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What causes world poverty?

The World Development Organisation claims that the policies of governments and multinational businesses cause poverty. Are they right?

"The world has the wealth and means to end poverty. Yet nearly half of the world's population live on less than £1.40 a day And over 11 million children will die from poverty-related illness this year alone, read the leaflet that fell out of a recent issue of the New Internationalist. This particular leaflet, entitled "Isn't it time we tackled the causes of poverty?" was issued by an organisation called the World Development Movement but it could have come from any of the numerous other campaigning charities in this field.

What they say is true—the world does have the wealth and means to end poverty—and, yes, it is more than time that we tackled the causes (or rather the cause) of poverty.

So what causes world poverty? Clearly, this is the key question since if you don't get the answer right, you're not going to get the solution right either.

According to the WDM, what causes world poverty are the policies currently pursued by governments and multinational companies:

"Policies of governments and companies are keeping people poor. Policies that ensure global trade benefits the rich, not the poor—the three richest men in the world are wealthier than the 48 poorest countries combined. Policies that give increasing power to multinational companies—for every £1 of aid going into poor countries, multinationals take 66p of profits out. The powerful are exploiting the poor to make bigger and bigger profits."

The WDM's solution to the problem of world poverty follows logically from this analysis that it is "the policies of governments and companies" that is the cause:

"We lobby decision makers to change the policies that keep people poor."

They claim that this can work, if enough pressure is brought to bear:

"In rich countries like Britain, decisions are made which can make or break the lives of the poor. We can influence those decisions. That's why our actions matter so much. Together we can be powerful and win change for the world's poor."

Is this true? Is world poverty caused by the mistaken policies of governments and multinationals? Can lobbying and campaigning get these policies changed?

As socialists, we have to say that the answer to both questions is "no". Governments don't pursue policies that put profits before poor people because they have chosen to do this rather than chosen not to. Nor have they given in to pressure from the rich and powerful to pursue policies that favour them. They don't have any choice in the matter, because they are not in control of things.

Governments operate within the framework of an economic system, and the current economic system—capitalism, to give it a name—is based on wealth being produced for sale on a market with a view to profit and on the competitive pressures of the market dictating that these profits be accumulated in the form of more and more capital invested to make yet further profits.

The aim of production under capitalism is not to satisfy people's needs but to accumulate profits. This is not a policy choice but an economic necessity imposed by the operation of impersonal and uncontrollable economic laws which governments have to abide by, unless they want to risk making things worse by provoking an economic crisis and stagnation in the area they rule over.

In short, governments put profits before poor people because they are obliged to by the impersonal workings of world market forces, not out of choice. The same goes, even more forcefully, for capitalist corporations. Their whole purpose is to make a profit on the capital invested in their businesses so that their shareholders can benefit. That's the nature of the beast, and we can't imagine that the World Development Movement is really so naïve as to believe that private companies, whether national or multinational, could pursue any other policy than to maximise their profits.

Classic reformist mistake

The WDM and the other campaigning charities are making, on the world level, the same classic reformist mistake that used to be made at national level: blaming policies pursued by governments rather than the economic system, and so seeing the solution as changing the government or even just its policies rather than changing the economic system. In many countries throughout the world, governments have been changed but the policies involving putting profits before people continued just as they did under the old government that openly upheld the status quo.

So, to be frank, campaigning charities like the WDM have got no chance at all of getting governments, and even less multinational companies, to change their practice of putting profits before people. And it is not because they believe merely in lobbying that dooms them to failure; not even the most violent street demonstrations can bring about a change in this practice. As long as the international capitalist system continues to exist, its economic laws will operate to put profits before people, and governments will have no choice but to dance to this tune.

But what are the alternative policies that the WDM and the others would like governments and companies to pursue? The WDM don't go into details in their leaflet but you can find out if you return their cut-off coupon. But this is not really necessary as another leaflet that fell out of the New Internationalist provides the answer. Issued by Christian Aid, and entitled "Trade for Life" it claims that "every day trade rules keep millions in poverty and a few in riches":

"Trade affects almost everybody on earth. Over the centuries it has become an increasingly powerful international force. But it is being manipulated by rich countries and companies to suit their interests. Poor people are missing out on the opportunities trade could bring. They are forced to continue living in poverty, sacrificing their lives and livelihoods for others to get rich."

But if the current "rules" governing trade are the cause, then the solution, logically, is to change the rules, and this is precisely the declared aim of the "Trade for Life" campaign:

"With new rules, trade could become one of the greatest solutions to global poverty. Trade has the power to create jobs, improve healthcare and benefit people's lives and livelihoods. The Trade for Life campaign calls for a major overhaul of the rules that run the international trading system."

Trade—the buying and selling of goods and services—should not be confused with the physical transportation of goods and services from one part of the world to another to be used there. The two are not the same, though trade usually involves the latter. In fact, it is precisely because there is trade—and not mere transportation—that goods and services are not distributed today to people according to their needs.

Trade is buying and selling, and this means markets and that goods and services are only produced to be sold on some market with a view to making a profit. It means that production is carried on not to satisfy people's needs, but to satisfy only paying needs, i.e. needs backed up by what pro-capitalist economists call "effective demand". In short, it means the application of the economic principle of "can't pay, can't have".

It is because the millions of people living in absolute poverty, who organisations like the WDM and Christian Aid are rightly concerned about, do not have any money, or not enough money, that their needs are not met: they don't constitute a market, or only an insufficiently profitable market. Because their demand for decent food, clothing, shelter, healthcare and sanitation is "ineffective", trade and the international trading system ignore them. No change in the rules of international trade is going to change this since it is the "international trading system" itself (aka the world market, aka capitalism) that is the cause.

What is required is not a reform of this system such as demanded by the World Development Movement, Christian Aid and the others, but its abolition and its replacement by one in which the Earth's resources become the common heritage of all humanity. Only on this basis can these resources be mobilised to eradicate world poverty and ensure a decent life for every man, woman and child on the planet. Yes, the world does have the wealth and means to end world poverty. And, yes, it is high time we tackled the problem.