So, what shall we
spar about today?
Today we're going to be
asking: Has capitalism
made the world a better place?
We're going to be looking
at this debate between two
groups of economists about
global poverty reduction.
So, has it happened?
How fast has it
happened, if it has?
And can it be attributed
to success of capitalism
spreading around the world
over the last 100 or so years?
What we're going to
be looking at here
is the percentage of people
in the entire world who
live in extreme
poverty, going from 100
per cent to 0 per cent, and
from the year 1820 to 2015.
Now, what do we mean
by extreme poverty?
That's people living on
less than $1.90 per day.
Now, that figure in 1820
was around 90 per cent.
So it started declining
fairly slowly.
But then in around,
in the late 1800s,
1900s starts dropping
more sharply.
After the world wars it
accelerates even more.
So we're now down at
around 10 per cent.
So this is the central
claim made by Gates, Pinker
and so on.
Absolute poverty has come down
during a period when capitalism
was spreading around the world.
A capitalist system has led
to the almost eradication
of extreme poverty.
I sense some
scepticism from you.
Well, as you expect, I'm going
to take issue with this claim
that living on $1.90 a day is a
useful measure of people living
in poverty.
For example, in the UK virtually
no one lives on that level.
The average earnings are
more like $100 per day.
That's not to say that we
have no one living in poverty
or even extreme poverty
in this country.
That's impossible.
Yeah, and that's
a point that has
been made by some of the
critics of this argument.
So a couple of leftwing
economists including,
most prominently,
Jason Hickel have
critiqued this idea of using
such a low poverty line.
So let's have a look
at other poverty lines.
This is $1.90 a day.
So let's that we're
here now, 1980.
OK, so another one sets the
poverty line at $3.20 a day,
so 55 per cent,
more or less, here.
And it went down...
To about--
25 per cent.
OK.
So that's a quarter of the
world population still living
on $3.20.
There's another one
which is $10 a day,
and that went from
65 per cent...
Down to about 55 per cent.
I mean, yes, things
have improved.
But it's not as rosy a picture,
maybe, as Roser, Pinker.
And $10 a day is
still not a lot.
There's a famous
line from a play
that China, in this
space of time in fact,
went from famine to slim fast.
Over a billion
people, surely they
are distorting
somehow these numbers.
Is this just China, basically?
OK, we're now going to have
a look at a chart which
takes the same metric and looks
at how does global poverty
reduction appear when you look
at the entire world and then
when you look at the
world minus China.
So 1981, so we're looking
at that more recent period,
through to 2015.
The axis starts at 0 per cent
of people in extreme poverty.
And we'll go up to 100 per
cent again to be consistent.
When we look at
the entire world,
China included, we start off
at about 40 per cent there.
And we've come down to about
just under 10 per cent.
If we look at the world
not including China...
So this is the world
average without China?
Without China.
It was initially lower and is
now at broadly the same point,
so world minus China.
So it's true that when
you include China,
a billion being lifted
out of absolute poverty
has had a big impact.
But this isn't just China.
The world has got
better in terms
of people being in extreme
poverty over the last 35 years.
So if we look at the
Gini coefficient.
The Gini coefficient is
a measure of inequality.
If the world were perfectly
equal, it would be at 0,
and 1 is complete inequality.
From 1850 to the years
just before the recession
or just as the recession
started hitting,
I'm going to look at
inequality from 0.5 to 0.7.
And what happened is that
inequality actually rose.
This line alone shows
you an inverse trend
from what we were seeing.
But I think the
process of capitalism
which led to this
increasing inequality
is the same process that
lifted more than a billion
out of extreme poverty.
And when you have huge
economic growth in capitalism,
most of those gains accrue
to the people at the top.
But if that system also raises
everyone by a certain level,
then that's still a
good thing on net.
One way that we
measure poverty is
to look at the share
of the population that
lives below the average income.
Now, even though I would
say that's an improvement
on the poverty line,
$1.90 and so on.
I think it's still faulty.
And I'll show you why.
So in the UK we measure
relative poverty
by looking at the number of
people who live at 60 per cent
below the median income.
So let's say the median
income is £10,000,
just picking a figure
out of thin air.
We're looking at the number of
people that are earning 60 per
cent of that, so £6,000.
So this is what's
happened in the UK.
We're looking at,
before housing costs
and after housing costs,
number of children
who live in poverty.
We had a third of kids
in this period of time.
Now we have 28 per cent of
children, a small improvement.
Before housing costs, it's a
quarter of kids, in '95, '96.
It went down to 17 per cent.
In this period here, where
there was a recession,
there wasn't much change.
So the government actually
acknowledged this and said:
well maybe this measure of
poverty or relative poverty
is wrong.
It doesn't include whether
these kids live in good housing,
whether they live in
crime-ridden areas,
whether they're performing
well in schools,
all these things
that go beside income
and that affect our lives.
Now, the problem
with this idea is
that policymakers didn't like
the fact that they wanted
to de-link poverty from income.
That would have been an issue
at the international level
because this is how
everyone measures poverty.
And so this was abandoned.
However, one could argue
that taking them into account
is crucial to assessing
whether people
who live in extreme
poverty are also
having a bad quality of life.
So this is another argument
that the sort of pro-capitalist
lobby would make, or
pro-capitalism lobby,
which is that if life expectancy
has gone up then that surely is
a sign that the fundamental
reason that humans exist is
actually...
we're getting that right.
So I'm going to do a chart
here showing global average,
from 1920 to 2015.
And that has gone up for
about 52 to now about 72.
That seems to me,
again, evidence
that global quality of life,
global life expectancy,
global health, all
of these things
that this indicator
captures have steadily
increased over that period when
capitalism has been spreading
across the planet.
If we want to stick to the
quantitative element of how
many years we get
to live, there's
clearly a sign of improvement.
But look at what
happened in the US,
for example, with
life expectancy.
So they went from
70 in the 1960s.
So we're looking
at it went up to 80
and then just sort of stalled.
And this is despite the fact
that health costs in the US
went up.
And it's one of
the only countries
where, actually, life expectancy
seems to be declining.
And one could argue,
not necessarily me,
but one could argue that
it's rampant capitalism that
is doing this to the
country and its population.
Aggressive marketing of
opioids, for example.
Exactly, that's one element
that has clearly had an impact.
Again, over the long run there
from '60 to 2015 in the US life
expectancy has risen.
But this recent
stagnation and decline
is certainly not a good sign.
And the US is the poster
child of capitalism.
So evidently, I and
capitalist advocates
would have to accept that
something there has gone wrong
in the last 10 years.
And we're certainly no longer
seeing this clear relationship
between capitalism, free
markets, and improvements
in quality and quantity of life.
My exhibit A in favour of the
argument that capitalism has
improved the world is
saying that over 200 years,
the percentage of people living
in extreme absolute poverty has
fallen from 90 per
cent to 10 per cent.
We then looked at the impact of
using more reasonable poverty
lines.
Yeah, and then we see that more
than half of the population
is still living in
poverty globally.
So still had an improving
trend, but it wasn't as quick,
and it hasn't got as far
as was initially claimed.
Then we looked at whether
this was all China going
from famine to slim fast.
And we found that it's true that
China's rapid development has
sort of inflated the extent
to which it looks like poverty
reduction has taken place.
But, even if you take
China out of the picture,
the percentage of people
living in absolute poverty
worldwide has still decreased.
And then I said, well, if
things are so rosy then how
come inequality has gone up.
But the argument for
those who say capitalism
has made the world
a better place would
be that, yes, things
have become more unequal.
But the same system that
produced that increasing
inequality has also elevated
people out of poverty.
It's increased their incomes.
But money isn't
insufficient, because if we
look at example of child
poverty in the UK, then
we'll see that this
measure doesn't explain
at all what happened during
the recession which had
a drastic impact on UK society.
And we should look at
other metrics like health,
educational attainment,
quality of housing,
and general quality of life.
And I said, that's
a very good point.
Let's look at something where
money is totally to one side.
And we just look at
how long people live.
Globally, there's been a steady
and still increasing rise
in life expectancy.
However...
The US, the poster child
of rampant capitalism,
shows that there is
not such progress
in the last couple of years.
JOHN BURN-MURDOCH: Yeah, so I
guess, with my capitalist hat
and monocle on I would say
we have seen improvements
in life expectancy and poverty
reduction during the area
where capitalism has been
expanding across the world.
However, I would acknowledge
that income-based measures
of human development
are very limited
and also that if you look at
the most capitalist countries
in the world, say the
likes of the US and the UK,
increases in life expectancy
have now actually stalled,
and there's some evidence
they may be falling.
So even if, perhaps, the journey
to capitalism helped countries,
it seems we've hit
diminishing returns or even
now a fork in the road where
capitalism is maybe not utopia.
And I would say
that in conclusion,
Pinker, Gates, so on haven't
quite persuaded me yet.
