Is Capitalism Good For The Poor Essay

This paper sets out to answer the question, “Is Capitalism Good for the Poor?” The answer—yes or no—depends on the particular features of a nation’s institutions and how we measure and perceive poverty. Poverty, capitalism, economic growth, income distribution, markets, property rights, and rule of law are among the many topics addressed. Despite various impediments to positive institutional change in many nations, heightened competition spurred by the information revolution and the spread of political and economic participation worldwide through the usage of globalization has benefit people previously cut off from the path of success due to poverty. In this regard, it is important to emphasize that economic growth, where it has taken hold, has benefited all layers of society. As Ayn Rand observed, “Capitalism did not create poverty—it inherited it.” To be sure, life during the early days of capitalism was hard (as life had always been), but for anyone willing and able to work, life was better than it had ever been—and even today, is getting better.

Keywords: Absolute Poverty, Capitalism, Economic Growth

Historically, economic growth has proven to be civilization’s most effective weapon against poverty. Capitalist institutions – competitive markets, strengthened by private property rights secured by the rule of law – have provided extremely powerful incentives for a continuous stream of innovation and entrepreneurship that has fueled the growth of production. Regardless of resource endowments, culture, or other characteristics, countries that have adopted the key institutions of capitalism have experienced the highest levels of economic growth, and have seen the biggest improvements in citizens’ standards of living. Conversely, those that have failed to establish capitalist institutions have created little wealth, and have suffered the frustration of stagnating per capita incomes or, as in much of Africa, the slide into ever-worsening