How Capitalism has contributed to rising Global Poverty Rates Details
Capitalism is an economic system in which the means of production—such as land, factories,
and businesses—are privately owned and operated for profit. In capitalism, economic decisions
like what to produce, how much to produce, and at what price to sell goods are largely
determined by market forces (supply and demand) rather than by the government.
Core Features of Capitalism:
1. Private Ownership
o Individuals or businesses have the right to own property, resources, and
businesses. Owners can control how these resources are used and can reap the
rewards of their investments.
2. Free Market
Economic activities are guided by the forces of supply and demand. Prices, production,
and distribution of goods are determined through voluntary exchanges in markets rather
than by central planning. Competition between businesses encourages efficiency and
innovation.
3. Profit Motivation. The main goal of individuals and businesses is to make a profit.
o Profit serves as an incentive to take risks, innovate, and improve products or
services.
Arguments that capitalism worsens poverty:
1. Income Inequality. Critics argue that capitalism tends to concentrate wealth in the hands
of a few, creating a wide gap between rich and poor.
2. Exploitation of Labor- Workers may be underpaid relative to the profits generated by
their labor.
Arguments that capitalism alleviates poverty:
1. Wealth Creation-Historically, capitalist economies have lifted millions out of absolute
poverty by creating opportunities for income and entrepreneurship.
2. Opportunities for Social Mobility- With access to education, skills, or capital,
individuals can improve their economic status, potentially escaping poverty.
My focus is on analyzing how capitalism has contributed to increasing poverty rates.
Specifically, I will examine the ways in which capitalist structures and practices—such as wealth
concentration, exploitation of labor, market-driven inequalities, and insufficient social
protections—can exacerbate economic disparities and push vulnerable populations further into
poverty.
Page 1 of 7
, Historical and structural inequalities
Extraction of Resources and Wealth. European powers during the colonial era exploited
colonies for raw materials, agricultural products, and precious metals. Example: Gold and silver
from Latin America, cotton from India, or spices from Southeast Asia enriched Europe while
leaving colonies economically dependent
Disruption of Local Economies. Colonial powers often dismantled pre-existing economic
systems to serve European markets. Local industries were undermined or destroyed because they
could not compete with imported European goods. Example: India’s traditional textile industry
collapsed due to British industrial imports, creating long-term unemployment and poverty.
Historically, wealth accumulation under capitalism has tended to benefit elites
disproportionately while excluding lower-income groups, creating entrenched social and
economic inequalities. Here’s a detailed discussion: Policies like low taxes on inheritance, land
ownership laws, or trade protections favored elites while offering little support to the poor.
Control of Capital and Means of Production
Early industrial capitalism enabled factory owners and financiers to control machinery, raw
materials, and production processes.
Market inequalities and withy concentration
Access to Information and Networks. Wealthy individuals and large firms have better access to
market information, professional networks, and expert advice.
Economies of Scale. Smaller businesses struggle to compete with these lower prices, giving an
advantage to established corporations.
Wealth concentration refers to the process by which a large portion of a society’s wealth is
held by a small percentage of the population.
Inheritance and Intergenerational Wealth
Wealthy families pass down assets, property, and investments to their childre
Control Over Economic Opportunities
Poorer individuals have limited access to the same opportunities, making it
difficult to improve their economic status.
Page 2 of 7
Capitalism is an economic system in which the means of production—such as land, factories,
and businesses—are privately owned and operated for profit. In capitalism, economic decisions
like what to produce, how much to produce, and at what price to sell goods are largely
determined by market forces (supply and demand) rather than by the government.
Core Features of Capitalism:
1. Private Ownership
o Individuals or businesses have the right to own property, resources, and
businesses. Owners can control how these resources are used and can reap the
rewards of their investments.
2. Free Market
Economic activities are guided by the forces of supply and demand. Prices, production,
and distribution of goods are determined through voluntary exchanges in markets rather
than by central planning. Competition between businesses encourages efficiency and
innovation.
3. Profit Motivation. The main goal of individuals and businesses is to make a profit.
o Profit serves as an incentive to take risks, innovate, and improve products or
services.
Arguments that capitalism worsens poverty:
1. Income Inequality. Critics argue that capitalism tends to concentrate wealth in the hands
of a few, creating a wide gap between rich and poor.
2. Exploitation of Labor- Workers may be underpaid relative to the profits generated by
their labor.
Arguments that capitalism alleviates poverty:
1. Wealth Creation-Historically, capitalist economies have lifted millions out of absolute
poverty by creating opportunities for income and entrepreneurship.
2. Opportunities for Social Mobility- With access to education, skills, or capital,
individuals can improve their economic status, potentially escaping poverty.
My focus is on analyzing how capitalism has contributed to increasing poverty rates.
Specifically, I will examine the ways in which capitalist structures and practices—such as wealth
concentration, exploitation of labor, market-driven inequalities, and insufficient social
protections—can exacerbate economic disparities and push vulnerable populations further into
poverty.
Page 1 of 7
, Historical and structural inequalities
Extraction of Resources and Wealth. European powers during the colonial era exploited
colonies for raw materials, agricultural products, and precious metals. Example: Gold and silver
from Latin America, cotton from India, or spices from Southeast Asia enriched Europe while
leaving colonies economically dependent
Disruption of Local Economies. Colonial powers often dismantled pre-existing economic
systems to serve European markets. Local industries were undermined or destroyed because they
could not compete with imported European goods. Example: India’s traditional textile industry
collapsed due to British industrial imports, creating long-term unemployment and poverty.
Historically, wealth accumulation under capitalism has tended to benefit elites
disproportionately while excluding lower-income groups, creating entrenched social and
economic inequalities. Here’s a detailed discussion: Policies like low taxes on inheritance, land
ownership laws, or trade protections favored elites while offering little support to the poor.
Control of Capital and Means of Production
Early industrial capitalism enabled factory owners and financiers to control machinery, raw
materials, and production processes.
Market inequalities and withy concentration
Access to Information and Networks. Wealthy individuals and large firms have better access to
market information, professional networks, and expert advice.
Economies of Scale. Smaller businesses struggle to compete with these lower prices, giving an
advantage to established corporations.
Wealth concentration refers to the process by which a large portion of a society’s wealth is
held by a small percentage of the population.
Inheritance and Intergenerational Wealth
Wealthy families pass down assets, property, and investments to their childre
Control Over Economic Opportunities
Poorer individuals have limited access to the same opportunities, making it
difficult to improve their economic status.
Page 2 of 7
