Did capitalism reduce global poverty?

You will find that questions being asked, rhetorically, all over the Internet and especially academic Twitter. I think many people conflate “recent small policy change towards market liberalization” with capitalism. What is missing in these discussions is an agreed upon time series for something called “capitalism”…. so while “poverty” has an enormous measurement apparatus, and environmental quality also has a big measurement apparatus, and life expectancy, and other things (well, maybe not nature deficit disorder)…. “capitalism” is always mentioned and never measured. It is as if people think somehow by simply knowing the name of a country and a year, they can proclaim it “capitalist”… So play a game: Is Nicaragua in 2014 more or less capitalist than Nicaragua in 2002? Than Nicaragua in 1952? Than Nicaragua in 1852? What metric among the metrics that go into the multidimensional index changed ? Tired already? Imagine now doing that for 150 complex countries over 200 years (and why do we not think that the Roman Empire was or was not “capitalist”?)… Remember that selecting on the dependent variable (as Marx did) is a big problem (the countries that got rich in 1850 are the capitalist countries…)….

If we have no such measure, we can’t even start to attribute credit or causality….

Commentators also often overlook that many people think that the United States, the global leader for most of the 20th century in poverty decline and income growth, had an indicator of “extent of capitalism” that declined, sometimes sharply, over the entire 1930-2000 period, with some upticks maybe in early 1980s but even that is debatable if one had a comprehensive measure rather than a simple rhetoric…

And by the way maybe rhetoric rather than measurable policies or practices isĀ  important: the main attribute of “capitalism” might indeed be that people think they are actually in a capitalist economy…. pop-writers have a field day with that kind of stuff, that people need to be like Uber and just “do it” rather than “ask permission” from the bureaucrats…

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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