The decline of poverty

If it sometimes feels like we should have solved poverty by now, here’s a bit of a historical perspective. When we cast back and look at the progress made on poverty in the last 200 years, here’s what we see. (Full size and more detail here)


There is no single data-set going back 200 years, so it’s not a perfect comparison, but the message stands: huge progress has been made. In my own lifetime the number of people living in poverty has fallen from 55% to 10%.

Neither should we be complacent, mind you. The black line there shows people living on $1.90 a day. I think we can all agree that moving up to $2 or $3 a day is hardly mission accomplished and the end of poverty. The percentage that remains also represents communities that are harder to reach or in particularly vulnerable circumstances – refugees or displaced people for example, or those in remote rural areas.

So there’s more to do, but we shouldn’t miss just how much has already been accomplished.


  1. Remember that this is in large part to the freerer markets and trade of the widely bemoaned ‘Washington consensus’.

    Trade not aid reduces poverty and free trade does it better than managed or ‘fair’ trade.

    Three cheers for capitalism and the profit motive.

    1. I fully expected you to rush to make that point, and you won’t find me claiming otherwise.

      You won’t be surprised to hear that I’d also want to point out that free markets are not the only factor in play. As I have pointed out many times, expanding the free market on its own doesn’t necessarily lift people out of poverty if it’s not accompanied by wider change.

      None of that diminishes the power of markets, it’s just about making sure they work for as many people as possible.

      1. I think the point needs repeating loudly since many people don’t make the link ( including many who have commented here before). For example most of the solutions posited about the supposed resources shortages would harm the poverty reduction free market capitalism is producing.

        Free market capitalism is essential in combating poverty, not something that is ideologically desposable. Without the wealth provided by economic growth that free market capitalism provides that government action would not be possible. Same with the technical innovation the free market creates.

        Too many people wrap themselves in a cloak of righteous claiming to care about the poor while espousing anti capitalist solutions that would do the opposite. Seductive easy feel good solutions such as those need to be called out for the bunkem they are.

        1. Sure, but it’s not correct to talk about “the poverty reduction free market capitalism is producing” as if it does it on its own. It’s not that simple. Markets are great for producing wealth, and not so good at sharing it. If we’re talking specifically about poverty reduction rather than just economic growth, it’s never enough to give all the credit to free markets.

          Free markets without the social side is kind of like sticking rockets on a wheelbarrow and entering it in the British grand prix. As you pick yourself out of the tyre wall, you’ll realise you need handling and braking as well as raw speed.

          1. Without the wealth the free markets are producing there would be no poverty reduction. And if you look historically in the UK, where over the course of the 19th century there was very little government intervention in sharing the growth still saw a great deal of poverty reduction in the UK.

            Poverty reduction without free market capitalism is like entering the Grand Prix in a car with no wheels or engine. Is it too much to ask that the engine isn’t mentioned only grudgingly.

    1. Yes, there has been a concomitant decline in resources, and increased pressure on land, water, wildlife populations, etc. Some of that is from people being lifted out of poverty, and some of it is from rising consumption of those who are already rich – those need to be teased apart and that’s one of the key points of this blog.

      As for sources, DevonChap above will tell you that the primary source of this increase is the spread of free markets and he’s partly right. Free enterprise has played a very significant part, but not the only part. You need social innovation alongside economic innovation if wealth is going to reach the poor.

      The UN have devoted a lot of time to working out what causes development, and they conclude that it consists of tapping global markets, in cooperation with a proactive state, and with a commitment to inclusion and ‘social capital’ (especially education). Other views are available, but there’s a summary of their conclusions here and I think they’re pretty good ones: http://makewealthhistory.org/2013/03/19/what-drives-development/

  2. I’m sorry, but defining poverty as living under 2$ per day is a pretty bad measurement. Also, allowing people from two generations to be able to buy iPads by jeopardizing the lives of many future generations can be a pretty bad deal when seen in a long-term perspective. Real poverty is lack of food, shelter, knowledge and freedom (i.e. time). I highly suggest reading the work of Helena Norberg-Hodge for a great narrative on globalization in the form of free market capitalism. A book from her: http://www.localfutures.org/store/#!/Ancient-Futures-Lessons-from-Ladakh-for-a-Globalizing-World-US-edition-updated-2009/p/16039064/category=12119219
    A short video from TedX: https://www.youtube.com/watch?v=4r06_F2FIKM
    Also, for a great look at market societies, consult Karl Polanyi’s book “The Great Transformation”.

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