Tuesday, October 20, 2009

The tale of poverty

In my research I have occasionally made the controversial claim that part of the “resistance” against a just world order is due to the belief that it would mean a “levelling out” of our economic wealth. Closely associated to this view is the idea that we in the industrial countries are rich today because other people in the developing world are poor. In many ways these beliefs reflect a traditional pre-modern understanding of poverty that has been, if not before, thoroughly falsified by the experience of welfare capitalism. To illustrate why this is so we can begin with imagining a traditional agrarian economy. In such a setting it may be true that the rich benefit, at least in a material sense, from having a large class of destitute people who carry out all the hard work necessary to maintain society. But as soon as we move forward in history, the introduction of labour-saving devices and the expansion of the monetary economy mean that the rich have a lot more to gain from growing aggregated purchase power. Continuous productivity gains in fact begin to depend on that more and more people become skilled and also become able to buy all the goods that are produced. By the advent of industrialism, this feedback loop starts to accelerate dramatically as mass production sets in. At this point, capital owners realize that without consumers, the massive productive capacity of their industries is not of much use.

Yet today, in a sense of historical déjà-vu, we are again faced with the belief that it is necessary to keep people poor in order for the economy to function. The argument normally goes that without a constant flow of cheap natural resources and the underpaid work carried out in for instance textiles industries, the world economy would come to a halt. What is missing here is of course the other side of the coin, namely what additional purchase power that all these (previously) poor people would bring to the market. Since economics by definition is a plus-sum game, this would simply mean that all our boats would rise. Most likely, a lot of menial work would then be priced out of the market since no one would be willing to carry it out, yet this should come as a relief and not a threat since it would leave more room for automation.

Fantastic as this tale may sound, I believe that it is a pretty accurate description of what has already happened in many parts of the world. Yet, as you are all aware, the real caveat remains. If the world were to see, and data suggest that it is in fact seeing, such an unprecedented rise in living standards, it would put an enormous strain on the natural environment, possibly unleashing cataclysmic environmental changes. While maybe temporarily halted by the current deep economic recession, some analysts think that we have already missed the turn to a low-emissions path and that the lofty promise of mainstream sustainable development, that poverty reduction would automatically lead to less environmental degradation, has categorically turned sour.

To overcome this apparent trap, and again show why the world does not “need” poor people but rather transformative progressive politics, we urgently need breakthrough innovations capable of challenging the Neo-Malthusian logic prevalent in much contemporary Green thinking.



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