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July 02, 2005

A Gross Fallacy.

Interesting piece in the Guardian. It contains one gross fallacy:

A small group of visionaries, the followers of Tom Paine in England and Antoine-Nicolas de Condorcet in France, ceased to regard poverty as a divine imposition on sinful humanity. It was seen as remediable in principle, since it was man-made in practice.

The fallacy is not the statement that they believed this, but that the belief was true. Poverty is not man made. It is wealth that is man made. If you start from here then you’re going to end up in the wrong place, as Steadman-Jones does. His conclusion is:


For only a politics combined with justice - in other words, the building of a global social-democratic programme - can make poverty history.

Which is indeed the wrong place. A global social-democratic programme will not create the wealth that is needed (if we equalised current GDP per capita we’d get to something like $5,000/ $8,000 a head, depending upon whose figures you believe). It might be a good thing to have anyway, there might be a moral case for it,  it might be something you desire, but it isn’t going to get world GDP up to $20k/$30k per head which is what we need to get everyone to roughly our standard of living.

What you need to start with is an acknowledgement that it is wealth that is man made. Then we need to work out what it is that creates wealth. Various different people have different ideas about this but I think there are two main causes. The onward march of technology and the division of labour with its increased specialization.

Armed with those two we then need to ask what are the things that increase those two desirable trends? We seem to get to where Adam Smith put us, along with Ricardo. The tolerable administration of justice, easy taxes and the secure administration of property along with trade, lots and lots of lovely trade (no, it doesn’t matter of the trade is inside a family, across a city or between nations).

After we’ve done this we can start to think about how that wealth is distributed. Perhaps social democracy is the way to go. Perhaps laissez faire is. Perhaps Communism. But it is a very different question, that allocation, than the one of how we create what we are trying to allocate. For until we have in fact created sufficient wealth to provide sufficient per capita (and what that is is also arguable) we have to measure our allocation system against whatever bad effects it may or may not have on the wealth creation.

This is why I think the fallacy, that poverty is man made, is so dangerous. It’s wealth that we create (or destroy in Mugabe’s case) and if we lose sight of that then we’re never going to order the economy, the world, in the manner we would wish. Whatever that manner is, of course....whether you desire a more or completely egalitarian world, or my preference, where all your wealth are belong to me, if you start from the idea that wealth is a given and poverty created then you are never going to be able to get it right.

I do rather like this point though:


Against those who maintained that the gulf between rich and poor was an inescapable part of "civilisation", Condorcet argued that inequality was largely to be ascribed to "the present imperfections of the social art". "The final end of the social art" would be "the abolition of inequality between nations" and "the progress of equality within each nation". Slavery would be abolished, colonies would become independent and there would be worldwide free trade. Asia and Africa would break free from "our trade monopolies, our treachery, our murderous contempt for men of another colour or creed, the insolence of our usurpations"

There’s one for the Trade Justice people then. Tom Paine and Condorcet, free traders both.

July 2, 2005 in Make Poverty History | Permalink

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Comments

Poverty is not man made. It is wealth that is man made.

Well no. Poverty is the lack of ownership of goods; wealth is the abundant ownership of goods. Ownership is a human institution rather than a fact of nature, so Condorcet and Tom Paine were right.

Posted by: dsquared | Jul 2, 2005 8:11:15 PM

...but the creation of goods (beyond a very low level) requires ownership.

So, the 'natural' outcome will be poverty (no ownership, no goods); whereas only the 'man-made' outcome permits the possibility of wealth (ownership and goods) even if it also still allows poverty.

Posted by: Blimpish | Jul 3, 2005 1:19:54 PM

Ownership is a human institution rather than a fact of nature…

Well no. Try taking a bone from the jaws of a Canine Security Operative and you’ll soon find that ownership has instincts that lie far deeper than culture. On the other hand, although primary wealth precedes ownership (the bone must exist before the dog can ‘own’ it), it is necessary for humans to formalise rights of ownership before complex wealth generation can take place. And only then is it meaningful to have arguments about distribution.

Posted by: HJ | Jul 3, 2005 5:42:20 PM

you have to go easy with Steadman-Jones; he's about 90 years old and going a bit senile.

Having a conversation with him is like arguing with a textbook - it knows what it knows, and says it authoritively enough to 'win' any argument, simply because it cannot be wrong.

Lovely chap though.

As for being man-made or not - IMO it's a bit involved for a sweeping statement and depends a lot on how you define poverty in the first place - is it simply being poor/destitute etc or is it relative? In the former case, man isn't born with money, prehistorically speaking, so as you say, wealth is man-made, and those that fail to keep up, for want of a better phrase, find themselves in poverty.

However, moving on a bit, the question of suppression arises, and when man-made wealth is created at the expense (often unjust expense) of making others poorer - where does free competition end and induced, man-made poverty begin?

Posted by: Paul Davies | Jul 4, 2005 10:07:26 PM