[dredmorbius]

A very valid point. See Gregory Clark's A Farewell to Alms intro:

Prosperity, however, has not come to all societies. Material consumption in some countries, mainly in sub-Saharan Africa, is now well below the pre-industrial norm. Countries such as Malawi or Tanzania would be better off in material terms had they never had contact with the industrialized world and instead continued in their preindustrial state. Modern medicine, airplanes, gasoline, computers—the whole technological cornucopia of the past two hundred years—have succeeded there in producing among the lowest material living standards ever experienced. These African societies have remained trapped in the Malthusian era, where technological advances merely produce more people and living standards are driven down to subsistence. But modern medicine has reduced the material minimum required for subsistence to a level far below that of the Stone Age. Just as the Industrial Revolution reduced income inequalities within societies, it has increased them between societies, in a process recently labeled the Great Divergence.1 The gap in incomes between countries is of the order of 50:1. There walk the earth now both the richest people who ever lived and the poorest.

http://assets.press.princeton.edu/chapters/s8461.pdf

More:

http://faculty.econ.ucdavis.edu/faculty/gclark/a_farewell_to...

[rohan_shah]

That's great.

I was making a similar hypothesis. Didn't know about the data though.

Here's my argument:

I agree that capitalism is such a system that allows for expansion of wealth by means of mass production.

But as America gets rich, there were suppressed workers in China who were doing the "hard work" for Americans.

As China gets rich, the Africans are doing it for them.

So calling the American capitalism as a foolproof system that elevates "everyone" out of poverty is just plain wrong because it helps produce more poor people in other poor countries. And then the market says, more the poor people supply, less the wages.

So they're always creating population booms somewhere to sell their products as well as get cheap labour.

But the Americans have given a positive association to population boom by telling a story called population booms = economic prosperity.

So there is going to be a population boom in Africa soon. With more than 2 bn people.

"Get ready for more cheap labour!" Says the US free markets.

But once everyone is used up and educated, what then?

[dredmorbius]

It's ... complicated. And there's more to the dynamic than that.

One of Clark's observations is that modernity -- not just capitalism, but technology, logistics, healthcare, interventions, etc. -- not only create poverty but make it survivable. A reason that persistant conditions of abject misery are sustained for lifetimes and generations is that they don't simply kill those affected (by disease, starvation, accidents, warfare) in a few weeks or months.

His book is part of a series edited by Joel Mokyr on economic history and progress (much of what Cowan and Collison are calling for), well worth looking at titles. Robert J. Gordon's The Rise and Fall of American Growth is another title, and more generally in 3what I'd consider a larger literature including Polanyi's The Great Transformation and Joseph Needham's work exploring what's come to be known as "the Needham question" -- why China, which developed a phenomenal set of technology and scientific knowledge, catalogued exhaustively in Needham's Science and Civilisation in China, didn't then proceed to have an industrial revolution similar to that which eventually occurred in England.

I think you're also absolutely correct to call out the claims made for capitalism -- that it elevates everyone out of poverty (the poorest billions have actually lost financial wealth in recent years), that it's an engine of creativity (many inventors died broke or broken, many inventions came from uncompensated sources, including famously the one mention of either technology or steam power in Smith's Wealth of Nations -- a boy optimising steam engine function because he wanted to play with his friends), and numerous others.

The contrast between price behaviour of rents vs. wages is very well discussed, going back to Smith, who also discusses the dynamics of poverty in economic growth and decline.

But yes: the orthodox economic theology appears to have several significant gaps with reality. Including though not limited to the behaviour of poverty under market-capitalist-property systems.