Posts Tagged ‘poverty’

225077

Special mention

Handmaid's Tale  PettJ20190504B_low

huck2may

Special mention

04-11-2019-mcfadden-915px

Jbug39V

It should perhaps come as no surprise that, as capitalism has been called into question and socialism generated increasing interest during the past decade, capitalism’s defenders have resorted to a long historical view. Look, they say, how capitalist growth has decreased poverty and led to improvements in people’s lives around the globe. Just stick with it and all will eventually be well.

That’s why, as Jason Hickel points out, the above infographic, based on sketchiest of data going back to 1820, is one of Bill Gates’s favorites. Or why Deirdre McCloskey never tires in scolding the critics of capitalism that “the Great Fact of modern life, the most surprising secular news since the domestication of plants and animals, is the rise of real income per head.”

The past two centuries of economic growth have done more to help the world’s poor than any activity by governments or charities or trade unions.

There are problem, of course, in the data—especially in basing the key series on an absurdly low poverty line of $1.90 a day.* Perhaps even more important, as Hickel explains, the numbers obscure the actual historical process:

that the world went from a situation where most of humanity had no need of money at all to one where today most of humanity struggles to survive on extremely small amounts of money. The graph casts this as a decline in poverty, but in reality what was going on was a process of dispossession that bulldozed people into the capitalist labour system, during the enclosure movements in Europe and the colonisation of the global south.

The masses people who were bulldozed into the capitalist labor system now produce and consume the immense accumulation of commodities that represents the growing wealth of nations around the world.**

But even as the percentage of workers living in extreme poverty has declined, especially in recent decades, they’re falling further and further behind the tiny group at the top. That’s because the incomes generated by economic growth on a global scale have been unevenly distributed.

e4

As the authors of the World Inequality Report 2018 have shown, while the real incomes of the bottom 50 percent of the world’s population increased (by 94 percent) from 1980 to 2016, they only captured a relatively small share (about 12 percent) of total growth during that period—while the world’s elite (whose incomes increased by 101 percent) captured more than twice that share (27 percent).***

What about those countries, such as China and India, where most of the decline in the population living in extreme poverty took place? There, the differences in total cumulative income growth was even more obscene. In China, for example, the incomes of the bottom 50 percent grew by less than 420 percent, while those of the top increased by 1920 percent. And in India, the growing gap between the bottom 50 percent and the top 1 percent is even more stark: just over 100 percent versus 857 percent.

That spectacular growth in inequality on a global scale is the part of the story the current defenders of capitalism such as Gates and McCloskey don’t want to tell. Yes, the percentage of the world’s population living in extreme poverty (at least according to conventional measures) has fallen. But that growing mass of wage-workers has been enlisted, forcibly or otherwise, in the project of producing a surplus that has been captured not by them, but by a tiny group at the top.

In other words, extreme poverty may have fallen but relative immiseration has proceeded apace—the result of a growing gap between those who have a lot and those who now have a little.

As I see it, declining poverty and growing inequality are two sides of the same historical coin of the growth of capitalism on a global scale.

 

*As Lant Pritchett has explained,

The exclusive reporting of international poverty based on the penurious “dollar a day” poverty line (morphed by inflation into the less lyrical “$1.90 a day” line) was a tool for “defining development down”. . .

A low bar poverty line necessarily treats both people just above the poverty line and people in considerable comfort and prosperity as “not poor” and hence necessarily creates false equivalences in which those just above and just below a poverty line were considered to be different (one “poor” and one “not poor”) but two people above the poverty line with very different incomes were treated the same (both “not poor”).

**I made much the same argument back in 2016:

global capitalism has changed over its history. At one time (especially in the nineteenth century), it meant industrialization in the global north and deindustrialization in the mostly noncapitalist global south (which were, in turn, transformed into providers of raw materials, which became cheap commodity inputs into northern capitalist production). Later, especially after decolonization (following World War II), we saw the beginnings of capitalist development in the south (under the aegis of the state, with a set of policies we often refer to as import-substitution industrialization), which involved a reindustrialization of the south (producing consumer goods that were previously imported) and a change in the kinds of industry prevalent in the north (which both exported consumer goods to the rest of the world, which after the first Great Depression and world war were once again growing, and often provided inputs into the production of consumer goods elsewhere). Later (especially from the 1980s onward), with the accumulation of capital in India, China, Brazil, and elsewhere, noncapitalist economies were disrupted and millions of peasants and rural workers (and their children) were forced to have the freedom to sell their ability to work in urban factories and offices. As a result, their monetary incomes rose (which is not to say their conditions of life necessarily improved), which is reflected in the growing elephant-body of the global distribution of income.

***And, for the middle 40 percent (mostly in North America and Western Europe), the growth in real incomes was much lower (only 43 percent).

20190124pettrgb2

Special mention

600_220462  rent_due

cvntny102317rgbjpg

Special mention

600_219841  600_219891

Alston

Last month, Philip Alston, the United Nations Special Rapporteur on extreme poverty and human rights (whose important work I have written about before), issued a tweet about the new poverty and healthcare numbers in the United States along with a challenge to the administration of Donald Trump (which in June decided to voluntarily remove itself from membership in the United Nations Human Rights Council after Alston issued a report on his 2017 mission to the United States).

The numbers for 2017 are indeed stupefying: more than 45 million Americans (13.9 percent of the population) were poor (according to the Supplemental Poverty Measure*), while 28.5 million (or 8.8 percent) did not have health insurance at any point during the year.

But the situation in the United States is even worse than widespread poverty and lack of access to decent healthcare. It’s high economic inequality, which according to a new report in Scientific American “negatively impacts nearly every aspect of human well-being—as well as the health of the biosphere.”

As Robert Sapolsky (unfortunately behind a paywall) explains, every step down the socioeconomic ladder, starting at the very top, is associated with worse health. Part of the problem, not surprisingly, stems from health risks (such as smoking and alcohol consumption) and protective factors (like health insurance and health-club memberships). But that’s only part of the explanation. But that’s only part of the explanation. The rest has to do with the “stressful psychosocial consequences” of low socioeconomic status.

while poverty is bad for your health, poverty amid plenty—inequality—can be worse by just about any measure: infant mortality, overall life expectancy, obesity, murder rates, and more. Health is particularly corroded by your nose constantly being rubbed in what you do not have.

It’s not only bodies that suffer from inequality. The natural environment, too, is negatively affected by the large and growing gap between the tiny group at the top and everyone else. According to James Boyce (also behind a paywall), more inequality leads to more environmental degradation—because the people who benefit from using or abusing the environment are economically and politically more powerful than those who are harmed. Moreover, those at the bottom—with less economic and political power—end up “bearing a disproportionate share of the environmental injury.”

Social and institutional trust, too, decline with growing inequality. And, as Bo Rothstein explains, societies like that of the United States can get trapped in a “feedback loop of corruption, distrust and inequality.”

Voters may realize they would benefit from policies that reduce inequality, but their distrust of one another and of their institutions prevents the political system from acting in the way they would prefer.

But what are the economics behind the kind of degrading and destructive inequality we’ve been witnessing in the United States in recent decades? For that, Scientific American turned to Nobel laureate Joseph Stiglitz for an explanation. Readers of this blog will be on familiar ground. As I’ve explained before (e.g., here), Stiglitz criticizes the “fictional narrative” of neoclassical economics, according to which everyone gets what they deserve through markets (which “may at one time have assuaged the guilt of those at the top and persuaded everyone else to accept this sorry state of affairs”), and offers an alternative explanation based on the shift from manufacturing to services (which in his view is a “winner-takes-all system”) and a political rewriting of the rules of economic game (in favor of large corporations, financial institutions, and pharmaceutical companies and against labor). So, for Stiglitz, the science of inequality is based on a set of power-related “market imperfections” that permit those at the top to engage in extracting rents (that is, in withdrawing “income from the national pie that is incommensurate with societal contribution”).

The major problem with Stiglitz’s “science” of economic inequality is that he fails to account for how the United States underwent a transition from less inequality (in the initial postwar period) to growing inequality (since the early 1980s). In order to accomplish that feat, he would need to look elsewhere, to the alternative science of exploitation.

While Stiglitz does mention exploitation at the beginning of his own account (with respect to American slavery), he then drops it from his approach in favor of rent extraction and market imperfections. If he’d followed his initial thrust, he might have been able to explain how—while New Deal reforms and World War II managed to engineer the shift from agriculture to manufacturing, reined in large corporations and Wall Street, and bolstered labor unions—what was kept intact was the ability of capital to appropriate and distribute the surplus produced by workers. Thus, American employers, however regulated, retained both the interest and the means to avoid and attempt to undo those regulations. And eventually they succeeded.

What is missing, then, from Stiglitz’s account is a third possibility, an approach that combines a focus on markets with power, that is, a class analysis of the distribution of income. According to this science of exploitation or class, markets are absolutely central to capitalism—on both the input side (e.g., when workers sell their labor power to capitalists) and the output side (when capitalists sell the finished goods to realize their value and capture profits). But so is power: workers are forced to have the freedom to sell their labor to capitalists because it has no use-value for them; and capitalists, who have access to the money to purchase the labor power, do so because they can productively consume it in order to appropriate the surplus-value the workers create.

That’s the first stage of the analysis, when markets and power combine to generate the surplus-value capitalists are able to realize in the form of profits. And that’s under the assumption that markets are competitive, that is, there are not market imperfections such as monopoly power. It is literally a different reading of commodity values and profits, and therefore a critique of the idea that capitalist factors of production “get what they deserve.” They don’t, because of the existence of class exploitation.

But what if markets aren’t competitive? What if, for example, there is some kind of monopoly power? Well, it depends on what industry or sector we’re referring to. Let’s take one of the industries mentioned by Stiglitz: Big Pharma. In the case where giant pharmaceutical companies are able to sell the commodities they produce at a price greater than their value, they are able to appropriate surplus from their own workers and to receive a distribution of surplus from other companies, when they pay for the drugs covered in their health-care plans. As a result, the rate of profit for the pharmaceutical companies rises (as their monopoly power increases) and the rate of profit for other employers falls (unless, of course, they can change their healthcare plans or cut some other distribution of their surplus-value).**

The analysis could go on. My only point is to point out there’s a third possibility in the debate over growing inequality in the United States—a theory that is missing from Stiglitz’s article and from Scientific American’s entire report on inequality, a science that combines markets and power and is focused on the role of class in making sense of the obscene levels of inequality that are destroying nearly every aspect of human well-being including the natural environment in the United States today.

And, of course, that third approach has policy implications very different from the others—not to force workers to increase their productivity in order to receive higher wages through the labor market or to hope that decreasing market concentration will make the distribution of income more equal, but instead to attack the problem at its source. That would mean changing both markets and power with the goal of eliminating class exploitation.

 

*The official rate was 12.3 percent, which means that 39.7 million Americans fell below the poverty line.

**This is one of the reasons capitalist employers might support “affordable” healthcare, to raise their rates of profit.

what-the-fight-for-15-could-get-us-002-d95

what-the-fight-for-15-could-get-us-004-1a7

what-the-fight-for-15-could-get-us-007-218

what-the-fight-for-15-could-get-us-008-1a2

what-the-fight-for-15-could-get-us-009-cb9

what-the-fight-for-15-could-get-us-10-3a8

what-the-fight-for-15-could-get-us-17-e88

what-the-fight-for-15-could-get-us-18-121what-the-fight-for-15-could-get-us-19-59f

what-the-fight-for-15-could-get-us-20-52a

what-the-fight-for-15-could-get-us-31-7f4

what-the-fight-for-15-could-get-us-47-d9dwhat-the-fight-for-15-could-get-us-48-48c

what-the-fight-for-15-could-get-us-49-0d0

what-the-fight-for-15-could-get-us-51-37a what-the-fight-for-15-could-get-us-52-fab

what-the-fight-for-15-could-get-us-53-f0a

what-the-fight-for-15-could-get-us-54-8b4

source