What We Owe Capitalism, In One Graph

by Rod D. Martin
October 4, 2017

Many today have an inadequate appreciation of what Capitalism has done for humanity.

Perhaps this graph will help.

This graph charts two very different things. First, it shows the number of people living in extreme poverty. As you can see, that number has dropped rather dramatically, starting as Communism began to fall and more of the world was able to benefit from economic freedom.

But second, it shows the relative number between those living in extreme poverty and those who do not, taking account of the massive increase in world population since 1820. And that truly is extraordinary.

The world has grown from about 1 billion people in 1820 to 7.5 billion today. Its population was less than half that when I was born, in 1969 (when, despite all the progress humanity had gained from log cabin days to walking on the Moon, more than half of humankind still lived in extreme poverty).

1820 is not long after Thomas Malthus wrote that as population increased, it would outstrip food supply. Ever since then, he and his intellectual heirs, such as Paul Ehrlich (most famously in 1968, in his The Population Bomb) and a host of other leftists, have been telling us we would soon face certain famine and widespread death. Ehrlich — whom the left still lionizes — actually predicted an irreversible global famine by 1980, and the decimation of global population by the early 2000s. This “overpopulation” phobia has driven much of the left’s policy agenda for decades, including in part its obsession with abortion.

But this certain doom never came. Obviously.

In fact, what happened is the exact opposite. If Malthus’s theory had been even partly correct, the percentage of humanity living in extreme poverty would have increased to virtually 100% very shortly after 1820; it would certainly be there today. But in fact, the percentage in extreme poverty was already very close to that 100% in 1820, and has done nothing but decrease ever since. It’s a tiny fraction today of what it was then, indeed a relatively small fraction of today’s population, and it’s dropping fast. A billion souls have been lifted out of extreme poverty just in the last 20 years (not at all coincidentally after the fall of Communism). We’re on track for another billion in the next 20.

What happened? Capitalism. Capitalism is the legal and economic framework necessary to cause normal, selfish people to attempt to solve other people’s problems without resort to charity, which is to say, sustainably. John Deere didn’t invent the steel plow, which helped eviscerate Malthus’s theory, for funnies: he invented it, just as men like Harold Hamm employed fracking technology to reverse America’s decline in oil production, to solve a big problem and build a future for his family in the process.

That’s how innovation works: it’s why “Peak Oil was wrong, and why Malthusianism is always wrong. Thomas Edison didn’t invent the lightbulb for free, nor did he — or J.P. Morgan, or George Westinghouse — throw vast personal resources at electrifying the world’s businesses and homes randomly. They saw a problem, they saw a need, and they risked their own time and fortunes to solve it. Obama can say “you didn’t build that”, but oh yes, they certainly did. And they didn’t do it as a charitable endeavor, no matter how much charitable good their work has done. They did it for profit: for their own futures and the futures of their families, the greatest motivator in the world.

We have all profited far more from their work than they did.

Leftists say that profit was “stolen”. But from whom would these men have stolen it? There was simply nothing like what they created before them that they could steal. They were creating ex nihilo, literally bringing light to darkness, and opening up vast worlds of possibility in the process.

Their payment? A tiny fraction of the value they added to all of our lives. Barely a commission, or even a tip.

The left — Socialism, “democratic” or otherwise — forever wants to carve up a finite pie. Capitalism doesn’t redistribute the tiny pie: it bakes bigger and better pies. And the results are before you, in this graph. If the left’s theories were true, not only would this graph show a completely different economic story, but almost all of the people represented on this graph would be dead, or never would have been born in the first place.

Leftists speak of Gini coefficients and income inequality. But all of pre-Capitalist human history, for thousands and thousands of years, were as horribly impoverished, with the tiniest possible group of “haves” above the largest possible group of “have-nots”, as the world was in 1820: indeed, most of it was quite a lot worse. What changed? The miraculous incentive-based system we call Capitalism, or economic freedom, which makes even the most selfish strive with all their abilities to improve the world around them. And that’s how you have everything from a far-more-than-adequate food supply to miracle cures to widespread education to the amazing device on which you’re reading this thought.

It is an extraordinary time in which to be alive. Let us be grateful for it, and prevent the Socialists from killing the goose that laid this golden egg, lest our children know the desperation and want our ancestors did.

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Postscript: While the title promises one graph, we are actually offering three.

First, “The Decline of Extreme Poverty”, which you’ve already seen above:

Second, per capita GDP since 1 A.D. Note the “hockey stick” upon the advent of Capitalism in the West:

And third, the rise of global population, which we were promised meant (and which the left continues to promise must mean) that all of the world’s resources must necessarily be spread thinner over vastly increasing numbers with each passing year, thus inevitably bringing not merely famine but a consequent vast reduction in population, not to mention a standard of living for the survivors far beneath that of the Dark Ages.

Oops.