Tuesday, 14 October 2014

On poverty


The other day one of this blog’s regular trolls expressed amazement that I’d linked to a post on poverty in good faith. Surely, reasoned the troll, the only reason a blog promoting “capitalist acts” would link to the story of a woman living in poverty would be to point and laugh.

The troll doesn’t get it.

Because it is capitalist acts that are lifting people out of poverty all the time. And that’s one of the things this blog was created to celebrate.

Consider this: capitalism inherited millennia of poverty, and (despite battling statism all the way) delivered two centuries of prosperity unimaginable  at any other time in history. That’s a great thing.


 Nearly 1 billion people have been lifted out of poverty in the last 2o years alone.   That’s a really great thing.


1 billion people lifted out of poverty not through charity, welfare, or the donations of the pope or Gwyneth Paltrow. But through greater capitalism: its markets, its rule of law, its production, its innovations.

One of the greatest insights into capitalism is that every trade is win-win. It’s only kings, warriors and governments that can coerce people against their will: but all human interaction when uncoerced are voluntary. They must be. “All proper human interactions are win-win; that’s why the parties decide to engage in them.”

This is one of the great benefits of living in a society, when it’s peaceful. Alone, none of us could produce all we need to flourish; but embedded within a network of folk all specialising in what they do best (and all being allowed to!) we can trade for the things we each value and favour.

That’s one of the underlying reasons capitalism succeeds in producing prosperity: because we trade values, capitalism rewards those who are best at creating new values. Because it values creation, it rewards the productive and the innovative. Because it rewards rewards the productive and the innovative, we see increasing production and innovation.

It was Ayn Rand who first identified that because this fabulous engine of production called capitalism requires no coercion to set it in motion, because it is properly the system that protects individual rights -- because it is based on voluntary exchange of human-created values – it is a system uniquely based not on any need for human sacrifice, but on the recognition that all gain is inherently non-sacrificial.  It is a system in other words promoting natural harmonies between men; demanding of each their best; allowing each of us to gain from the general existence of others.

In 1962 Ayn Rand wrote this:

Capitalism has created the highest standard of living ever known on earth. The evidence is incontrovertible. The contrast between West and East Berlin is the latest demonstration, like a laboratory experiment for all to see. Yet those who are loudest in proclaiming their desire to eliminate poverty are loudest in denouncing capitalism. Man’s well-being is not their goal.      

Since she wrote that, the evidence has only become more incontrovertible – yet the voices in opposition have not got any less. 

Perhaps because man’s well-being really isn’t their goal. Because if it were, they would surely be the loudest in proclaiming their desire to expand capitalism – or at least understand it.        That they aren’t, and don’t, and chose to stay and point and laugh instead, suggests eliminating poverty is still not their goal.

[Hat tip On Liberty Street, oaaselect]


  1. As usual, so well put Peter. If a person reading this blog cannot see sense in what you have laid out, unless they go to the effort of asking an intelligent question then it can only be because they don't want to see sense.

  2. There is no such thing as society. There are only individuals, and families.

  3. That number is huge! 1 billion in 20 years - I wonder what the socialists have to say about that

  4. I like coming over to the PC blog, especially after the New Zealand sad 'Daily Bog', and 'the Stranded' and the hopeless news everywhere its good to see how well off we are. My father and my Mother worked hard to give me and my brothers and sister a good life and they succeeded.

  5. Yep, capitalism and public investment in electricity generation, health, education, welfare, sewage systems, street lighting, roads... but knock yourself out deluding yourself, Atlas.

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  8. Chaz - In regards to "public investment in electricity generation, health, education, welfare, sewage systems, street lighting, roads" - where do you think the money, and in many cases the technology that allows this public expenditure in the first place come from, if not the surpluses of the capitalist economy?

  9. @Jamie: Happy to have your comments when they're relevant, but these were long-winded and well off-topic.

  10. It's not as simple as merely 'introducing capitalism' that brought the world out of the dark ages.

    The evolution of science and technology has a symbiotic relationship with capitalism but it's not the same thing: most of the greatest scientists were not motivated by profit.

    Secondly, that upswing in prosperity correlated with (relatively) stable governments to stop organised crime running everything.

  11. Hi Barry, "Capitalism" as used above refers to a system that protects private property rights as well as economic and civil freedoms.

    While individual inventors are perhaps not motivated by profit (the best ones were, though) they were at their most effective in a system that allowed them free exploration and protected their intellectual and physical property. The system that best allows for this to happen is capitalism.

  12. @Dolf Who were these best scientists/inventors who were motivated by profit? Off the top of my head Newton, Einstein, Tesla, Cavendish, Maxwell, Bohr, Planck, Turing, Da Vinci. All motivated by curiosity and/or the desire to improve society, not profit.

    Most of these people didn't have their intellectual property recognised at all. Arguably Tesla could have become one of the richest men in history if he cared about profiting from his IP, but he didn't.

    The point being: although capitalism is great, the progress of modern society has a lot of other factors involved.

  13. Barry - You've ignored or misunderstood Dolf's point. Capitalism means more than just "personally motivated by financial profit" - it refers to a system that enshrines and protects both material and intellectual property. Without this protection you can't have IP, you generally don't have inventions, and you certainly can't translate inventions into anything commercially useful.

  14. Barry, Mark has already summarized my point (Thanks for that)

    However, you might want to check your premises. Your examples? Well paid professional scientists, "Professional" in this instance meaning "For money". Yes they were curious, but they didn't turn down the paycheck, or the Nobel prize money.

    Oh yeah, Nobel, he did it for the money, as did Edison, Watt, Bell, Ford, Jobs, Gates, Ellison etc. ad infinitum.

    Tesla is a funny case, and probably the exception that proves the rule.

    Also, I am not saying Capitalism is the only system that allows progress, hell, even the soviets made some progress, but it is by far the best system.

  15. @Dolf: On your last point, you might enjoy an excellent book by Werner Keller called 'East Minus West Equals Zero.' Highly recommended.

  16. Hi Peter,

    Thanks, I'll have a look.

    TBH I was hedging a bit with that last statement, as my feeling is that where the Soviets did achieve, they were acting "un-Soviet". Much like the great growth of "communist" China today is due to the fact that they are no longer acting as true communists.

  17. Mark - The assertion that you don't get inventions without IP recognition is absolutely false. Likewise Dolf argued that the best inventors/scientists were motivated by profit and that is also demonstrably untrue.

    Right now you are using the World Wide Web. Tim Berners-Lee invented it & he is yet another great mind who didn't care about his IP being recognised. What you and Dolf need to understand is that great scientists are born with that desire to innovate; they don't become that way after weighing up their career options.

    Tesla is hardly the exception that proves the rule. One of the hallmarks of the great scientists is that they are obsessed with their work, not how much money they can make through it. I think pretty much all the great scientists I mentioned worked for meagre salaries at universities, at least during the periods when they made their most significant discoveries.

    Dolf - Nobel was a scientist first and foremost, then linked his scientific developments to the business his family owned; Edison was arguably more of a shrewd businessman & patent thief than an inventor; Ford, Gates, Ellison & Jobs are all businessmen at heart rather than scientists or inventors (consider how Jobs treated Wozniak). That leaves Watt & Bell, who did patent their ideas but are in the minority of great scientists in that regard. Certainly, putting 'ad infinitum' at the end of your list was a bit ridiculous.

    It's not that the scientists I mentioned were part of a competing system to capitalism; rather that science & business are separate endeavours. Although they can have a symbiotic relationship, to argue that innovation can only occur with a profit motive is erroneous.

  18. Barry - Your argument relies on an overly narrow and dis-integrated view of what capitalism is, that you seem to be stuck on

    I am not disputing that "great scientists are born with that desire to innovate", and for many that desire is their main driver, rather than seeing riches in their bank account. In fact I'd go further and say that this desire is not limited to scientists; I see it all the time in my field of engineering, in architecture, and even in property development. But that doesn't make your point. What *you* need to appreciate is that without capitalism that desire hits a dead end. Innovation generally can't occur, and it certainly can't be commercialised into anything commercially useful and alleviate poverty without a capitalist system that recognises property rights.

    If I'm "absolutely wrong" on this count, then please provide some examples of where inventions are thriving in places that don't recognise property rights. Or provide some examples of the converse - where you have sound property rights but people are living in relative poverty compared to those who don't.

    Without capitalism the best science and technology you can get is Soviet-style - where the state can send Sputniks into space, but the people starve or have to queue for toilet paper.

  19. Mark

    You were going along just fine and then you contradicted yourself. If it is true that the desire to innovate hits a dead end and can't occur in a Soviet-style system, then there could be no Sputnik.


  20. Barry

    If a great inventor and scientist with a burning desire to innovate were born in say, North Korea today, would he have the same effect of alleviating poverty if he stayed there or if emigrated to a country that is a bit more, dare I say, capitalist?

    Statistically speaking Somalia or Bolivia produce the same number of great inventors driven by an inborn passion for innovation per capita as the US, yet they still, on average, live in poverty. Are the people in "the west" genetically predisposed to leverage their great inventors to alleviate poverty, or might it have something to do with a political and economic system?

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  22. @Amit, the story of Sputnik has been long told, and it starts not in the Soviet Union but in Nordhausen, Niederschwafen and Peenemunde -- in Thuringia, north Germany -- and with General Eisenhower’s order to hand the German V2 programme over to the Soviets intact, including their future “space plan.” (“The Russians have made use of our experience in the building in long-range rockets and have taken over all our Peenemunde ideas,” said Dr Dornberger, [former commandant of Peenemunde.] “They adopted all our plans for the conquest of space, worked out by us in 1942. Satellites are only the first stage…”) *

    The German rocket scientists themselves were rounded up immediately after the war and arrested, and all their equipment and captured know-how sent with them in sealed trains to the Soviet Union, with orders to “advance their programme.” “The Red General Staff, who … had at their disposal over one-third of the entire Soviet gold and dollar reserves, valued at fourteen-thousand million dollars, used thus sum for the project.”

    Work on rockets was undertaken by these captured German scientists, working in slave labour camps in Nitishi, Kimri, Zagorsk, Podberezhye, Sovrino, Obiralovka, and Monino and Gordomlya Island near Moscow, and eventually in “sealed experimental establishments rapidly set up by the Red Army on the Caspian Sea and in the far north.”

    Work on remote control guidance systems was undertaken in a “settlement on the outskirts of [Moscow], surrounded by barbed wire and closely guarded,” and overseen by “a son of Berya, the much-feared chief of the Soviet Secret Police.” The idea behind these systems had originated in England, used to guide pilotless bombers to German V1 launching sites, and stolen by the Russians during the war. “For the production of this and other intricate and highly complicated … equipment, the Russians, who had been so far behind in this field, used the [captured] Zeiss factory from Jena, now installed at Momino, and the transplanted Siemens and Schuckert works. The Askania works, from West Berlin … also helped to make good any Russian deficiencies…”

    “Sputniks and Luniks are certainly notable technical achievements … The Americans [however] were polite enough not to mention the fact that all the instruments carried by the Sputnik were evolved in the West” – not to mention all the ideas and the scientists themselves.

    * All quotes from Werner Keller’s ‘East Minus West Equals Zero,’ 1962.

  23. Peter

    With all respect, this story makes it much, much worse!

    The German rocket scientists were rounded up as you mention. Some were sent to the USSR and some were sent to the UK and on to the USA. Then they were put to work. Given that mostly they were war criminals it is difficult to be sympathetic about their conditions and fate. Of course the ones who ended up in the USA fared better than their colleagues back in the USSR. The ones who were famous like von Braun did very nicely, thank you very much - rock star status! It would seem that on attributes of usefulness principle, morality and integrity diminish away- memory too. Anyway, accepting the selected extracts at face value makes the situation worse for us in that Nazi innovation led to Mercury-Redstone (and all the rest right up to and including the might of Saturn V). Just as one may claim that the Soviets imported and copied the Nazi innovations, so also the USA..... Hence, the totalitarian regime of National Socialism is where real innovation gets done and the rest just go out and copy it!

    The final selection ought to be rewritten as “Sputniks, Luniks, Mercury Redstone to Saturn V and the rest are certainly notable technical achievements … The Americans [however] were polite enough not to mention the fact that their technology was originally developed by the Nazis” – not to mention all the ideas and the scientists themselves."

    For Mark's thesis this is a disasterous development as there is little to choose between a Nazi system and a Soviet one when it comes to private property rights, liberty and capitalism.


  24. The US military certainly recruited Wernher von Braun and senior members of his team, those who had escaped enslavement by the Soviets, but you seem to have overlooked a few things:

    White Sands and Robert Goddard's rocket experiments already existed before von Braun et al went to the States -- indeed, von Braun incorporated Goddard's knowhow from his Aggretat series of rockets in von Braun's V2.

    Unlike the Soviets, the US military did not steal the enture contents of the Peenumunde desks and factories, nor enslave all the scientists they could find -- the only way it could have advanced its programme. Instead, it simply recruited two scientists educated before the Nazi era to help it make progress on a project already begun.

    In the modern world there is certainly a sad dichotomy between science and morality; general progress in the former, retardation in the latter. It is true that "von Braun escaped from the sphere of moral judgment with the help of the American authorities, who wanted to employ him in the missile and space programs. [Author Wayne Biddle] has a more general point to make, too: scientists and engineers, by claiming to be 'apolitical,' often escape being held to account for what they help to produce. In other words, von Braun is an egregious example of a more general phenomenon." [

    By this, we might observe that "government science" (by whichever government) is ineluctably interested in things that go bang -- and in sophisticated means by which to send things that go bang over vast distances. Von Braun himself says from a young age he was more interested in rocketry for space travel; the Nazis (and Soviets) were more interested in guided missiles -- and spent their fortunes developing them.

    As observers through history have noted, observers like Alexis de Tocqueville for example, no-one denies that governments can achieve thigs when they set slave labour and employees' minds to them, it's simply that these achievements -- pyramids, monuments, autobahns, Sputniks, guided missiles, nuclear bombs, Saturn V rockets -- are bought at great expense, with the great fortunes necessary to that research extracted sacrificially directly from the mouths of labour (contrast that with how free trade works, for which see above). As Ayn Rand observes, this bears particularly harshly on the serfs in slave-labour economies: "Industrialization is not a static goal; it is a dynamic process with a rapid rate of obsolescence. So the wretched serfs of a planned tribal economy, who starved while waiting for electric generators and tractors, are now starving while waiting for atomic power and interplanetary travel. Thus, in a “people’s state,” the progress of science is a threat to the people, and every advance is taken out of the people’s shrinking hides."

    We might note too that recent developments in private space research -- now that NASA has begun folded its space tent to become the research arm of the global warming movement -- suggest that there might be more economical ways to develop interplanetary travel than the blunderbuss govt methods developed following von Braun's approach.

    And we might also observe, with Frederic Bastiat, that there is progress that is seen, and progress that is not seen. Even in a relatively-free society, that can begin to afford the "luxury good" of this kind of science research, while we do see the weaponry and the monuments produced with taxpayers' cash, what we don't see is the innovations that weren't made because great brains were producing weapons and monuments -- and we also don't see what that spending might have produced if that money was kept in producers' pockets, and all the best scientists weren't on the govt payroll.

  25. Amit - I used the word "generally". There can still be limited technology within a dictatorship if:
    a) It's stolen or copied from someone else,
    b) it orginates from an earlier (pre-dictatorship) era; and/or
    c) the dictatorship allows a limited degree of freedom, such that some advancement within a limited scope is possible .

    In the case of Sputnik there seems to be a combination of all 3.

  26. Peter - You seem a little too desperate to attack govt initiatives for the sake of attacking govt initiatives.

    The problem with Bastiat's seen/unseen point on govt vs private industry scientists is that it is non-falsifiable. Maybe the NASA scientists that sent Armstrong to the moon would have achieved something better if they had been employed by private industry (I doubt it). There is obviously only one version of history to consider. You cannot assume private industry would have done better just because it suits your worldview.

    What are these recent developments in private space research? it's 45 years since NASA put men on the moon - the private space industry has a lot of catching up to do.

  27. Scott - You should judge a gov't initiative not so much on how successful they are at achieving their stated goal, but whether the initiative is in line with the proper rule of gov't. The fundamental principle is that creativity requires freedom. To the extent that a gov't initiative is consistent with freedom, there's nothing inherently wrong with being on the gov't payroll.

    To the extent the NASA space program had a direct or indirect defence role during the Cold War, it was legitimate. Even If you argue that it didn't have a defence role, then it was still the contribution of free men choosing to be a part of it, and in particular a lot of private contractors, that made it possible.

    I think you misunderstand Bastiat's seen/unseen point. The point is not that the private sector can necessarily do better than the gov't for any given project (in matters of defence they often don't). It's that whatever creativity and wealth the gov't takes and directs towards their own (generally illegitimate) initiatives, it necessarily detracts from progress in other areas that are often more sorely needed.

  28. Mark

    Point taken. I think that what you say makes sense.

    In regards to point three, there are also those who continue to innovate and develop "under the radar" so to speak. An example would be Altshuller in Russia. Eventually his work was recognised by the powers running the joint, but by then he'd already formulated the idea, tested it and knew he was onto something.


  29. Peter

    I don't doubt your sincerity on most of this, but your history is not sound. It reads like propaganda reminisceint of the early WW2 British racism in regards to the Japanese (e.g. they can't shoot straight because they all have milk-bottle glasses etc).

    That there were Nazi scientists and technicians who were shipped out to the Soviet Union we agree. That there were merely a pair dispatched to the US we disagree. There were many more than two (and do not forget the ones who ended up in the UK and Canada).

    Your characterisation of the contents of the Peenemunde sites being "stolen" by the Soviets is quaint. If we acccept they were indeed "stolen", then it was by the Americans. The Soviets were receivers and committed conversion, but it was the Americans who delivered it up into the hands of the receivers and converters. Really though, was this a theft at all? It was justified as spoils to the victors at the time. In reality the content of those sites was already proceeds of crime and it was in the process of being employed to commit further crimes, long before the arrival of the victorious Allies.

    Employing Nazi rocket scientists was not "the only way" the Soviets could have advanced their rocket programmes. They had their own scientists and rocketry that predated the war just as did the Americans. The reason for the interest in getting hold of Nazi rocket experts by both sides was for the purpose of accelerating the programmes, getting a leg-up or a shortcut to save time and resources. The Americans did it. The Russians did it. Rocket science and technology was identified as a path to weapons of exceptional range and destructive potential. Already it was clear to both the American and the Soviet sides that there would be no long term "trust" of their "allies". The Cold War was soon to be established. Both sides sought advantage or, at the minimum, equivalence with what the other side were up to. Rocketry was one of several areas where this happened.

    In researching the early rocket experiments, programs and pioneers you overlooked Vladimir Chelomey, Konstantin Tsiolkovsky, Valentin Glushko, Mikhail Yangel and so on. Of course you are not to be blamed for this as you are an English speaker from a country that lies proudly within the Western Alliance. It does need to be said that the propaganda of the Cold War wherein USSR technical people could do nothing except copy and steal misleads. It should not be relied upon as it is an inaccurate fabrication.

    On morality, you approach the truth of it I think, but are not quite there yet.



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