Why Capitalism Increases Poverty for Most People

Why Capitalism Increases Poverty

Many people confuse capitalism with trade. Trade has been with us since the agricultural age, starting with barter for goods and eventually becoming the sophisticated system of money exchange we have today. Capitalism, however, is only three or four hundred years old. Before we had capitalism, we had a brief period of mercantilism, and before that feudalism (the middle ages).

Prior to capitalism, all the land was not owned by people or government personal. The land that was not taken by people living on it was called ‘the commons.’ All land that was not lived on or had homes or palaces or wasn’t farmland, etc. were shared by everybody. This meant one could grow veggies on it or graze one’s cattle on it. Land and water were not owned by anyone. This was all detailed in the Magna Carta on the 15 June 1215.

Capitalism changed this, and with the change, people internationally have become poorer and poorer.

Internationally, people are beginning to realize that capitalism isn't working.
Internationally, people are beginning to realize that capitalism isn't working.

Correlation isn't cause

Yes, there has been an immense advance in prosperity for many people during the last three hundred years. However, that prosperity has lessened during the past thirty years and more and more people are becoming poor. Internationally, the middle classes are shrinking.

There are several reasons for the advance in prosperity. I have listed some.

New World and unexploited resources. The Old World (Europe and Russia) were pretty much taken. There was no opportunity for people to find new minerals, hunt extensively, etc. These countries had been inhabited for 2000 or 3000 years. They had been fully exploited, more or less. With the increase in religious persecution, the increases of taxes by kings to fund their luxury lifestyle and wars, plus the greater availability of ships sailing to the New World, many went to the New World. When they arrived, they could pretty much take whatever land they wanted. They didn’t have to pay for it. They could hunt buffalo (virtually to extinction) and kill the inhabitants of the land who tried to stop them. They could mine gold (South Africa, California), raise sheep (Australia), and they didn’t have to pay a penny for it. Under those circumstances, it’s pretty easy to become prosperous.

However as more and more of these resources got taken and where one couldn’t just stake a claim, people had to start paying for their resources. While it was still relatively easy until about the 60s, by the 70s there were so many people and so much land had been appropriated by government and the rich that it wasn’t so easy to become prosperous anymore. For the last two generations, each generation has been poorer than the babyboomers.


"The world around us is entirely different to what we've been told"

Correlation... Just because success happened at the same time as capitalism doesn't mean the success was the result of capitalism.

Englightenment and increase in science and technology. The Enlightenment was the backlash against religion and the idea that we should use reason and evidence to establish factual information. As a result of this, science and technology came into its own. Consequently we were able to wipe out diseases like Small Pox and Polio with vaccinations, plus use the information we had to invent things like phones, electricity, trains, and more. By removing superstition from the mix and by preventing the Church and Kings from executing and imprisoning those of a scientific bent, the world moved forward.

Infrastructure. Without bridges, roads, dams, trains, passenger ocean liners (like the Tiitanic), cars, etc. movement and information could not flow. While some capitalists certainly built some products, it was essentially the State that laid the infrastructure and paid for it through the taxes of the people. Without that infrastructure, people couldn’t get to jobs, and goods couldn’t get to their market.

Land Ownership Yes, this was part of capitalism, and it most certainly did make some rich, but it was and is only part of the equation that has led to such prosperity. However land ownership by a few is now endangering the lives of the poor because there is no more ‘Commons’ where they can eke out a living.

The percentage of households considered middle class shrunk nationwide between 2000 and 2013, a state-by-state analysis by Pew Charitable Trusts' Stateline news site found.
The percentage of households considered middle class shrunk nationwide between 2000 and 2013, a state-by-state analysis by Pew Charitable Trusts' Stateline news site found. | Source

Capitalism has run its course and is now making people poor

Imagine a game of Monopoly. Everybody starts out with the same amount of money. Then you throw the dice Some people land on good property and buy it and others land on poor property or no property at all. It had very little to do with their skill.

Some aspects of life are just plain luck!

Of course, there’s an element of skill to Monopoly as well. One has to know what to buy and what to sell, whether to build houses or not. Still the luck works with the skill to allow one to win the game.

However, not everybody can win the game. The board is finite. There is only so much property to be bought and so, after a while, even if one has the money, one cannot buy anymore.

This is what has happened in the last stages of Capitalism. We are in the ‘end game’ stages. Most of the land and the minerals have been exploited by people who came before us and are in their hands or the hands of their descendants. At this point, unless one has a substantial amount of money, one cannot buy in.

Capitalism is nothing more than a game of Monopoly – a three hundred year long game, but still a place where there’s a certain amount of land to exploit and things to take, but now most of the land is taken (or owned by government) and it’s no longer possible to go shoot wild animals and sell their skins.

Note something else about the Monopoly game. The richer one or two players became, the less money and land there was for the other players, until eventually the other players couldn’t play anymore because they had payed everything to the landowners.

This is what Thomas Piketty speaks about in his international bestselling book Capital in the 21st Century. The landowners (rentiers) are becoming richer and richer and everybody else is becoming poorer and poorer.

The wealth gap between America’s high income group and everyone else has reached record high levels since the economic recovery from the Great Recession of 2007-09, with a clear trajectory of increasing wealth for the upper-income families and no wea
The wealth gap between America’s high income group and everyone else has reached record high levels since the economic recovery from the Great Recession of 2007-09, with a clear trajectory of increasing wealth for the upper-income families and no wea | Source

Who do you blame for the financial woes of so many?

See results without voting

The USA had protectionism for 150 years.

American capitalism

Much of modern American capitalism is built on the backs of misery in either the third world or the east. For instance, most computer companies use Foxtron to build their hardward. Foxtron has the most savage working conditions imaginable with workers sleeping on the property, sometimes working 16 hours a day, 7 days a week. Some have committed suicide as a result.

In addition, America has no labour protection. Business can fire employees at will and need not provide paid vacation leave or paid medical leave. No consideration is given that human beings aren't machines.

The reality is that half of Americans either work on the breadline ($15 per hour) or below the breadline. There is little room for joy. The high incidence of mental illness and physical disease is indicative of the stress that the majority live through on a daily basis.

This can hardly be called a successful economic model.

A successful economic model would mean that all the people of the country are well rested and provided for. It would mean that people in far away places had an equal share of the resources that people in the city had. It would mean that there were no potholes in the road and no slums for those so poverty stricken that they cannot afford decent housing.

Capitalism is not a successful economic model. When it focuses on what the market will bear, this means that only the rich can afford the goods, and when it is not profitable to provide for the outlying areas, then goods don't travel to the outlying areas.

Some points to remember about Capitalism

  • It is virtually impossible in today’s world to become successful without resources. Studies show that it’s the kids who come from upper middle class families and rich families that tend to be successful.
  • Studies show that people who are poor are so highly stressed that they cannot think creatively. That’s because the brain is used elsewhere. Capitalism causes stress because it’s competitive.
  • If capitalism was so successful, people wouldn’t have to resort to crime to make money and the majority of the world’s people wouldn’t be poor. After all, Capitalism has had between 300 and 400 years to sort the issues It hasn’t.
  • The idea that Capitalism sorts the sheep from the goats and that the stupid people/lazy people won’t be successful while the clever hardworkers will is without merit. By that measurement, criminals wouldn't be wealthy and the numerous studies which show that most billionaires and millionaires fall into the sociopathic category would need to be questioned. The reality is that people are poor because they didn’t have the opportunity to learn relevant skills, the capital to pay the necessary expenses to be successful, and/or the opportunities afforded to those who do become successful.
  • Internationally, the middle classes are shrinking and earning less and less. This has been happening steadily for the past thirty years and is part of the ‘end game’ scenario. (Remember the Monopoly analogy?)

© 2015 Tessa Schlesinger

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Comments 19 comments

AudreyHowitt profile image

AudreyHowitt 14 months ago from California

This is a very interesting article. I happen to agree with you. Sharing this!


TessSchlesinger profile image

TessSchlesinger 14 months ago from South Africa Author

Thank you +AudreyHowitt. :)


nicomp profile image

nicomp 14 months ago from Ohio, USA

"Prior to capitalism, land was not owned by people or government personal."

Surely you jest. Have you heard of Feudalism?

"It is virtually impossible in today’s world to become successful without resources"

Oh my word. Are you implying that capitalism restricts access to resources? Capitalism is the mechanism by which resources are earned. Dave Thomas was adopted, started working at 12, dropped out of high school, and oh, by the way, founded the Wendy's restaurant chain.

Larry Ellison was adopted, dropped out college, and oh, by the way, started the Oracle Corporation with $1200 of his own money. He is now one of the richest men in the world.


TessSchlesinger profile image

TessSchlesinger 14 months ago from South Africa Author

nicomp. Today land all the country's land is owned by government. According to the Magna Carta, the 'commons' was not owned by anyone and it could be used. I probably phrased myself badly there and will rewrite it.

Yes, um. Larry Ellison was born in 1944. Dave Thomas was born in 1932. I believe I said things were relatively easy until the 60s and 70s. It doesn't work that way anymore for the exact reasons I mentioned.


RJ Schwartz profile image

RJ Schwartz 14 months ago from Idaho Falls, Idaho

I'm going to have to challenge your theories. You use the term Internationally multiple times however capitalism isn't practiced across the world. Even in the United States, pure capitalism isn't practiced as our government frequently gets involved in economic decisions that limit a pure concentration of power in any single industry. I'd say our economy is more of a free market system with both private and public ownership of resources (think public utilities.)

Now I do agree that there is a huge wealth gap with our current system, but what would you trade it for? Communism - a proven failure. Socialism - a proven failure. Democratic Socialism - Who decides what should be public and what should be private?


TessSchlesinger profile image

TessSchlesinger 14 months ago from South Africa Author

RJ Schwartz. When you talk about 'welfare tourists' in Europe in one of your articles, when your profile is thin on the ground, when you talk about socialism being a failure, and when you talk about 'pure capitalism,' I assume I am speaking to an American of the Libertarian ilk. I also assume that I'm speaking to someone who has been brainwashed by American propaganda of the Cold War type, has strong Republican roots, is a 'believer, has never lived and worked (outside the American military) in Western Europe, Australia, or New Zealand. I assume many things because people who say what you have just said generally have that background.

As above. Goodbye. I have neither the time nor the inclination to educate you or inform you that what you are saying has been disproved many, many times, that socialism is alive and well and that all the countries that are more prosperous than you have democratic socialism.


nicomp profile image

nicomp 14 months ago from Ohio, USA

"Yes, um. Larry Ellison was born in 1944. Dave Thomas was born in 1932. I believe I said things were relatively easy until the 60s and 70s. It doesn't work that way anymore for the exact reasons I mentioned."

It still works that way:

Mark Zuckerberg is 31 (born in 1984) and worth 44 billion. He dropped out of college.

Marissa Ann Mayer is 40 and CEO of Yahoo.

Markus Persson is 36 and world-famous for creating Minecraft.

Chris Pratt, 36 YO, dropped out of community college and lived in his van on the beach.


nicomp profile image

nicomp 14 months ago from Ohio, USA

"nicomp. Today land all the country's land is owned by government"

In Cuba all the land is owned by the government. In the United States, no.


TessSchlesinger profile image

TessSchlesinger 14 months ago from South Africa Author

Yes, nicomb. Mark Zuckerberg does NOT come from a poor family. He was born into an upper middle class family, the son of dentist Edward Zuckerberg and psychiatrist Karen Kempner.

I pointed this out in my article, "It is virtually impossible in today’s world to become successful without resources. Studies show that it’s the kids who come from upper middle class families and rich families that tend to be successful."

In addition, I quote from Wiki "Zuckerberg began using computers and writing software in middle school. His father taught him Atari BASIC Programming in the 1990s, and later hired software developer David Newman to tutor him privately. Newman calls him a "prodigy", adding that it was "tough to stay ahead of him".

His father was rich enough also to afford to pay for a private tutor for him.

Marissa Meyer was also born into an upper middle class family. As per wiki "Mayer was born in Wausau, Wisconsin, the daughter of Margaret Mayer, an art teacher of Finnish descent,[17] and Michael Mayer, an environmental engineer who worked for water companies."

Markus Persson Is Swedish and Sweden is socialist, not capitalist.

https://en.wikipedia.org/wiki/Nordic_model#Economi...

Chris Pratt is an actor. Wiki says, "Pratt was waiting tables at the Bubba Gump Shrimp Company restaurant in Maui when the 19-year-old was discovered by actress and director Rae Dawn Chong." Puh-lease. So we all have to go around waiting to be discovered.

The bottom line is that people who are successful come from money these days. It wasn't like that prior to the 70s, but has been for at least 20 years.

The Bureau of Land Management administers more than 247.3 million acres (1,001,000 km2) of public lands in the United States which constitutes one-eighth of the landmass of the country.

You cannot just go out into the wilds and claim land for yourself. You cannot just go and hunt for oil or minerals, or anything. You have to get a licence from these people, and you have to pay them.

As I have shown, you don't do your homework properly. Your examples actually proved what I said. Statistically, 90% of people who succeed today came from either the upper middle class or the rich. Those are facts.


TessSchlesinger profile image

TessSchlesinger 14 months ago from South Africa Author

wb and John the Catholic. Your remarks have both been marked spam. As such whatever you say after this, it will go into the spam filter wherever that is. Please respect the fact that we disagree and nothing you say is going to make us agree. I really couldn't be bothered to argue with you because I know nothing I say will change your mind. So what's the point?


letstalkabouteduc profile image

letstalkabouteduc 13 months ago from Bend, OR

I sense a growing frustration in our country with capitalism, especially among the young. Even if they work hard and graduate from college, many cannot get decent jobs in their fields. They're questioning the system. The disparity between the rich and poor is growing grotesque. Politicians are owned by Big Business and the corrupt are winning the game.


moneymindit profile image

moneymindit 9 months ago from California

I disagree with you about life being like the game of Monopoly. Monopoly has rules. Players are limited by the rules of the game and not by the limits of property and money. For example, in Monopoly, income is limited to charging rent and passing GO. In life, income is limited by one's resourcefulness.

MM


TessSchlesinger profile image

TessSchlesinger 9 months ago from South Africa Author

I didn't say that life was like a game of Monopoly. I said capitalism was like a game of Monopoly. And there are very definitely rules. If you break the rules, you go to jail. The point is that Monopoly is a competition and the one who wins the game takes it all. That is the comparison.


moneymindit profile image

moneymindit 9 months ago from California

Hi Tess,

What I meant is that in life there are many more opportunities to make money than in Monopoly.

MM


TessSchlesinger profile image

TessSchlesinger 9 months ago from South Africa Author

Moneymindit, there may well be, but the principle is the same.


moneymindit profile image

moneymindit 9 months ago from California

Hi Tess,

I disagree. Life is abundant. For example, here on HubPages, there are plenty of readers available for all of us, right? Or is there a finite amount of readers, and once one HubAuthor gets all of the readers, then there are no more readers for the rest of us?


TessSchlesinger profile image

TessSchlesinger 9 months ago from South Africa Author

You've actually published one hub. I can guarantee that you have earned no money. And, no, there are not plenty of readers available to us. I check my stats every day. Compared to Google Plus where I get approximately 300,000 to a million views per month, here I get a measly 10,000 a month. On that, I have never reached payout in one month. And from past figures, I think I'm in the top 2% or something.

Life might be abundant on planet earth, but money is in extreme short supply for the majority of the people on this world. This is NOT because they are lazy, stupid, or anything else. It is because capitalism, which is nearly 300 years old, only rewards those at the top. Capitalism leads to oligarchies. And the USA, according to both Princeton and Stanford is now teaching its students that the USA is an oligarchy.

It's not about whether there are a finite number of readers on hubpages. It's whether there are enough readers to generate an income. And, no, there are not.


moneymindit profile image

moneymindit 9 months ago from California

Hi Tess,

I only have one Hub on here for one reason. I created my own web site named SpontaneousPursuits.com I used to have many more Hubs here, but they were unpublished due to their content. Nevertheless, I enjoy interacting with other readers and authors here on HubPages.

From what I have gathered, you are an Atheist who believes in evolution. Capitalism is Darwinian, which is funny, because most Republicans are Christians, yet they push Capitalism, and Capitalism is nothing more than survival of the fittest. I had a Hub on this very topic.

Not everybody can be Bill Gates. The problem is not Capitalism. The problem is that not everybody is smart enough to take advantage of the opportunities available in Capitalism.

Everybody in this country is free to open a business. Steve Jobs didn't grow up in the top 1% of society. The fact that he was able to become the head of the most valuable company on the planet is proof that Capitalism works IF one is smart enough to work it.

MM


TessSchlesinger profile image

TessSchlesinger 9 months ago from South Africa Author

Um. Actually, the reason that the human species has survived is because of co-operation, not competition. You need to go google that. There have been a mass of studies over the last two decades and they all come up with the same thing - people work and achieve more collectively than through competition of a few people.

Next, Steve jobs is an exception to the rule. That said, he grew up in the States during the 50s and 60s when there was a lot of help from the government.

And, yes, he is a great example of capitalism. His firm, Apple, use Foxxtron in China where people work 18 hours a day 7 days a week and live on the premises. They commit suicide, etc. All this in order for Steve Jobs to make money. It has cost many lives.

There is nothing smart about making loads of money. If you're enough of a sociopath, it's easy. Study after study has shown that people who become very rich do so on the broken backs of others and have sociopathic traits. you can google that as well.

Interesting that you think one must be smart to go into business. Actually, you have to be smart to get a degree in hard science. In business, all you have to do is be willing to be part of a system of unequal exchange. Labour is not less important or less vital than capital.

But you also prove that capitalism doesn't work when you say that you 'have to be smart enough.' In other words, it only works for 1% or 2% of humanity. Everybody else is screwed. The vast majority of the world is in poverty. Our resources are dwindling at twice the speed they can be replaced. Our environment is polluted and different species are becoming extinct by the month. On top of that, we have climate change. All thanks to excessive manufacturing of goods that go to the landfill.

If capitalism worked, then after 250 years (that's how long capitalism has been going), we should be living in paradise with everybody educated, fed, and happy.

Next, the modern world did not arrive because of capitalism. It arrived as a result of the Enlightenment which said that one had to consider facts not superstition (religion) when discovering and inventing. They lived by logic. It was logic which led to the invention of things. It was also not capitalism which led to the belief that everybody must be schooled, etc. That was socialism and mercantilism.

Capitalism emerged as a means for the aristocracy to hang onto their wealth so that the peasants couldn't get it. If you read books like Piketty's Capital in the 21st century, you will understand that, relatively speaking, most of the wealth is inherited wealth.

http://www.forbes.com/sites/jeffbercovici/2011/06/...

http://mic.com/articles/44423/10-professions-that-...

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