people kid themselves they're not being oppressed by force, and the individual is constantly thwarted in his or her efforts to increase their prosperity. You have all sorts of disasters like rent control, which forces the middle class out of cities and leaves behind the subsidized poor and the super rich who pay inflated rents to subsidize them (look at NYC). You have a war of pressure groups, all fighting each other tooth and nail for the same limited government resources, for political favor, for legislative influence. A mixed economy divides a population into tribes and perpetuates the racial tension which comes from tribalism.

By and large I agree with you that the actual attempts to introduce socialism/communism resulted in untold misery, which was not accidental but an inevitable outcome of the marxist theories on which these attempts were based.

"By and large"? That's what you call 96 million dead in the 20th Century? My answer would have been "I agree with you 100%". How could it be anything less?

Also, like you, I came to that conclusion after an embarrassing youthful infatuation with hard-left politics. The end result of which is that I now have a fierce distaste for extremist politics of any kind (except, of course for 'militant wishy-washiness'

What I object to is the use of the word "extremist". It's used as if the characteristic of "extremeness" is inherently bad, and must be avoided at all costs. Yet, nobody would object to "extreme health" or "extreme happiness". In the same way, I don't see how any rational person could object to "extreme respect for individual rights". The "extreme" part doesn't denote the quality of goodness or badness, it just denotes the extent of that goodness or badness. When someone says "extreme Capitalism" what they are really saying (even if they don't mean to) is "extreme rights".

For this reason, I believe very much in pragmatism - looking at what works in practice instead of what ought to work in theory. I take it as a given that capitalism is possibly the worst way to organise a modern economy - with the exception of everything else that has ever been tried or thought of...

Pragmatism is nothing but an expression of intellectual, moral and philosophical disintegration. A system based on nothing more than "what works in practice" is no philosophical basis for a system at all. In fact, it's ultimately nothing more than a "moral blank check" with which to justify anything. You are absolutely, unconditionally 100% wrong about Capitalism being the worst way to organize an economy - it's the ONLY way to organize it. What you're saying is like saying that the laws of physics are possibly the worst way to organize a universe.

But back to Eurodweebery. Today, after the fall of the Berlin wall, all the countries of Europe have market capitalist economies, sustained by democracy and the rule of law.

That's not really true at all though, is it? Really, they are mixed economies in which Capitalist activity is expected to pay for Socialist style policy. To say that democracy "sustains" Capitalism is the exact opposite of the truth. Capitalism sustains democracy.

However, one reason for a lot of the hostility that exists on the right in the US towards Europe (dating from well before certain European countries failed to give the US backing for its current foreign policy) is that Europe now offers an alternative capitalist model to the American Dream, in which free markets are tempered by state regulation (not control) and generous welfare provision. Indeed even the US system contains some elements of regulation and welfarism. For this reason, we need to think of a variety of competing capitalisms (what could be more capitalist than that?), especially when you factor in the very different models to be found in East Asia.

Again, I find myself wondering just which reality it is you exist in. Europe doesn't offer "a different Capitalist model" at all, it just has a more oppressive statist side in its mixed economies. Just because they're "different" doesn't mean they're better, or more moral. In fact, the more state control you have over the economy, the less moral the system is. I don't think you know what "control" means. Regulation? Is that what you call forcing people to pay for a TV license to fund a leftist propaganda machine, like they do in Britain? Or forcing everyone to pay for "free" health care whether they like it or not? Actually, the countries that have been more Socialist in Europe, specifically Scandinavian countries, are now beginning to see the benefits of a freer market and are looking towards heading that way.

The great strength of capitalism is its ability to continually re-invent itself.

You cannot "continually reinvent" the inalienable right a man has to his own life and his own mind. It is what it is. You can deprive him of that right in varying degrees, but that is not "reinventing Capitalism", that is depriving him of Capitalism.

There are huge problems with capitalist economies, but very often the solutions to those very problems are thrown up by capitalism itself. So that every time 'advanced thinkers' announce the death of capitalism, we find that these "rumors" have been "greatly exaggerated", in the words of Mark Twain.

Most of the huge problems with Capitalist economies are caused by state control, state interference and state corruption. Take all those things away, you have less problems. Capitalism will never die, as long as man has a vested interest in making his existence better.

It will be interesting to see which capitalist model is more successful in the future - that of the US or that of the EU. 'Righties' here of course will be sure of their answer, and social democrats will jump to the opposite conclusion, but I don't think that the answer is really that clear yet. For an interesting take from an American writer who thinks that Europe is the future see here. Link

The most successful in the long run will be the system which offers the most unimpeded, and hence most efficient, flow of capital. Of course, the most efficient use of capital happens in a fully free market. Next, consider the word "efficient" in the context of todays popular environmental concerns.

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