The Causes Of Poverty

What is the cause of poverty?

The search goes on... Or is it known?

Let us begin by making a bold statement: There is only one cause of poverty. There may be many reasons why people are poorly housed, hungry, uneducated, unemployed and unable to support themselves, but there is only one basic, fundamental cause of poverty.

But first let us attempt to agree on what we mean by poverty. Can it be easily defined?

What does the World Bank say?

Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time. Poverty is losing a child to illness brought about by unclean water. Poverty is powerlessness, lack of representation and freedom.

The European Union’s working definition of poverty is:

Persons, families and groups of persons whose resources (material, cultural and social) are so limited as to exclude them from the minimum acceptable way of life in the Member State to which they belong.

The Children in Wales Organisation say:

There is no single, universally accepted standard definition of poverty. Modern definitions of poverty have moved away from conceptions based on a lack of physical necessities towards a more social and relative understanding.

This is now the most commonly used definition of poverty in the industrialised world. It recognises that poverty is not just about income but also about the effective exclusion of people living in poverty from ordinary living patterns, customs and activities.

And the United Nations, in a statement in June 1998 said:

Fundamentally, poverty is a denial of choices and opportunities, a violation of human dignity. It means lack of basic capacity to participate effectively in society. It means not having enough to feed and cloth a family, not having a school or clinic to go to, not having the land on which to grow one’s food or a job to earn one’s living, not having access to credit. It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, and it often implies living on marginal or fragile environments, without access to clean water or sanitation.

Where does this get us? Trawl the web and you will find many other attempts to define poverty – some even distinguishing between Absolute and Relative poverty.

Is poverty man made?

Poverty is an unnatural state. Man has dominion over all the animals and plants and yet he is the only animal to be afflicted by poverty. When did you last see a warren of rabbits begging for work? Or blackbirds begging for bread?

So it would seem that poverty must be an unnatural condition for which man has only himself to blame. The entry in Wikipedia suggests that poverty is a personal failing:

When it comes to poverty in the United States, there are two main lines of thought. The most common line of thought within the U.S. is that a person is poor because of personal traits. These traits in turn have caused the person to fail. Supposed traits range from personality characteristics, such as laziness, to educational levels. Despite this range, it is always viewed as the individual’s personal failure not to climb out of poverty.

So there you have it. If you live in poverty it is your own fault.

However, 'Poverty' writes Peter Townsend, Emeritus Professor of Social Policy at Bristol University, a man who has devoted most of his life to making people aware of poverty and its causes, says:

Poverty is not something people impose on themselves for want of effort and community organisation. It is constructed by divisive and discriminatory laws, inflexible organisations, acquisitive ideologies of wealth, a deeply-rooted class system and policies which serve privilege in the short term and destroy society in the long term. Poverty is caused by private monopoly, landlordism, employerism, ownership.

Private monopoly? Landlordism? Whatever does he mean?

What experts say about the cause of poverty?

The ‘Dollar a day’ organisations says:

There is no single cause of poverty. Poverty is too complex an issue to be the result of just one problem. There are, however, many interrelated factors that contribute to poverty in developing nations.

Lilian Brandt, writing in the Political Science Quarterly, 23 (1908), suggested:

Around the world, the causes of poverty are similar. Lack of finances, health care and education are common causes of poverty. Still, the causes of poverty aren't just about going without materials. Of all the causes of poverty, the most devastating is the lack of hope — a feeling that "I don't matter." Compassion International

Child Poverty Action Group:

The main cause of poverty is inadequate income, arising from worklessness, low wages and the low level of benefits.

Ask yourself: Why is income inadequate? What is the reason for unemployment? Why should man, with all his creative powers and manual strength be reliant on benefits? There has to be another factor. There has to be a fundament cause.

An organisation called Smallstock in development comes close:

Poverty is diverse and comes in many forms. However, there are many common factors, and these mostly tend to be related to limited access to land, assets, and services.

One more quotation, from Fight Poverty, will serve to illustrate the confusion of thought:

Poverty has many causes, some of them very basic. Some experts suggest, for instance, that the world has too many people, too few jobs, and not enough food. But such basic causes are quite intractable and not easily eradicated. In most cases, the causes and effects of poverty interact, so that what makes people poor also creates conditions that keep them poor. Primary factors that may lead to poverty include overpopulation, the unequal distribution of resources in the world economy, inability to meet high standards of living and costs of living, inadequate education and employment opportunities, environmental degradation, certain economic and demographic trends, and welfare incentives.

Did they say ‘primary factors’? They did but they didn’t. The ‘primary’ factors they suggest are in fact all secondary factors. What are ‘primary factors?’

Economics is a science and definitions have to be precise in order to distinguish between cause and effect. The effects of poverty are myriad. But poverty has a single cause.

Poverty is caused by a lack of production of basic necessities. The primary factors of production are land and labour. Labour applied to land produces wages and wealth. David Ricardo postulated in 1817:

Where land is free (unenclosed) wages depend on the margin of production, or upon the produce that labour can obtain at the highest point of natural productiveness open to it without the payment of rent. Where land is all enclosed the level of wages are reduced to the least a man will accept.

So immediately we have a focus on land and the level of wages – so often quoted in the statements above. Adam Smith writes from (true life) to reinforce the suggestion that wages are not limited where land is freely available:

In treating of the Causes of the Prosperity of New Colonies (Wealth of Nations, book 4, chapter 7), he says: "Every colonist gets more land than he can possibly cultivate. He has no rent, and scarce any taxes to pay.... He is eager, therefore, to collect labourers from all quarters, and to reward them with most liberal wages. But those liberal wages, joined to the plenty and cheapness of land, soon make those labourers leave him in order to become landlords themselves, and to reward, with equal liberality, other labourers, who soon leave them for the same reason that they left their first master.

This short paper is an attempt to examine the problem of poverty and why all the money and charity in the world have not provided a long-term solution. There will always be people who are poorer than others but there should be no paupers. Poverty is an unnatural state. The world is endowed with untold resources. Man has unlimited powers of initiative and ingenuity. Why are millions of human beings unable to provide adequately for themselves and forced to live in degrading poverty? Dependent on ‘benefits’ whether they come from their own government or international charity.

Every year the Government publishes a survey of income poverty in the UK, entitled Households Below Average Income (HBAI). The survey for 2007/8 shows that 13.5 million people in the UK (23%) are income poor. People living below the poverty line (see below) are distributed around the UK as follows: England - 11,500,000; Scotland - 900,000; Wales - 700,000; Northern Ireland - 400,000.

·         53% are in households that include at least one child

·         34% are in households of people of working age without children

·         13% are in pensioner households

The poverty line used in the table below is 60% of the median UK income after housing costs have been paid. Below this amount, a household is described as living in income poverty. The poverty line is adjusted to take into account how expenditure needs differ between types of households.

*Courtesy Child Poverty Action Group -  http://www.cpag.org.uk/povertyfacts/index.htm

So after all this, can we say what is the cause of poverty and what is the cure?

Humanity acknowledges that to harness the labour of others in slavery is wicked. But to claim land as private property is considered a natural right. Until we can see that land is a free gift of nature and is the inheritance of all people we will continue to endure all the social evils we attribute to poverty throughout the world.

The root cause of poverty is private ownership of the natural resource essential to life – land. Private property in land has been long established. In giving all men equal rights of access to land it is not necessary to confiscate land, undo titles or nationalise land. It is simply a matter of collecting the land value rental thereby returning to the community the value created by the community. This can be achieved through Land Value Taxation.

Article by Michael Hawes, a School of Economic Science economist based in Lincoln