Capitalism Has Led to “Deterioration in Human Welfare,” Study Suggests

The expansion of capitalism from the 16th century onward has been accompanied by an extreme decline in human welfare.

Is Capitalism the Cause?

A study carried out by the Institute of Environmental Science and Technology at the Universitat Autonoma de Barcelona, in collaboration with Macquarie University, Australia, has shown that the new economic system has seen a decline in wages all the way to below subsistence, along with a deterioration in human stature and a marked upturn in premature mortality.

It is a popular assumption that before the 19th century, the majority of the population lived in extreme poverty. It is assumed that people rarely had access to essential goods like food and that capitalism came along and gave many of those people a better life.

Jason Hickel, a researcher with ICTA-UAB, questions these claims. In a study recently published in World Development, research indicates that the data used to make these claims was based solely on historical GDP and Purchasing Power Parity exchange rates that do not accurately account for changes in access to essential goods. The data allegedly does not offer a satisfactory proxy for human welfare and may imply progress even as the health standards deteriorate.

Reconstructing Human Welfare

Researchers are using a different approach to reconstructing human welfare. They begin by analyzing three empirical indicators: real wages, human height, and mortality. They analyze these factors in five different world regions (Europe, Latin America, sub-Saharan Africa, South Asia, and China) from the rise of the capitalist world economy in the 16th century.

Conclusion One

Their analysis provided three conclusions. They found that extreme poverty was not, in fact, a normal or universal condition prior to the 19th century. Data collected on real wages suggests that unskilled urban laborers had enough income to meet their basic needs. Extreme poverty only seemed to arise during periods of dramatic social dislocation, such as wars, famine, and dispossession. These circumstances were seen particularly under colonialism.

Conclusion Two

The second conclusion is that the rise and expansion of capitalism saw a dramatic deterioration in human welfare. In all of the regions reviewed by researchers, the process of incorporation into the capitalist system was associated with a decline in wages to below subsistence, followed by a deterioration in human welfare and an upturn in premature morality.

Dylan Sullivan, the study's lead author and researcher at Macquarie University, Australia, expanded on this point. “This is because capitalism is an undemocratic system where production is organized around elite accumulation rather than human needs,” explains Sullivan. “To maximize profitability, capital often seeks to cheapen labor through processes of enclosure, dispossession, and exploitation.”

Conclusion Three

The third conclusion reached is that recovery from this prolonged period of immiseration occurred only recently. Progress in human welfare did not begin until the late 19th century in Northwest Europe and not until the mid-20th century in the global South. Researchers point out that this coincides with the rise of the labor movement, de-colonization, and socialist political parties. “These movements redistributed incomes, established public provisioning systems, and attempted to organize production around meeting human needs,” Jason Hickel says. “Progress appears to come from progressive social movements.”

This article was produced and syndicated by Wealth of Geeks.