Can Capitalism Eliminate Poverty?

Probably not, even though it's the best economic system yet. It takes compassion from the haves to help the have-nots

By Stephen J. DeVience

Capitalism is the most beneficial economic system for the world today. It has been around since man began to trade shells for animal skins. The success of capitalism is due to the way it utilizes human nature. Most people are greedy and want more. Therefore, they work to create wealth -- and trade for things that they cannot make.

It all seems simple on paper. However, the reality is that capitalism involves complex social and economic forces. This can make it frightening to people who don't understand its dynamics, so they attack it as a cruel and unfair beast. In some ways that's true. Still, it is also the most benevolent system yet found.

The unfortunate side of capitalism is that in this imperfect world, where capitalism is neither universal nor uniform, there always seem to be losers. Winners may outnumber losers, but losers there are. Also, an inherent amount of poverty is built into the system. Theoretically, there should be a decent job for everyone. But many jobs pay low wages, so people endure poverty even as they work.


  Communism was supposed to solve this problem of poverty. But in most nations that tried it, ordinary people became even poorer. China is the sole exception, likely because it now permits capitalistic ideas to flourish, after a fashion. It is able to make money in external free markets while tightly controlling its internal economy.

Yet even much of China's population still lives in poverty. The same holds for Cuba, North Korea, and Vietnam. All of the great communist experiments have failed, demonstrating the ineffectiveness of that system.

So how can poverty be eliminated under the capitalist system? Many say this can be done through improving education. However, if everyone is better educated, there will just be smarter workers holding minimum-wage jobs. Education can put one person ahead of another, but it alone cannot improve the system as a whole. There will always be more demand for janitors than for lawyers.


  Although there are many natural reasons for poverty, such as disasters or drought, many Americans bring poverty upon themselves. People drop out of high school or have children that they cannot support. The welfare system can give an unwed mother enough money to feed her children, but it does not take care of them so that she can get a job. This is a problem seemingly without a ready answer.

It would be nice to believe that there is a solution that will lead to a fair, equitable society without want. Despite many attempts, it has not been found. Until it is, if it is, maybe we can make do with simple generosity and a stronger sense of community.

More Americans might be willing to donate money or time if they could be sure their contributions benefited a good cause and good people, but they are put off by horror stories of unscrupulous swindlers who prey on the generous. Because compassionate Americans could alleviate much of the human toll that poverty now entails, governments really need to do a better job of overseeing charities.


  Otherwise, free-market capitalism is a great system. It is highly productive and stable in the long term. It provides opportunities for the ambitious, and it allows even those who are laid back to lead comfortable lives. It is sad that some must suffer, but no better economic system is visible, even on distant horizons.

So, since poverty seems likely to remain a serious blight on society, successful people must take more responsibility for helping the poor. Generosity is the companion that capitalism needs most.

DeVience was a finalist in the 2005 Intel Science Talent Search

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