Bill Gates and 4bn in poverty

Is global poverty falling or rising?  Realistic estimates calculate that there are over 4 billion people in poverty in this world, or two-thirds of the population.  And yet, in their latest ‘public letter’ to us all, Bill and Melinda Gates, the richest family in the world, issued last month, were keen to tell us that the battle against global poverty was being won, as those living on less than $1.25 day had been cut by half since 1990.  How do we reconcile these two estimates?

Back in 2013, the World Bank released a report that there were 1.2bn people living on less than $1.25 a day, one-third of whom were children.  This compares with America’s poverty line of $60 a day for a family of four. But, according to the World Bank, things are getting better, with 720m less people on this very low threshold for poverty compared to 1981.  And Nobel prize winner Angus Deaton has emphasised that life expectancy globally has risen 50% since 1900 and is still rising. The share of people living on less than $1 a day (in inflation-adjusted terms) has dropped to 14 percent from 42 percent as recently as 1981. A typical resident of India is only as rich as a typical Briton in 1860, for example, but has a life expectancy more typical of a European in the mid-20th century. The spread of knowledge, about public health, medicine and diet, explains the difference.

However, when we delve into the data more closely, there is a less optimistic story.  Martin Kirk and Jason Hickel were quick to take the Gates’ to task on the arguments in their letter.  The Gates “use figures based on a $1.25 a day poverty line, but there is a strong scholarly consensus that this line is far too low…..Using a poverty line of $5 per day, which, even the UN Agency for Trade and Development suggests this is the bare minimum necessary for people to get adequate food to eat and to stand a chance of reaching normal life expectancy, global poverty measured at this level hasn’t been falling. In fact, it has been increasing – dramatically – over the past 25 years to over 4bn people, or nearly two-thirds of the world’s population.”

The World Bank has now raised its official poverty line to $1.90 a day.  But this merely adjusts the old $1.25 figure for changes in the purchasing power of the US dollar.  But it meant that global poverty was reduced by 100m people overnight.

And as Jason Hickel points out, this $1.90 is ridiculously low.  A minimum threshold would be $5 a day that the US Department of Agriculture calculated was the very minimum necessary to buy sufficient food. And that’s not taking account of other requirements for survival, such as shelter and clothing.  Hickel shows that in India, children living at $1.90 a day still have a 60% chance of being malnourished. In Niger, infants living at $1.90 have a mortality rate three times higher the global average.

In a 2006 paper, Peter Edward of Newcastle University uses an “ethical poverty line” that calculates that, in order to achieve normal human life expectancy of just over 70 years, people need roughly 2.7 to 3.9 times the existing poverty line.  In the past, that was $5 a day. Using the World Bank’s new calculations, it’s about $7.40 a day. That delivers a figure of about 4.2 billion people live in poverty today. Or up 1 billion over the past 35 years.

Now other experts argue that the reason there are more people in poverty is because there are more people!  The world’s population has risen in the last 25 years.  You need to look at the proportion of the world population in poverty and at a $1.90 cut-off, the proportion under the line has dropped from 35% to 11% between 1990 and 2013. So the Gates’ were right after all, goes the argument.  But this is disingenuous, to say the least.  The number of people in poverty, even at the ridiculously low threshold level of $1.25 a day, has increased, even if not as much as the total population in the last 25 years.  And even then, all this optimistic expert evidence is really based on the dramatic improvement in average incomes in China (and to a lesser extent in India).

In his paper, Peter Edward found that there were 1.139bn people getting less than $1 a day in 1993 and this fell to 1.093bn in 2001, a reduction of 85m.  But China’s reduction over that period was 108m (no change in India), so all the reduction in the poverty numbers was due to China.  Exclude China and total poverty was unchanged in most regions, while rising significantly in sub-Saharan Africa.  And, according to the World Bank, in 2010, the “average” poor person in a low-income country lived on 78 cents a day in 2010, compared to 74 cents a day in 1981, hardly any change.  But this improvement was all in China. In India, the average income of the poor rose to 96 cents in 2010, compared to 84 cents in 1981, while China’s average poor’s income rose to 95 cents, compared to 67 cents.  China’s state-run, still mainly planned, economy saw its poorest people make the greatest progress.

Poverty levels should not be confused with inequality of incomes or wealth.  On the latter, the evidence of rising inequality of wealth globally is well recorded and it’s the same story.  If you take China out of the figures, global inequality, however, you measure it, has been rising in the last 30 years.  The global inequality ‘elephant’ presented by Branco Milanovic found that the 60m or so people who constitute the world’s top 1% of income ‘earners’ have seen their incomes rise by 60% since 1988. About half of these are the richest 12% of Americans. The rest of the top 1% is made up by the top 3-6% of Britons, Japanese, French and German, and the top 1% of several other countries, including Russia, Brazil and South Africa. These people include the world capitalist class – the owners and controllers of the capitalist system and the strategists and policy makers of imperialism.

But Milanovic also found that those who have gained income even more in the last 20 years are the ones in the ‘global middle’.  These people are not capitalists.  These are mainly people in India and China, formerly peasants or rural workers have migrated to the cities to work in the sweat shops and factories of globalisation: their real incomes have jumped from a very low base, even if their conditions and rights have not. The biggest losers are the very poorest (mainly in African rural farmers) who have gained nothing in 20 years.

The empirical evidence supports Marx’s view that, under capitalism, an ‘amiseration of the working class’ (impoverishment) would take place, and refutes the Gates’ Letter that things are getting better.  Any improvement in poverty levels, however measured, is down to rising incomes in state-controlled China and any improvement in the quality and length of life comes from the application of science and knowledge through state spending on education, on sewage, clean water, disease prevention and protection, hospitals and better child development.  These are things that do not come from capitalism but from the common weal.


12 thoughts on “Bill Gates and 4bn in poverty

  1. Good piece, thank you.

    Have you looked at Sanjay Reddy and Rahul Lahoti’s “$1.90 a Day: What Does It Say? The New International Poverty Line.” New Left Review 97 (2016)?

    They also run through the various calculations for producing the reassuring numbers the World Bank offers in its ‘poverty has reduced’ narrative.

  2. You might also want to critically evaluate figures on hunger. The agencies say this too is coming down. But look in the small print and it is coming down for a sedantary life — which poor people cannot undertake. Use calorie figures for an active and healthy life and hunger is pretty well the same as it was 40 years ago. Hickel makes this point, building on Timothy Wise and the folks at GDAE.

  3. I remember watching a documentary recently about people who live near and work in e-waste. They could make about ten dollars a day but costs of living ate that up. Not to mention the health risks that adults and children were subjecting themselves to.

  4. I do not believe that we should conflate the issue of poverty with Marx’s thesis on immiseration, which is the separation of property from the worker: ” Separation of property from labour appears as the necessary law of this exchange between capital and labour….. this complete denudation, purely subjective existence of labour, stripped of all objectivity. Labour as absolute poverty: poverty not as shortage, but as total exclusion of absolute wealth” ( Grundrisse Pp 295-6). ”Immiseration” then is not about the level of wages, but about the separation of the worker from the means of production in the first place.

    1. Well I did write a book called The Great Recession back in 2009 as well as The Long Depression in 2016 and the upcoming World in Crisis in 2017 (later this year). I cant make any more meetings in April, I’m afraid, as I am off to the US to present at the Historical Materialism New York conference.

  5. Michael Roberts

    Dear Sir,
    Sorry to disturb.
    Ganashakti is the daily newspaper of West Bengal state committee of Communist Party of India (Marxist). It is a mass circulation daily published in Bengali. This year we are celebrating our 50th year too.
    Ganashakti will publish a special supplement on 5th. May, 2017, commemorating the beginning of Karl Marx’s bi-centenary.
    Our endeavor will be to highlight relevance of Marx’s thought in the contemporary world, and in the world to come.
    We request you to kindly send an article for the supplement. Our humble suggestion is that the topic may be 150 years of Capital. However, you may choose another topic as you wish.
    The article may be around 1000 words and we will be glad to receive it by 22nd April, so that we can translate it.
    Other contributors will include Prabhat Pattanaik, Amiya Bagchi, Sitaram Yechury, Irfan Habib and Vijay Prashad.

    Avik Dutta
    Editor, Ganashakti.
    6th April, 2017.
    Kolkata. India.

  6. A correct understanding of ‘immiseration’ also allows us the better to refute the following, which I take from Fred Moseley’s critique of Blaug:

    ”With respect to Marx’s conclusion of increasing impoverishment, it is not always entirely clear from Blaug’s discussion in these papers whether he interprets

    impoverishment in absolute or relative terms. However, in ETR, he clearly interprets impoverishment in relative terms.
    ‘Marx never denied that real wages might rise under capitalism. He strongly implied that labor’s relative share would fall but in fact never used the phrase “relative impoverishment.” The notion that he pronounced a theory of the growing poverty of the working class is just folklore Marxism.’ (p. 257)
    Blaug also argues that Marx does not prove such a tendency toward relative impoverishment.”

    As the above quote from the “Grundrisse” demonstrates, Marx’s thesis of ‘absolute poverty’ has nothing to do with wage levels, and contra Blaug the subsequent development of capitalism has triumphantly confirmed Marx’s analysis. We have only to consider the hundreds of millions of peasants who have been flung into the ranks of wage labourers in the last decades.

    The point is this: ”since the conditions of labour confront the individual worker in an ever more gigantic form and increasingly as social forces, the chance of his taking possession of them himself as in the case in small-scale industry, disappears”( Theories of Surplus Value Part 3 p353).

    In any case, most wage earners are at best only a few months away from penury if unable to sell their labour power. Why, even Steve Keen realises now the stings of ‘relative impoverishment’ as manifested in his recent appeal for all good people to augment his revenues, which have become depleted owing to his insistence in curtailing his labour time!

  7. As for Keen’s ideological labours as ‘a public intellectual’ we take no account, as they are rather an expression of his nature, and no doubt also a source of joy and consolation, as with monks at their prayers!

  8. This a good link to share!
    Great explanation.
    This is important part to share with the people:

    [And as Jason Hickel points out, this $1.90 is ridiculously low. A minimum threshold would be $5 a day that the US Department of Agriculture calculated was the very minimum necessary to buy sufficient food. And that’s not taking account of other requirements for survival, such as shelter and clothing. Hickel shows that in India, children living at $1.90 a day still have a 60% chance of being malnourished. In Niger, infants living at $1.90 have a mortality rate three times higher the global average.]

    Nobody can go to bed with a clean conscience when there are brothers and sisters living with such low amounts.

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