Monday, 25 August 2008

How capitalism creates poverty

In response to an earlier comment on my blog I said I was in the process of writing a paper on how I believe Capitalism creates poverty rather than wealth. I've been working on that for several years now and progress is slow because I'm doing a lot of other things as well, but I intend to try and finish it within the next six months or so.

Of course, in a sense it is obvious that Capitalism creates poverty - you only need to look around the world to see that! We have a small number of very rich people and a very large number of poor people.

For those who want to know more, here is a brief explanation. Firstly, its important to understand that when I talk about capitalists I don't mean the man (or woman) who runs the corner shop, the local restaurateur or farmer, or any one of thousands of small and medium sized businesses. I mean Capitalism with a big C. That is the multi-national corporations, the banks and financiers, the speculators and people who have inherited large amounts of wealth. In the earlier to mid part of the 20th Century, after the great crash of 1929, these Capitalists were subjected to democratic controls and regulation through Franklin D Roosevelt and the New Deal in the USA, and also by the post-war settlement in the UK. Those controls were matched by an increase in public provision, nationalisation, and welfare, notably the National Health Service in the UK.

The result of this change brought about a more equal society and led to the development of what we call Middle Britain in the UK today. Millions of people were given opportunities - such as a University education - they would never have had if things had been as they were before all this happened. This, combined with relatively strong trade unions lead to a narrowing of the gap between rich and poor, and a much wider distribution of wealth.

Ever since it happened the Capitalists have been trying to roll back the gains that your parents and grandparents made through these changes. They want to get ever richer and to do this they need to make all of us poorer. For a while, the Soviet Union acted as a brake on the ambitions of capitalists. The Capitalists were terrified that communism might spread and were content to allow us in the 'West' to get better off (it was all right for them to continue to screw people in Asia, South America and Africa). Capitalist materialism had to be contrasted with the misery of life under the communists. The Soviet Union may not have been good for Russians, Ukrainians and Georgians but it was good for people in the West.

The collapse of the Soviet Union in the late eighties gave Capitalists the green light to begin the process of screwing the rest of us. This process had already started in the UK in the 1970s with the removal of the controls imposed on the movement of money (exchange controls) and the hobbling of the trade unions in the 1980s under Margaret Thatcher. In the decade after the collapse of the Soviet Union the retreat of the political left, which failed to respond to these changes, meant that big business was able to capture the EU just as it had gained control (once more) of the USA under Ronald Reagan.

Now that Capitalists make the rules they are making sure that we will soon be working as cheap labour for them. How do they do it? Well through governments such as New Labour, through the European Union and most especially through the the World Bank, International Monetary Fund (IMF) and the World Trade Organisation (WTO). These bodies enforce the globalisation of the world economy. They do it through a set of rules which force countries to open up their economies to big corporations through privatisation and deregulation. Health, education, pensions and welfare programmes are slashed, the natural resources of these countries are expropriated by the big corporations. The result is increasing poverty for the people and increasing wealth for the Capitalists. This is not business, or trade or commerce nor is it even economics - it is economic imperialism, it is the looting of countries on an unimaginable scale, it is the greatest heist in history.

What happens to countries that resist? their governments get overthrown, crises, are engineered and if that doesn't work bombs are dropped. Because make no mistake about it the Capitalists have an army - it is called NATO. Take Yugoslavia for example. Before the break up of the Soviet Union Yugoslavia was relatively prosperous. Now it consists of a handful of small impoverished states. When NATO troops invaded Kosovo they forcibly privatised the collective factories. The Iraqis, after the American invasion, are now poorer than they were under Saddam Hussein. Under the new Iraqi government trade unionists are being suppressed. And so the pattern is repeated.

I guess you probably believe it can't happen here. Er... well yes it can and it is. We have already seen the gap between rich a poor increase massively since New Labour came into power. A programme of privatisation and deregulation is rolling back the gains that our parents benefited so much from. Of course people in the UK have been conned on a massive scale. These changes have been sold to them as inevitable, as progress, as the bright shiny new private future, as opposed to the bad old days of the dreaded 1970s - when the UK was a much more equal society than it is now.

Firstly, we have the millions of de-unionised low paid workers who work for the pittance of the minimum wage, and the cheap labour imported from the poorer parts of Europe. Privatisation of public services is weakening the remaining Trade Union base. Now they are going for the middle classes. Privatisation of health and legal services means that the once independent doctors and lawyers are going to end up as employees of Tesco and Virgin. We are going to end up as mere customers rather than stakeholders in health and education, and we are going to end up paying more - for less.

Of course there is still someway to go but the end result of this is that you are going to end up poorer than your parents and your children will be poorer than you are. Its not too late to halt and reverse this process but we need to start doing something about it and soon. That is why I joined the Green Party. Because it has policies which will reverse what is happening to us now.

I've been doing some reading and research recently and I'll just leave you with a couple of things that are well worth looking at. The first is a lecture by Dr Michael Parenti. Although I was aware of the issues he discusses in his lecture I had never heard of him before I came across the video whist surfing the web recently. The lecture, delivered in 2002 before the Iraq war, is one hour long but is an hour well spent. The second is a book I'm reading called The Gods That Failed by Larry Elliot and Dan Atkinson. Although I've not finished it yet it is a book I could warmly recommend to anyone who wants to know more about how and why Capitalism creates poverty. I just want to finish this with part of a quote I found in that book. It was written by Jeremy Seabrook in Unemployment ( Quartet Books 1982) :

" The persistence of poverty in spite of the enormous material advances shows that the poor are there for reasons that have nothing to do with scarcity of resources (in any way that scarcity could be interpreted by common sense) but everything to do with ideology.

The very idea of sufficiency is one that capitalism cannot acknowledge. The possibility that a society could produce enough to ensure the well-being and comfort of all its people is a terrible blasphemy against the deep purposes of capitalism. The drive for more, for accumulation, for increase, the generation of wealth, imply dearth, wants and loss elsewhere; and the unchanging symbiosis of rich and poor only reflects this simple equation


Anonymous said...

Some interesting comments; not seen anything "new" here, but a good outline of the issues. And you're right - the result is poverty. On a global scale.

So what do we do about it? I do my best at work, with being a shop steward, but the odds are stacked against me as the company claims to be running at marginal profits so any attempts to increase pay will result in job losses. Not an easy battle.

You made ref previously to the current position of trade unions - but on a practical level, what do you do as a trade unionist where you work, to counter workers poverty? I am very open to ideas - as feel it's at workplace level that we start to empower the workers. I'm sure they'd agree with your views here, but I can't seen anyone on the floor seeking to read an academic paper. It will be good to see the finished product, so hope you publish it!

Joe D

Howard Thorp said...

Hi Joe. Thanks for your response. In respect of your comment "what do we do about it" - the short to medium term answer is "get hold of political power". That means becoming active in politics by joining a party such as the Green Party (GP) which espouses values which we can believe in.

One advantage of the Green Party is that it is not an avowedly socialist party - although its values are socialist with a small 's'. The Party has a Manifesto for a Sustainable Society (MfSS). Whilst this is not a user friendly document it does contain a programme which most socialists, trade unionists and Old Labourists could feel at home with.

The downside is image. We are still seen as the beards and sandals brigade by many people. But we are just about to elect Caroline Lucas as our leader and I have no doubt that she will give us the focus we need to recruit many more new members and supporters.

The GP has an active trade union section, and I am doing my best where I work to strengthen the hand of the union. How do we do that? By having a strategy just like our enemies do! Experience has taught me that the people who succeed have a plan and get themselves organised. That is what we need to do. Where I work I'm involved in creating a strategy which I hope will reverse the cuts in terms and conditions and standard of living we have been subjected to in the past few years. Of course this will mean politicising the branch which is not easy in the current climate.

As for the 'paper' I'm writing. Its not an academic paper - it is a political manifesto which aims to resurrect socialism and left wing politics. Quite ambitious I know but you have to go for it don't you? If we want to really beat capitalism, in the end, we can only do it economically. We need to create an alternative economic system that works for us just as the Capitalists have created an economic system that works to their advantage.

Ps I do recommend you watch the Parenti video if you haven't seen it.

Anonymous said...

All well and good to have a strategy, Howard, but how do you ensure it's delivered?
You make ref to your aims to politicise your union Branch, but how do you intend to do that? And what if they are not interested in your views (it does happen!)? Let your members read your blog and see what you think they should be doing? Or do you get them involved in the development of the plan?


LVTfan said...

Might I suggest an article for you? It is called "Henry George and the Reconstruction of Capitalism," by Bob Andelson, and you'll find it, among other places, at

I'd be interested in your reactions.

Howard Thorp said...

My reply to Joe was about as brief as I could possibly make it, as is this. I don't have any illusions. Making the kind of changes needed to overcome the forces promoting privatisation and deregulation is a huge task, but one which I believe is possible.

If you look at what is happening in South America, for example, there is cause for optimism. Chavez and Morales aren't perfect but they are working to ensure that the resources of their countries' are not looted by the multinationals. They deserve our support.

In the UK more and more people are beginning to wake up to what is happening. As far as strategies to promote trade unionism are concerned I hope to get as wide an involvement as possible in my workplace.

I don't claim to have all the answers. An important part of the purpose in writing this blog is to try and stimulate a debate which will lead to positive action.

I will be taking a look at

David Gerard said...

I don't know if this will work ...

Anonymous said...

Are you poor? Am I poor? With the luxury of a house, with a laptop with broadnand commection to the world, I don't think I can say I am!
So what is this poverty that we're talking about? And what - exactly - is wrong with entrepreneurialism in a consumer society?
And where's your evidence that the trade union base is weakened by capitalism? Closed shops are not illegal in the UK - even now. It is only illegal to seek to take action to enforce the status of a closed shop.
Is it capitalism that damaged the trade union base, or is it something else? Why don't workers voluntarily seek to work together to further their aims - is it because humans all have, essentially, the selfish gene?