Capitalism and Extreme Povery

Abstract

This paper assesses claims that, prior to the 19th century, around 90% of the human population lived in extreme poverty (defined as the inability to access essential goods), and that global human welfare only began to improve with the rise of capitalism. These claims rely on national accounts and PPP exchange rates that do not adequately capture changes in people’s access to essential goods. We assess this narra- tive against extant data on three empirical indicators of human welfare: real wages (with respect to a subsistence basket), human height, and mortality. We ask whether these indicators improved or deteri- orated with the rise of capitalism in five world regions - Europe, Latin America, sub-Saharan Africa, South Asia and China – using the chronology put forward by world-systems theorists. The evidence we review here points to three conclusions. (1) It is unlikely that 90% of the human population lived in extreme poverty prior to the 19th century. Historically, unskilled urban labourers in all regions tended to have wages high enough to support a family of four above the poverty line by working 250 days or 12 months a year, except during periods of severe social dislocation, such as famines, wars, and institutionalized dispossession – particularly under colonialism. (2) The rise of capitalism caused a dramatic deterioration of human welfare. In all regions studied here, incorporation into the capitalist world-system was associated with a decline in wages to below subsistence, a deterioration in human stature, and an upturn in premature mortality. In parts of South Asia, sub-Saharan Africa, and Latin America, key welfare metrics have still not recovered. (3) Where progress has occurred, significant improvements in human welfare began several centuries after the rise of capitalism. In the core regions of Northwest Europe, progress began in the 1880s, while in the periphery and semi-periphery it began in the mid-20th century, a period characterized by the rise of anti-colonial and socialist political movements that redistributed incomes and established public provisioning systems.
World Development 161 (2023) 106026

Capitalism and extreme poverty: A global analysis of real wages, human height, and mortality since the long 16th century
Dylan Sullivan. Macquarie School of Social Sciences, Macquarie University, Australia; and Jason Hickel, Institute for Environmental Science and Technology (ICTA-UAB), Autonomous University of Barcelona, Spain, and International Inequalities Institute, London School of Economics and Political Science, UK

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