Forbes magazine recently published an article titled, “Unless It Changes, Capitalism Will Starve Humanity by 2050.” The author, Drew Hansen, a businessman and regular contributor to Forbes, starts out by claiming that capitalism has “failed to improve human well-being at scale.” This assertion is easily refuted by evidence. Over the last few decades, hundreds of millions of people were lifted out of extreme poverty. In fact, the share of the world’s population as well as the total number of people living in poverty is at an all-time low, despite a population increase of 143 percent since 1960. The left-leaning Brookings Institution predicts that absolute poverty will have been practically eliminated throughout the world by 2030. If this is not good news for global capitalism, what is? Capitalism, Hansen continues, is also responsible for widespread destruction of animal species, decimation of forests, and a growing risk of starvation. Let’s examine each of Hansen’s claims in turn.
Is capitalism killing off species?
Hansen claims that “species are going extinct at a rate 1,000 times faster than that of the natural rate.” Journalist and Human Progress advisory board member Matt Ridley, who holds a doctorate degree in zoology from Oxford University, rebutted this often-used claim in his book The Rational Optimist:
Ridley also notes that the extinction rate has fallen even farther in the most industrialized countries, where people tend to care more about environmental stewardship. He himself has worked on various projects to help protect endangered birds. Capitalism, by creating wealth and enabling humanity to move past worries of basic survival, has helped us to preserve other species.
Is capitalism destroying the forests?
Hansen says that 6 million hectares of forest are being lost every year. While forest area is slowly declining, there are plenty of reasons for optimism. In a recent paper for the Breakthrough Institute, environmental scientist Jesse H. Ausubel describes how as countries grow wealthier and their populations come to care more about the environment, forests rebound:
To see the effect of rising wealth on forest protection, simply consider the contrasting trends in Europe and Africa:
Agricultural advances that let farmers harvest more food from less land are also helping to spare forests. Ausubel notes that smarter agricultural practices in the former Soviet Union and Eastern Europe freed at least 30 million hectares (an area the size of Poland or Italy) and possibly as many as 60 million hectares from agricultural use and returned it to nature.
Does capitalism make people poorer?
Citing the 2014 U.S. Census, Hansen notes that 15 percent of Americans live in poverty. (The Census defines poverty as an income of less than $12,071 a year for a single-person household, or $33 a day). But, what does it mean to be poor in America? As the Mercatus Center economist Steve Horwitz writes, “poor U.S. households are more likely to have basic appliances than the average household of the 1970s, and those appliances are of much higher quality.”
In 1984, for example, 83 percent of all households in the United States owned a refrigerator. By 2005, 99 percent of poor American households owned a refrigerator. The evidence of an improving standard of living for poor Americans is abundant and available – to those who are willing to see.
Hansen fails to mention that living on $33 a day is not poverty by historical standards. Throughout most of human history, almost everyone lived in extreme poverty. Only in the last two centuries has wealth dramatically increased. Early adopters of capitalism, such as the United States, have seen their average incomes skyrocket.
Moreover, Hansen does not put American poverty in a global perspective. Thirty-three dollars per person per day would be considered luxurious in the developing world today. (Globally, absolute poverty is measured at $1.90 per person per day.) Our understanding of poverty is undoubtedly skewed by America’s riches. But remember that if you make $32,400 or more per year, then you are in the global top 1 percent of income-earners (adjusted for differences in the cost of living).
Does capitalism lead to starvation?
Hansen then repeats the old and discredited idea that humanity won’t be able to feed itself as the population grows. Thomas Malthus first made that argument in 1798. Since Malthus’ time, humanity has found ways to produce more food per unit of land through innovations like synthetic fertilizers and increasingly advanced genetic modification techniques. As production increased, the prices of food fell. Today, food is 22 percent cheaper than it was in 1960, in spite of global population growth of 143 percent. As a result, calorie consumption increased, and the total number of undernourished people fell.
Malthus’ mistake was to ignore human beings’ ability to innovate their way out of problems. But, as Julian Simon found in The Ultimate Resource, people are excellent problem-solvers, and the free market helps to coordinate solutions to most of our everyday challenges. A challenge (feeding a growing population), led to technological innovation (the Green Revolution and GMOs) and that led to a solution (higher agricultural productivity and falling food prices). Far from leading to starvation, capitalism has ensured that the supply of food rose to meet growing demand.
If humanity does face starvation in 2050, it will not be because of capitalism – it will be because anti-capitalist views like Hansen’s have prevailed.
This first appeared in CapX.