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Capitalist and Free Trade

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Capitalist and Free Trade


Capitalist and Free Trade
“The primary reason that nearly 1 billion people have been taken out of extreme poverty in the past 20 years has been capitalism and free trade”
This is according to an Economist article “Towards the End of Poverty” (June 1st 2013) which claimed that the global poverty has gone down due to economic growth that has been seen certain nations. Nations like China and India are a good example, their standards of living has developed tremendously as well as the conditions of people in those countries.
The article is of the belief that Africa should be the next region to experience growth and good standards of living (Singh, 2009, 874). Nations like Nigeria, and Ghana are examples of countries in Africa with good standards of living which is attributed to trade and investment. Similarly, the countries are putting much effort in doing away with social issues that connected to below par education, health and communications (Gibbs, and Leech, 2009, 186). The article goes on to state that in the year 2050, ‘extreme poverty’ would be something that is non-existent. The article goes to discourage anti-capitalists from complaining regarding the negative issues arising from free trade and markets. They called upon to allow capitalist to grow as it has been noticed as a success in the 21st century.
With no regard accorded to the massive contrast of wealth in today’s world, the millions of unemployed persons and the constant deaths of babies due to preventable diseases, the article goes on to call for additional global trade (Banik, 2009, 117). Through this, high levels of poverty would be brought to a decline.
The focus of the article in according praise to capitalism is a good instance of the ‘Taliban economics’ which is followed by market evangelists. These evangelists are of the thought that freed markets will over nations the biggest individual autonomy and overall security (Singh, 2009, 890). For those that follow it, believe that those that criticize it fault in their economic aspects and may adversely affect those that follow it.
The political impact of the undesirable praise for the profit system can be seen; in the rise that capitalism lacks the inability to solve poverty in world, be it extreme or otherwise. There is therefore no need to have another option for the social system (Gibbs, and Leech, 2009, 188). Logic has not been given its rightful due. Capitalism which has been the main cause for poverty is now accorded all of the praise for being the remedy for poverty to several nations.
Questions rise on if capitalism should be accorded all of the praise for reducing poverty that is noticed in billions of people globally (Wade, 2008, 12). This calls for focus on extreme poverty and how it has spread with time.
Extreme Poverty
Extreme poverty is a state that is attributed to adverse deficit in the basic human needs like food shelter and clothing as well as cleans sanitation and education. The state is more reliant on access to this resources rather than available income.
This definition was not taken in well by the United Nations in the year 1996. People like Wresinski declined to go with the capitalist origin of the problem with a new definition being acquired by the World Bank later. The World Bank defined extreme poverty as someone who lives below $1.25 a day (Schumpeter, 2013, 62). They did not involve the profit system and the connection to poverty in defining poverty. Presently, several instances of extreme poverty is said to be found in the sub-Saharan part of Africa. This poverty can be attributed as being acquired from a section of the ignored working class (Wade, 2008, 7).
In the year 2000, the United Nations undertook stringent efforts to do away with extreme poverty in the confines of capitalism. This effort comprised of private ownership of ways of producing goods and services as well as distribution, competition with nations and the production of goods and services for profit. Several countries agreed to this objective and signed a contract about the same. Capitalism was of the belief that it will lead the countries with extreme poverty to success (de Soto, 2000, 74). Huge trust was placed on capitalism for bringing people to riches or reducing the number. However, a decade later the objective it was set out to achieve did not materialize. Capitalism had failed to achieve its objective and instead led to the increase of the people living in extreme poverty. In September 2010, the UN met to look at the progress that had been made. Report suggested that with 830 million people living in poverty and starvation, the number had since gone up to about 1 billion (Wade, 2008, 20). Food had been a great issue that led to extreme starvation of several other people in 2010. The initiative failed to give every person 2720 kilocalories per day.
The economist who wrote the article among other supports of capitalism ignored the failure of the millennium development goals of the UN (Socialist studies, n.d.). The reality was that capitalism had failed to reduce or even eradicate poverty in nations. The reason as to why the initiative did not meet the goals it set out to achieve was attributed to the limitations it had in meeting the needs of people through profit.
The proponents of the initiative ignored that fact that capitalism had brought about several problems in climate change. This had the impact of affecting future of people in terms of food production and the access to water.
There are several facts that have led to the failure of free trade, free markets and capitalism. About half of the population in the world is able to access sufficient income, the live below dollar a day (Socialist studies, n.d.). This is a huge number that grows daily and is hard to manage. Several children who are the future of several nations are close to a billion and live below the poverty line. Reports by the UNICEF, state that about 22,000 children pass away every day because of poverty. Several people living in the sub Saharan and other parts of the world do have access to clean water Socialist studies, n.d.). This number according to the UNICEF is about 1 billion, with 443 million children skipping schools annually due to the diseases that arise from taking unclean water.
In the year 2011, over 165 million children below the age of 5 years had suffered from stunted growth as a result of poor nutrition. Extreme poverty has led several people not to eat a balanced diet hence suffer from malnutrition. The number has since grown over the years with the efforts being applied not proving viable. This number adds up to the 870 million people in the world that do not have food to eat (Cousins, 2009, 894). What they take is not sufficient. Some eat once a week while others insufficient meal after a long period of time. This poverty has led several children that lack the basic amenities to suffer from preventable diseases like diarrhea and pneumonia. As a result, over 2 million children died annually due to the inability to access treatment from poverty.
The year 2011 has led to over 19 million children to go without vaccination. This spells doom for this families and generally the countries as the able population would drop from inability to access medication (Socialist studies, n.d.). Additionally, poverty has led to a quarter of the human population to go without electricity. This tends to affect the storage of goods for trade as they go bad fast leading to losses.
The Capitalist Class
The capitalist class owns most of the world’s means of production and distribution but only to a section of the population. Most of these rich people are not concerned about the welfare of the poverty stricken nations of individuals. They swim in excess wealth and other secondary needs.
In the present world, about 1 percent of the rich capitalists control close to 39% of the resources the world has available. Reports states that this number has been gradually increasing over time and is bound to reach unimaginable levels in future (Botha, 2003, 830). The Boston Consulting Group’s Global Wealth report state that the wealth of these rich capitalists has grown at about 8% in 2012 to $135 trillion. The leading 1 percent wealthy population manage about $ 53 trillion of the world’s resources, while those worth $5 million manage about a quarter of the resources the world has to offer.
The instances of extreme poverty can be prevented. The barrier to acquiring this is the private ownership of the means of producing goods and services and distribution, the countries condition and the objective of the profit. In simple terms, what makes sure that these problems are still existent is capitalism. This problem has grown from one generation to another with time.
Socialism in the world would have done a much better role in alleviating poverty (Posner, 2009, 23; Socialist studies, n.d.). Extreme poverty would be non-existent and the people living in India and China would face the same situation as the early working class that were there in 1800s as stated in Fredrick Engels book, The Condition of the working class (1844). In the frame of practical and reasonable model of ownership and democratic control of means of production and distribution, people are able to create products and issue services so as that they satisfy their basic needs. Everybody would be able to access their basic amenities. Politicians, charities among others should not be accorded the mandate to resolve this social problem (Socialist studies, n.d.). The economists on the other hand do not have a good understanding of capitalism, how and why it brings about poverty.
Poverty is connected to class and capitalism as a disintegrated society. Capitalism has not played any role in reducing poverty but it has only increased. Wage slavery has taken the place for agrarian system (Bernstein, 2006, 449). Poverty is now not a natural state but it is now brought about by capitalism and production of goods and services and profit transaction.
Capitalism separates the individuals that are not able to pay for products and with the help of the wage system, stresses on rationing model on the working class. This shows that what one can buy with their wages and what their families need are completely different.
Capitalism and poverty are connected in regards to production. Here is where the working class is exploited and poverty arises (Greenhalgh, n.d., 1093). In situations where capitalism is low, the working class sell their labour force or power to operate as a commodity to the capitalist for wages. In the production process the employees create products that have value than the raw products; the machines and labour that create the goods. According to Max, these value (surplus value) is where the unearned income of interest and profit comes from for the capitalists.
The surplus value arises from the exceptional nature of the labour power. This value is determined by quantity and quality of labour applied in production (Greenhalgh, n.d., 1094). It arises through the fact that the working class does not get its wages for the labour used but for the ability.
In the process of working, the working class goes through two time sessions; vital and surplus labour time. While in the vital or necessary time the class creates value the same as the wages workers need to facilitate their basic needs in food, shelter and clothing among others.
The necessary time may be about 5 hours in a 7 hour working day, the extra hours are done for free. According to Marx, this is the surplus labour time which leads to a surplus value which leads to profit after going through the market process (Posner, 2009, 46).
Class and the exploitation that comes with it lead to poverty since one does not have access to the means of production and distribution. The individuals involved in the daily working are not accorded what they need but what their earnings can afford them to buy. This describes poverty be it the standards of living rises or drops, if the rate of pay goes up or down.
It is clear that the economists and those of the same believe are wrong in the thought that capitalist can lead to end of poverty. Capitalist cannot end poverty but lead to its increase. The presence of private ownership of means of production and distribution and the aspect of profit will lead to poverty for the world (Socialist studies, n.d.). Wealth will only be accessible by a small section of people.

Banik, D. 2009. Legal empowerment as a conceptual and operational tool in poverty eradication. Hague Journal on the Rule of Law, 1, 117–31.
Bernstein, H. 2006. Is there an agrarian question in the 21st century? Canadian Journal of Development Studies, XXVII (4), 449–60.
Botha Joubert 2003. Capitalism, Inequality, Poverty and Professor Terreblanche. South African Journal of Economics, volume 71, Issue 4, pp. 830-886.
Cousins, Ben 2009. 'Capitalism obscured: the limits of law and rights-based approaches to poverty reduction and development'. Journal of Peasant Studies, 36: 4, 893 - 908 de Soto, H. 2000. The mystery of capital: why capitalism triumphs in the west and fails everywhere else. New York: Basic Books.
Gibbs, T. and Leech, G. 2009. The failure of global capitalism: from Cape Breton to Colombia and beyond. Cape Breton: Cape Breton University Press
Greenhalgh, C. (n.d.). Why does market capitalism fail to deliver a sustainable environment and greater equality of incomes? Cambridge Journal of Economics, Vol. 29, Iss. 6 pp. 1091- 1109.
Posner, R 2009. A Failure of Capitalism: The Crisis of '08 and the Descent into Depression. Harvard University Press.
Schumpeter, J. 2013. Capitalism, Socialism and Democracy. New York: Routledge.
Singh, N. 2009. Fighting rural poverty, inequality and low productivity through legal empowerment of the poor. The Journal of Peasant Studies, 36(4), 871–92.
Socialist studies (n.d.). Is Capitalism Ending poverty? Acquired on 13th September 2013 from: <>
Wade, R. 2008. Financial regime change? New Left Review, 53, 5–21.

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