This book argues that the popular narrative that, thanks to the spread of capitalism, the rates of global poverty and hunger in poor countries are going down, is wrong. The reality, according to Hickel, is that poverty and hunger are increasing, as is the divide between rich and poor countries, and that this is due to deep injustice and inequality built into the global economic system. This system is structured to allow rich countries to extract all the value from poor countries, so it’s really the rich countries that are the cause of poverty in the poor countries, and no amount of sending aid or growing the GPD of those poor countries will ever make up for it.
Some of the claims in this book are startling and disturbing; some seem questionable or cherry-picked to fit a narrative; the weakest part is that, even if you accept that the book is correct about all the problems with the global economic system, the alternatives the author presents seem laughable and unrealistic. All that said, as I read this book, it made me keenly aware that I do not have a strong enough grasp of history, politics, or economics to properly judge. At least now I have the motivation to go and educate myself to find out more, and for that eye-opening experience alone, this book is worth a read.
Here are some of the claims in the book and some thoughts on them:
Is the world getting better or worse?
Hickel says that those popular charts you saw Bill Gates share from the World Economic Forum or in Hans Rosling’s TED talk are misleading or gimmicks.
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The absolute number in poverty is higher than ever before.
- Hickel says those charts all show poverty decreasing, whereas in reality, the number of poor people in the world is greater now than ever before.
- That’s because the world population has grown from ~4 billion people in the 1980’s to 7.3 billion people today.
- Even though the proportion of people in poverty has gone down, the total number is higher.
- There are now hundreds of millions more people in poverty today than ~30 years ago.
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(My take) Improvement is improvement.
- I agree the amount of poverty we have today is a tragedy, but the fact that the proportion did decrease means there are also hundreds of millions of people living better lives today, and ignoring that completely seems disingenuous.
- Worse yet, those charts show huge gains in other measures, such as child mortality, literacy, education, and vaccination, all of which are also showing remarkable gains. Hickel briefly acknowledges some of these, but then moves on, as if these accomplishments at such a global scale have no merit.
- In fact, this is a common pattern throughout the book: he ignores just about all the benefits we’ve seen from capitalism and the global economy—all the advances in health care, lifestyle, technology, etc.—and focuses solely on the downsides. There are, of course, many downsides, but EVERY system will have downsides, and many of the alternatives we’ve seen through history have been even worse.
Are we measuring poverty correctly?
Hickel also claims that the way we measure poverty in those charts is unreasonable.
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The definition of poverty is too low.
- Those charts set the poverty line at $1.90 per day, which, depending on what country you’re in, doesn’t get you out of poverty by a long shot.
- Hickel argues for using higher poverty lines (in the $7-10 per day range) and shows that for those poverty lines, poverty rates are actually going up.
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The definition of poverty has been manipulated.
- Hickel show the history of how the poverty line measure has been manipulated over the years to make the numbers look better than they really are.
- So things may be much worse than they were before.
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Much of the improvement is due to China.
- Hickel claims that many of the gains we’ve seen in poverty (and hunger) rates vanish if you remove China from the equation.
- That is, China has seen massive gains the last 30 years, but most other poor countries have not.
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(My take) What does the real data show?
- On the one hand, I agree that less than $2 per day really is an absurd number.
- On the other hand, $1.90/day is actually the line for “extreme poverty” (not just poverty), and some of the numbers I found indicate that not only have the rates of extreme poverty gone down, but so have the rates for other poverty lines (e.g., $3.20/day, $5.50/day).
- So I’m not sure what the reality is here. How do I find reliable data?
- Also, I get the desire for poverty to improve in all countries, but ignoring poverty improvements for 1.5+ billion people seems a bit absurd.
Is hunger on the rise?
Hickel then moves on to rates of hunger, which do seem to be on the rise.
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Hunger is not a problem of lack, but of distribution. Globally, we produce more than enough food to feed every single person, and yet, billions of people around the world go hungry every single day.
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Hunger is worse due to forced wage labor. Hickel claims that many poor countries were forced to switch from a happy, peaceful, natural agrarian or hunter gather lifestyle to the misery of wage labor, and this is a big cause of increased hunger rates.
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(My take) The first item seems true, but the second is questionable.
- The point about distribution seems unquestionably, and depressingly, true.
- However, I’m not sure if I buy the second point about the “happy peaceful native living an easy life of plenty” narrative.
- It’s easy to idealize those societies, but didn’t they have short life spans, high child mortality, and massive violence?
- Moreover, earlier political and economic systems could be just as brutal, if not more, as anything we have today—e.g., Hickel romanticizes Feudalism in one part of the book, which seems absurd.
How did the global economy arise?
The book then shifts to the history of the global economy, laying out how the rich countries became rich and the poor countries became poor.
- Hickel goes over colonialism, imperialism, slavery, the role of the British in India and China, the Belgians in Africa, American interference (and coups) in South America, and much more.
- This is one of the more compelling parts of the book, as this is all well known history, and it has had a massive impact on how the world is structured today.
- However, it’s also worth mentioning that Hickel covers a massive amount of global history in a short time span—a bit like Guns, Germs, and Steel condensed into a chapter or two—so he tends to gloss over a lot of details.
Modern economic institutions
Hickel also discusses more modern economic institutions and practices, almost all of which was new to me.
- Structural adjustment programs (SAPs): loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to poor countries that experienced economic crises. To obtain these loans, those countries were required to implement a number of very questionable economic and social policies (e.g., cutting wages, removing public services, privatizing most state-owned enterprises, shifting business primarily to labor and resource extraction, strengthening protection for foreign investors, etc.). Ostensibly, these policies were to help stabilize the economies of these countries, but in reality, they often had the opposite effect. The poor countries would end up in massive debt to the rich countries (Hickel describes debt as a modern form of colonialism) and the policies would require them to open up their markets to rich countries in a way where those rich countries would end up dominating the economy and extracting most of the value from it.
- IMF and World Bank: Apparently, these institutions have legal immunity everywhere, so you can’t ever sue them, no matter what they do wrong?
- WTO: Apparently, control of this organization is massively biased towards rich countries. E.g., The US has enough votes to veto any WTO decision.
- NAFTA and other FTAs: These agreements allow foreign corporations to sue local governments (but not vice versa!) in private court, overturning local laws or regulations!
- Tax shelters: An astonishing amount of global trade goes through tax havens, often allowing rich corporations (mainly from rich countries) from paying taxes to poor countries. There is even a thing known as the “City of London” which is a small piece of London that is a separate entity with its own Lord Mayor elected by corporations… primarily to find tax havens. Is this… True?
Some of this stuff sounded absurd, almost like conspiracy theories, but a quick search suggests this stuff might be true. Where do you go to learn more about this stuff? Why do I know so little about major organizations like WTO, IMF, World Bank, etc.? Am I the only one that’s this ignorant of this stuff?
The role of protectionism
Hickel then argues that protectionism is required to bootstrap capitalism.
- All rich countries started with protectionism. Hickel argues that every country that’s rich today used protectionism and social programs (e.g., like the New Deal) in its early days, before going out and competing in the global economy. It’s a bit like raising a child: you keep the child at home the first 18 years, giving them a chance to grow and mature, before sending them out into the world on their own.
- The IMF and SAPs ban protectionism. Apparently, in the name of “neoliberalism,” this type of protectionism and social programs are banned, which Hickel argues makes it impossible for poor countries to ever compete globally, and build stable economies.
This seems plausible, but I honestly don’t know enough about capitalism or history to know if this is accurate. Where do I go to learn more about this?
The limits of GDP growth
Hickel then moves on GDP, making the claim that the global economy is based on the need for infinite GDP growth, but infinite GDP growth on a planet with finite resources is impossible.
- Most money is debt. Due to fractional reserve banking, 90% of the money circulating today is debt, which means it’s money created out of thin air when a bank loans money it doesn’t actually have. Eventually, all of this debt will have to be paid back—with interest. The need to pay back all this money that didn’t exist before means the economy needs to grow, and grow, and grow, forever.
- Resources on our planet are limited. Moreover, economic production has side effects, such as climate change. In other words, we are at the point where the only way you can grow GDP is at the cost of someone else. That means our economy, based on the current model, must eventually grind to a halt.
Is (infinite) growth an absolute requirement of capitalism? Where do I go to learn more about this?
Hickel’s proposed solutions
In the final chapter, Hickel proposes solutions such as:
- Forgive some or all of the debt that poor countries have to rich countries.
- Ban fractional reserve lending.
- All countries will have to reduce consumption and stop growing their economies.
- Ban all advertising.
- Reduce the work week to 2-3 days per week as a way to reduce unemployment and consumption.
This is the book’s biggest weakness. After a scathing review of capitalism and the global economy, Hickel doesn’t present any particularly compelling alternatives. Yes, some of the more insidious problems (e.g., SAPs, tax havens) can probably be fixed, but that doesn’t seem enough to make the type of sweeping changes we need. It reminds me of the Churchill quote:
Democracy is the worst form of Government except for all those other forms that have been tried from time to time…
