Capitalism causes poverty, doesn’t solve it – modern examples of poverty reduction are explained by socialism, not markets – prefer recent studies.

Proponents of the standard public narrative about the history of human welfare hold that extreme destitution is a natural condi- tion, which only began to decline with the rise of capitalism. Yet the national accounts data on which this narrative relies cannot legitimately be used to draw these conclusions, and extant data on wages, height, and mortality do not support them. In all of the regions reviewed here, fully-employed unskilled labourers in the early 18th century had incomes higher than the extreme pov- erty line. Far from a normal or natural condition, extreme destitu- tion is a sign of severe social and economic distress, arising during periods of heaupval and dislocation such as war, famine, and state repression. As for the impact of capitalism on human welfare: data on wages, human height and mortality indicate that the rise and expansion of the capitalist world-system from circa 1500 caused a decline in nutritional standards and health outcomes. Recovery from this prolonged condition of crisis occurred only recently: the late 19th century in Northwest Europe and the mid-20th cen- tury in the periphery.

If one starts from the assumption that extreme poverty is the natural state of humanity, then it may appear as good news that only a fraction of the global population lives in extreme poverty today. However, if extreme poverty is a sign of severe social dislo- cation, relatively rare under normal conditions, then it should con- cern us that - despite many instances of progress since the middle of the 20th century - such dislocation remains so prevalent under contemporary capitalism. Depending on the subsistence basket one uses to measure poverty, as of 2008, between 200 million and 1.21 billion people live in extreme poverty (Moatsos 2017; 2021; see also our discussion in Appendix VI).18 While direct com- parisons with the wage data are difficult because of the variety of baskets used, this suggests that under contemporary capitalism hun- dreds of millions of people currently live in conditions comparable to Europe during the Black Death (Figures 4 & 5), the catastrophes induced by the American genocides (Figure 7) and the slave trade (Figure 9), or famine-ravaged British India (Figure 11). To the extent there has been progress against extreme poverty in recent decades, it has generally been slow and shallow.

The evidence reviewed here suggests that, where poverty has declined, it was not capitalism but rather progressive social move- ments and public policies, arising in the mid-20th century, that freed people from deprivation. While more research is needed to confirm this point, it is worth noting that these findings are consis- tent with previous studies. Amartya Sen (1981) finds that between 1960 and 1977, the countries that made the strongest achieve- ments in life expectancy and literacy were those that invested in public provisioning. Countries governed by communist parties (Cuba, Vietnam, China, etc.) performed exceptionally well, as did countries with state-led industrial policies (South Korea, Taiwan, etc.). Similarly, Cereseto and Waitzkin (1986) find that in 1980, socialist planned economies performed better on life expectancy, mean years of schooling, and other social indicators than their cap- italist counterparts at a similar level of economic development. Navarro (1993) reached similar conclusions: when it comes to life expectancy and mortality, Cuba performed considerably better than the capitalist states of Latin America, and China performs bet- ter than India. Navarro also found that, amongst the developed capitalist countries, the social democracies with generous welfare states (i.e., Scandinavia) have superior health outcomes to neo- liberal states like the US. Poverty alleviation and gains in human health have historically been linked to socialist political move- ments and public action, not to capitalism.

Contrary to claims about extreme poverty being a natural human condition, it is reasonable to assume that human commu- nities are in fact innately capable of producing enough to meet their own basic needs (i.e., for food, clothing, and shelter), with their own labour and with the resources available to them in their environment or through exchange. Barring natural disasters, peo- ple will generally succeed in this objective. The main exception is under conditions where people are cut off from land and commons, or where their labour, resources and productive capacities are appropriated by a ruling class or an external imperial power. This explains the prevalence of extreme poverty under capitalism. Cap- italism is a highly productive system, but it is also undemocratic: decisions about what to produce and how to use surplus are deter- mined by the few who own and control the means of production (Chomsky, 2013; Albert, 2003; Wood, 1981). For capital, the pur- pose of production is not primarily to meet human needs, as we might expect in a more democratic system, but rather to extract and accumulate profit. Toward this end, capital seeks to cheapen inputs – labour and resources – wherever possible, including through enclosure and dispossession, especially in the periphery. The effect is that labour power and resources that could be used to meet local needs have often been appropriated instead for accu- mulation, and enclosures have left people vulnerable to market crises and other upheavals they might otherwise be able to weather. This only began to change when radical social move- ments pushed to organize production more around meeting human needs, including through public provisioning (establishing new commons and social securities) and a fairer distribution of purchasing power. This is a more interesting and nuanced conclu- sion than the standard public narrative allows.

Capitalism is not the only mode of social organization to have historically induced subsistence crises. Figure 5 suggests that Euro- pean feudalism culminated in an episode of extreme poverty. Data on wages in 4th century Ancient Rome suggests labourers working 250 days a year lived in extreme poverty, with a welfare ratio of 0.83 or less (Allen, 2009; Scheidel, 2010). This is consistent with Koepke and Baten’s finding that human height in the Roman Empire was substantially lower than in other times and places, which they speculate may be due to high inequality, a lack of pub- lic services, and the commercialization of Roman agriculture (Koepke & Baten, 2005, pp. 86-87). Even in Maoist China - where pro-poor policies significantly reduced deprivation following the revolution - dictatorship and press-censorship caused millions to die in the famine of 1958–61 (Dreze & Sen, 1989, pp. 210-215). Capitalism is not unique in producing poverty; poverty may result from any system where an underclass lacks political and economic power. It is clear however that the expansion of the capitalist world-system caused a dramatic and prolonged process of impov- erishment on a scale unparalleled in recorded history.

It is worth noting that many of the scholars we rely on for data attribute the trends outlined here not to the rise of capitalism, but to Malthusian population dynamics (e.g., Allen, 2001; Koepke & Baten, 2005; Alfani & Gráda, 2018; Abad, Davies, & van Zanden, 2012; Clark, 2007, 2013; Lee & Zhang, 2010). Some of these schol- ars use statistical models to demonstrate there is a correlation between welfare indicators and population pressure. Yet they ignore how these dynamics are themselves structured by the politico-economic system. From the 16th century, the European population grew while welfare deteriorated and food access declined. But this must be understood within the context of the emerging capitalist system. Productive capacities that could have been used to meet people’s needs were instead diverted to service elite accumulation. Land that could have been used for food culti- vation was enclosed and used for other commercial purposes (Moore, 2002; Wallerstein, 1974; Frank, 1978). Furthermore, capi- talist elites seeking to increase the size of their labour force used pro-natalist state policies to prevent women from practicing family planning (Federici, 2004, pp. 88-91). Similar considerations pertain to Latin America. Mexican wages fell to subsistence levels in 1800, when the population hit 5 million people (Abad et al., 2012, p. 158). But pre-Hispanic Mexico had a population of up to 18 million people (ibid). If in 1800 the land could only support 5 million at bare subsistence, it was because the colonial economy was geared towards elite accumulation rather than local food needs. We should not ignore the relationship between population growth and ecology, but we must not treat these as operating in a social and political vacuum (Davis, 2002, pp. 306-310; Kallis, 2019).

To explore this issue further, we can consider the famines that occurred during the rise of capitalism. Alfani and Gráda (2018) pre- sent a statistical model demonstrating the occurrence of famine in Europe was correlated with population size. They conclude that ‘‘distribution and entitlement issues were not the main cause of medieval and early modern famines” (ibid., p. 283). Lee and Zhang (2010; Lee, 2014) find a similar correlation in pre- revolutionary China and reach similar conclusions. However, these scholars do not actually demonstrate that these famines resulted from absolute food scarcities rather than distributional issues, which may have been exacerbated by population growth. Indeed, the evidence suggests that food output was generally sufficient for averting famine in the early modern period. Alfani and Gráda (2018, p. 285) note that in France and Italy, the famine- population correlation disappeared around 1710 and 1770, respec- tively, ‘‘before the onset of sustained [GDP] growth.” They also acknowledge that ‘‘the early disappearance of famine in certain areas” may be linked to ‘‘public and private charity” (ibid., p. 286). Clearly, if distributional policies rather than growth elimi- nated famine, the problem was not an absolute scarcity of food. Similarly, Lee’s data indicates that during the major famines of the late 19th century, grain output per capita in China was between 190kg and 240kg (Lee, 2014, p. 235). Compare this to post-colonial India, where from 1951 to 2001 per capita food- grain supply averaged only 189kg (Patnaik, 2004, pp. 20-21), and yet the country did not experience mass famine (Dreze & Sen 1989).19 This suggests that 19th-century China had sufficient food to avert mass famine. This did not occur because the British- imposed drain on China ‘‘accelerated the decline of the ‘ever- normal’ granaries that were the [Qing] empire’s first-line of defense against drought and flood” (Davis, 2002, p. 12). The Chinese popula- tion starved not because the landmass was too small for its needs, but because the landmass was called upon to service an expanding capitalist world-system.

A limitation of this study is that the consumer baskets upon which ‘welfare ratios’ are based include only a limited number of goods. In reality, the goods available have changed over time, and people now have access to vaccines, household durables, and other appliances that did not exist in the past. This is unlikely to be relevant prior to de-colonization. We have seen that during the colonial period mortality generally increased, indicating there was no improvement in access to health care. But it is plausible that after 1950 the subsistence basket fails to account for access to new goods among the poor. Post-colonial South Asia has experi- enced improvement in longevity, despite stagnant welfare ratios. Nevertheless, we maintain that the trend in access to food is important. If a modern wage can purchase no more food than wages from 400 years ago, something has clearly gone wrong, even if there have been gains in medical care or information technology. ‘Welfare ratios’ bring our attention to a worker’s ability to meet their most basic needs. If these basic capabilities deteriorated dur- ing the rise of capitalism, and if up to a billion people today have lower real incomes in terms of access to food than 16th-century labourers, it is reasonable to conclude that the world capitalist sys- tem as such has failed to deliver meaningful progress against extreme poverty.