Is capitalism creating an expanding gap between the rich and the poor?

The expansion of capitalism has brought great economical benefits, and the reasons behind an existing poverty gap are not purely due to capitalism per se, what PROP is saying is false. They say that Africa has no more expectations of economical growth than what they had 10 years ago, this is totally wrong since Africa´s GDP growth has increased in the past decade in a 5.4%, in addition expectations for next year’s growth are around 7% [[www.engineeringnews.co.za/article/africas-economic-growth-may-reach-7-in-2010-2010-02-22]].

This growth is because of the change in their policies towards a more open economy, bringing as a result attraction of foreign direct investment which has a direct impact in the country´s wealth and on the peoples living conditions; more jobs are being created and a constant accumulation of capital.

The reasons behind the poverty gap are not purely capitalistic; a clear example may be seen at the development of the African region between the 60´s and the 80´s, where wars, political and social instability hampered economical growth that would had improved the regions wealth. Nigeria reduced its population below the poverty line from 43% to 34% from 1985 to 1993 and 59% of its GDP was related to private merchandise trade; right after the sub-Saharan region came into a period of greater stability.[[data.worldbank.org/country/nigeria]]On the other hand countries as Somalia, where armed conflicts are in progress, have had less or even no growth nor trade or investment[[data.worldbank.org/country/Somalia]]showing that the true reasons why there is poverty are other.

OPP believes that the solution to the great poverty gap is in having less and less armed conflicts and political instability and that capitalism has positive impact in combating poverty. As studies have shown income per capita is increasing and prize volatility is decreasing bringing the region a step forward to combat the gap of poverty rather than harming it.Economical is directly related to the improvement of living standards and the possibility of breaking this poverty gap.[[http://www.imf.org/external/pubs/ft/survey/so/2008/car022108b.htm]]

It is a rather broad generalisation to state that the capitalist owned the equipment due to previous wealth that he had been born into. There is a vast amount of social mobility in Britain whereby people can earn money and make big profits when they had very little to start with. Alan Sugar is one example. From selling goods out of the back of a van this is now one of the richest and famous men in Britain. It is his hard work that created the gap between him and the poorest, not the capitalist system.

Also we have to point out that a capitalist system is a more fair system where people are paid proportional to the work performed. Contrary to what Prop is saying this is not explotation, you are not rewarding a person who fixes pipes the same as a doctor at a hospital, they are different works which demand different capabilities and hence different rewards. Explotation would be if they recieved no benefits, but workers in the status quo have ensurance, health care, and wages; which may be not as high as the CEO of the company they work for, but they are good, suficient and fairly established through meritocracy. In the times of Karl Marx explotations of the workers were true and evident but right now it is not creating a gap between people, in the status quo persons are recieving benefits and opportunities where enterpreneurship can happen to be succesfull(as on Alan Sugar´s example). Finally, the “capitalist” doen not completely set the wages he desires, they are regulations of the government and labour unions that protect workers.

As we have shown, social mobility and oportunities created by the capitalist system are making this gap that the world has been carrying for centuries less and less by giving people a greater capability of improving their living standards. With free trade, investment, foreign companies in a country etc. the GDP of a country increases and hence more jobs, higher wages and greater possibilities of getting out of poverty.

The only reason this has come into issue now is due to the vast amount of press coverage given to the topic. This does not mean that the income gap is rising, just that we are hearing about it and making abigger deal out of it now. The gap is becoming more visible to us now. But surely this is a great thing. If we can see the inequaltiy we can attempt to change it. When we fail to see the inequality, that is where the problem lies. In communism, the inequalities are hidden. So this capitalism is well placed.

What is riling people’s feathers is that there are some rich people and a lot of poor people. An egalitarian would like to see all people earning the same. However, this is not political equality. What people earn should be based upon their efforts and achievements, not some abstract notion of equality. People should be rewarded for their efforts. The emotion that is driving this anti-capitalist ideology is not reason and rationality but laziness and envy. This is a meritocratic society whereby those who work longer hours, those who plan and those who try earn more than those who have a poor work ethic. This is justice, and this is what our capitalist state provides.

The capitalist system is not creating the gap between the rich and the poor, it is the people themselves who are creating the gap. The rich continue to do what made them rich and the poor continue to do what made them poor. Surely criticizing the rich for choosing the most lucrative appointment of their time is not helping the scenario. They did what anyone with a sense of ambition would do. Everyone has the opportunity to choose the most lucrative use of their own time. They cannot complain when they have made the wrong choices. It is this blame the system not myself attitude that got poor people where they are in the first place.

Peter Schwartz
Criticizing income inequality is like complaining that a computer carries a higher price than a paper clip.