Is capitalism to blame for hunger and poverty?

Before capitalism, most of the global population were living in extreme poverty. From 90 percent in 1820, the rate has now fallen to 10 percent.

Most remarkably, since the end of communism in China and other countries in recent decades, poverty has declined faster than in any previous period in human history. 

Many people who believe that capitalism is to blame for hunger and poverty have an entirely unrealistic notion of life in pre-capitalist societies. Johan Norberg, the author of the book Progress, was himself an anti-capitalist in his youth. He admits, however, that he had never really given much thought to how people might have lived before the Industrial Revolution. He had basically imagined this entire epoch of human history similar to a trip to the countryside. 

Fernand Braudel, the famous French historian wrote a definitive work on the social history of the 15th to 18th centuries. People’s diets, he revealed, largely consisted of porridge, soup and bread made from low-quality flour, which was baked in batches every couple of months and was often moldy and so hard that it could only be cut with an axe. Most people, even in cities, had to get by on 2,000 calories a day, with carbohydrates making up well over 60 percent of the total. Food was often nothing more than a lifetime of eating bread and bread again, or mush and porridge. People back then were lean and small in stature – throughout history, the human body has adapted to inadequate caloric intake. 

Some people rave about the harmonious pre-capitalist world, in which everything was so “decelerated.” This slowness, however, was mostly a result of physical weakness due to permanent malnutrition. It is estimated that 200 years ago about 20 percent of the inhabitants of England and France were not able to work at all. At most, they were only strong enough to walk slowly for a few hours each day, which condemned them to begging for their entire lives. The “possessions” most people owned were limited to no more than a few items, as seen in contemporary pictures: a few stools, a bench and a barrel that served as a table. Even these descriptions only refer to Western Europe, which was home to the small number of countries where people were best off at the time.

I have described this in such detail here so that you can more fully understand what it means when people say that 90 percent of the world’s population were living in extreme poverty before the emergence of capitalism. In other parts of the world, living standards were far worse than they were in Western Europe. The British economist Angus Maddison, who specialises in analysing historical economic data, used a series of complex calculations to estimate the historic gross domestic product per capita for a range of countries around the world. In 1820, this amounted to 1,202 international dollars (a unit of measurement based on the year 1990) in Western Europe. The figure is similar in other Western countries, such as North America, Australia and New Zealand. In the rest of the world, however, GDP per capita at the same time was only 580 international dollars, or about half as much.

The impact of capitalism is evident from a longer historical comparison. In the first year of our common era, GDP per capita in Western Europe was 576 international dollars, compared to 467 international dollars for the world as a whole. That means that in Europe, GDP per capita doubled in the pre-capitalist period, between year 1 and the year 1820. In the much shorter period from 1820 to 2003, GDP per capita in Western Europe then rose from 1,202 to 19,912 international dollars and in the other capitalist countries of the West it climbed as high as 23,710 international dollars.

But the same progress was not replicated everywhere. In Asia, for example, in the 153 years from 1820 to 1973 GDP per capita only increased from 691 to 1,718 international dollars. And then, in just 30 years, from 1973 to 2003, it rose from 1,718 to 4,344 international dollars.

So what happened? These incredible developments in Asia are mainly due to the fact that China progressively introduced free-market principles after Mao Zedong’s death in 1976. As late as 1981, as many as 88 percent of the Chinese population were still living in extreme poverty; today it is less than one percent. Never in world history have so many hundreds of millions of people been lifted out of abject poverty and into the middle class in such a short time. 

Capitalism has done more to overcome hunger and poverty than any other system in world history. The most devastating man-made famines over the past 100 years all occurred under socialism – in the 1930s alone, according to a range of estimates, between five and nine million people died in the Soviet Union from famines caused by the socialist collectivisation of agriculture.

The end of communism in China and the Soviet Union was a major factor in the 42 percent reduction of hunger between 1990 and 2017. 

In North Korea, however, one of the world’s few remaining socialist states, several hundred thousand people died in famines from 1994 to 1998. 

The Heritage Foundation’s Index of Economic Freedom reveals that the world’s most capitalist countries have an average GDP per capita of $71,576. That compares to $47,706 in the “mostly free” countries. At the other end of the scale are the “mostly unfree” and “repressed” countries, where the GDP per capita is only $6,834 and $7,163, respectively. 

Rainer Zitelmann is the author of The Power of Capitalism.