2000s >> 2008 >> no-1247-july-2008

World Poverty

Why it will never be eliminated from the capitalist system

Everyone has a notion of what global poverty is. Many tut-tut and wish someone would do something about it. Some give funds, a little or a great deal, in the hope of relieving some of the worst effects here or there. Governments and global institutions spend vast sums of money on getting together regularly in luxury hotels to discuss, repeatedly, what could/should be done, where and how it should be done and how much in money terms each of them will pledge for the current initiative. The bottom line – how much of these pledges the donors actually divest themselves of compared with the self-seeking public pronouncements they make about their grand schemes – reveals huge discrepancies.


Apart from concerns of absolute poverty of billions living on less than one or two dollars a day there are also plenty living in relative poverty who know only too well the feeling of sinking deeper and deeper in the last two or three decades into unmanageable debt through falling incomes (in real terms), through job-loss and no hope of replacement, through long-term illness or injury, through losing their homes from natural disaster, conflict or falling house prices and foreclosures, through unfavourable global tendencies, through simply always having more months than money. Awareness of global poverty, whether relative or absolute, has probably never had as high a profile as currently but much of the data compiled by such institutions as the World Bank and available in publications geared to promoting an unquestioning belief in the continuation of the economic norms of the capitalist system convey information slanted to support particular agenda. That schemes are afoot to tackle and abolish the worst ravages of poverty is an illusion manufactured to veil the truth.


In an article in Dissent winter 2008, “Growth and Inequality” Thomas Pogge (of the Centre for Applied Philosophy and Public Ethics at the Australian National University and soon to be in the Philosophy Department of Yale University) debunks the myth, promulgated by the Economist, the World Bank and others who subscribe to this unfounded belief, that “growth is good” for all across the spectrum. Statistics can be and are manipulated and displayed to back up a pre-chosen outcome. Pogge shows example after example of how this is done. The cherry-picking that follows is designed to present a part of what he reveals about growing inequality without misrepresenting his main thrust. An early example compares figures from the World Bank tabulating the Gross National Income of the high-income countries alongside the rest of the world, with his own figures extrapolated from the World Bank’s data placing the Gross National Income of the richest countries alongside the GNI only of the poorest countries (each group constituting 10 percent of the world’s population). The difference between the two comparisons is striking. Over a 25 year period, 1980-2005, in the World Bank’s table, the high income countries had between 15.8 and 23.2 (fluctuating up and down slightly in different years) times more than the rest of the world; however, in the same period in Pogge’s figures derived from the World Bank’s World Development Reports, he shows the difference between richest and poorest increasing from 60:1 to 122:1. In an example from the Economist whose author sets out to prove that faster growth is more beneficial for the more populous poor countries (e.g. China and India) than the less populous ones Pogge explains that the Economist’s author is erroneously comparing Gross Domestic Product rather than Gross National Product/Gross National Income, thus inflating the figures and grossly misleading the readers about the true state of income of the world’s poorest. (Gross Domestic Product includes the earnings made by foreigners which is leaving the country and also includes earnings that residents derive from abroad – hardly relevant in an assessment of the wealth of the poor).

 Within countries the variations in income inequality generally happen to be greater in developing countries rather than in wealthier countries. It is shown that “substantial improvements in the position of the poor are possible at tiny opportunity cost to the rich” e.g. Bolivia’s richest 10 percent have almost $13,000 per capita whilst the poorest 10 percent have $77. Shifting $200 from each of the rich to the poor would make an enormous difference to the poor raising their average income from 2.8 percent to 10 percent of average income whilst the rich would hardly notice the difference. A study by the Asian Development Bank in 2007 concluded that China’s economy is actually 40 percent smaller than previously thought. Purchasing power had been grossly overestimated and therefore the number of Chinese living on less than a dollar a day is three times more than previously thought, at 300 million. The same study also shows that the numbers in India on less than a dollar a day are double those thought – 800 million. Similar discrepancies occurred for those living on $2 a day. These are huge errors in the World Bank’s figures and this shows only two countries. As for the true worldwide figure we are left to make our own conclusions. One conclusion Pogge comes to is that growth conceived from the standpoint of the poorer population segments would achieve far better results in avoiding poverty on the one hand and would reduce environmental degradation on the other.


Global, i.e. international, inequalities prove to be even wider than intra-national ones. Figures for 2000 show the personal wealth of the bottom 20 percent to be 0.12 percent, and that of the bottom 40 percent to be 0.62 percent in contrast to 39.9 percent being held by the top 1 percent of world population and 70.6 percent by the top 5 percent. Fascinating as the figures are, the reality is that to double the wealth of the bottom 40 percent of world population only 1.55 percent of the top 1 percent would need to be transferred. And to double the wealth of the bottom 80 percent would still only take 15.3 percent of the top 1 percent or 8.7 percent of the top 5 percent. This is not to suggest that such a redistribution of wealth should take place or even that it would much improve the standing of the impoverished in the short or long term but it is another simple demonstration of the sheer scale of the gulf between rich and poor and a reminder of the huge numbers of populations on the ‘wrong’ side of the equation because the current system requires the imbalance in order to function.


With regard to attempts at eliminating poverty; first, at the 1996 World Food Summit in Rome, 186 governments pledged to achieve food security for all and to halve the present level of hunger no later than 2015; second, at the U.N. in 2000, 192 governments came together to “proclaim the Millennium Development Goals” – the commitment to halve world poverty by 2015 referred to by Pogge as “the grandest global initiative.” The sleight of hand from 1996 to 2000 is one example Pogge reveals as to how these governments (Britain included) simply pay lip service to the goals they set. Apart from the U.S. immediately disavowing the 1996 ‘agreement’ suggesting that a fundamental right to be free from hunger is a goal to be aspired to and realised progressively but not one to give rise to any international obligations, the 192 governments committed to the Millennium Development Goals changed the goalposts by subtly changing the wording from halving the number to halving the proportion, in one word vastly reducing the target. The 1996 promise was to reduce the extremely poor from 1,087.8 million to 543.9 million by 2015. The MDG in 2000 promised a 17 percent reduction from 1,089.6 million in 2000 to 905.2 million in 2015. In real terms at least 361.3 million have been ‘lost’ in the revamping of the figures from number to proportion – the 361,300,000+ still being people remember, and extremely hungry, vulnerable people at that. In addition, as each year goes by more millions are included in reports as being chronically undernourished. “Creative accounting” Thomas Pogge maintains, “is sustaining in affluent countries the belief that global poverty is disappearing and therefore does not require our attention.” His disgust is palpable; “thus far official concerns about poverty and inequality are mostly rhetorical.”


Aside from the obvious fact that extreme poverty engenders widespread hunger, malnutrition, lack of clean water, death from easily preventable diseases, lack of access to healthcare, inadequate shelter, illiteracy and general lack of education, the poor also suffer from a plethora of other, less obvious inequalities. They have no influence in international decisions which affect their lives and livelihoods. They have no bargaining power. They have no lobbyists. They have no importance alongside foreign governments and corporations. They are there to be ignored, discounted.


The marginalisation of masses of the global population is no accident, no simple mistake or miscalculation but an inevitable consequence of the deliberate policy of those who hold the power; those whose aim is to accumulate more and more of the world’s land, resources, wealth of any kind or just money, because this is what the capitalist system from which they benefit requires of them; and deliberate policy, too, of those in governments who do their utmost to assist, sometimes in the hope of gaining a few steps on the ladder. There is no altruism here. Even accumulating and then giving away $x billion to a ‘worthy cause’ will only address a fraction of the problem for a short time (e.g. $50 billion between 500 million people is $100 each) and if, of the world’s wealthiest 1 percent, more than a handful were giving away such sums the world’s media would broadcast it large. No, there is no philanthropy on that scale. As the figures showed earlier a tiny proportion from the top 5 percent’s vast wealth would make differences that would not go unnoticed. It is Thomas Pogge’s opinion that “it is for the sake of trivial economic gains that national and global elites are keeping billions of human beings in life-threatening poverty.” His solution would be economic institutions and policies prepared to sacrifice “aggregate economic growth” as a “moral imperative.”


The facts are out there. The national and global elites understand the facts only too well. When the facts show that there are no moral aspects being factored in it must be time for the common people to realize that they, too, are part of the problem for having continued to swallow the bait proffered. Not the 1 and 2 dollar a day billions, as stated earlier they have no bargaining power; they are, as yet, dispensable. But what of the huge middle and upper sections, the 55 percent between the elite 5 percent and the 40 percent at the bottom? The vast working class of the world, lied to over and again by their own governments and by governments collectively in their pompous commitments on our behalf, is a sleeping giant. When it awakens, thoroughly sick and tired, this giant will be a force to be reckoned with. We can’t wait for a change of heart from the top. The top has no will to fix the system except to their own advantage and only a complete change will suffice. A world of free access for all and common ownership of the common wealth is the only way to eliminate poverty. The solution is in our hands.


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