Why Capitalism did not lift Africa, South America or other 3rd world countries out of poverty

It has been many decades since African countries have become independent and adopted the very Capitalist economic model of their former colonizers. They were supposed to prosper, raise their life standards, get out of 3rd world status.

Even further, South American countries have been independent close to two centuries, and not only they exactly copied the Capitalist development model, but also had majority of cultural traits of their former colonial masters…

Yet, not only those countries, but also many other nations who adopted the Capitalist model still get classified as “3rd world”, not having broken the cycle of poverty and due to the lack of modern life’s amenities and standards.

All these countries have been practicing Capitalism. In some cases, 200 years or more. Why, then, these countries are still poor?

That’s because Capitalism does not do what it is claimed to do

Capitalism lifts out of poverty the countries which can use others as markets for their produce and providers of cheap resources and labor.

If the capitalist country can ‘persuade’ or subdue other countries to become its satellites as such in one way or the other, the capitalist country is able to export its manufactured or high technology goods and services to the market countries, whereas buying cheap resources or manpower from them to do that production.

If the capitalist country cannot acquire such markets, it stagnates and gets crushed under immense inequality.

Historical examples:

Every single country in Western Europe turned capitalist during industrial revolution. Those who were able to prosper and grow were the ones who were able to acquire colonies or satellite countries to use as markets.

Like Britain, who already had various vast colonial holdings which they were using as markets, like India, or France, who had had acquired such colonies recently.

You will notice that Germany and Italy, being newly unified industrial powers in mid to late 19th century, have immediately rushed join ‘The Race for Africa’ at the end of 19th century in order to acquire colonies as such.

In contrast, various gigantic countries which were not able to acquire such colonies were not able to employ their industrial capacity to acquire riches – Austria-Hungary is a great example, it was a large country with sufficiently diverse resources, but in contrast to Germany, which had considerably more scarce resources, it was not able to marshal an industry to match despite presence of a much stronger central government which tried whatever needed to keep up with other countries. Its internal market did not allow it to gain the same steam, and its internal resources were not comparable to what resources other countries with actual colonies were pulling in.

Russia is another similar example. Even after making a conscious effort to industrialize, they were not able to gain any level of industrial clout anywhere near the countries which had colonies gained by the start of World War I.

The case of Netherlands is a great example to the contrary – a tiny country with scarce resources, low population compared to major players, has stayed a major economic player and industrial center from mid 17th century all the way up to mid 20th century thanks to few colonies they were able to keep, and also by piggybacking on Britain’s endeavors through financial tools.

The very Nordic countries which you named in your analysis were among those who were left behind by Capitalism at the end of 19th century. They were not able to acquire such colonies or markets, and therefore they had to make do by being smaller satellites to the neighboring big industrial powers, stagnating much more behind them. Even by doing some peripheral manufacturing to supply those larger countries with some intermediary manufactured goods and some of their significant natural resources, they were not able to bring prosperity to their own countries.

And after an attempt at even more (actual) capitalism ended up in the almost-destruction of their society, in late 19th century they have moved towards what is called Social Democracy by early-implementing various of the famous socialist programs we have in every modern country today, therefore already ushering a much higher standard of living for their average citizen compared to every single capitalist country on the continent.

At the time when those Nordic countries’ citizens were enjoying social measures which the continent was to see only 30–40 years later, Winston Churchill was having soldiers shoot at striking miners who were asking for better wages and some social services.

It was even worse in US.

Battle of Blair Mountain – Wikipedia

As you will notice at this point, the prosperity and riches capitalism acquired even in those countries which had the colonies and markets to use, did not provide a betterment in the lives of majority of ordinary people.

Being a system geared for profit maximization for those who hold the most capital, it was very natural for those who held the capital to have the Welsh miners in Britain to work 7 days a week for 12 hours a day with scarce pay with zero protections, just like how they were having people in India produce natural resources for them as they starved.

Above you see children enjoying the fruits of prosperity which capitalism brought to their country in the late stages of industrial revolution.

………..

At this point you will easily understand the position of African, South American, various Asian countries

Not only a majority of those countries were still colonies of the nations which ‘prospered’ by capitalism until later half of 20th century, but also after becoming independent, they were not able to find markets to make their budding capitalism work.

Doubly difficult, since the countries which used them as colonies had every reason to keep the infrastructure and industrial development in those colonies as low as possible, only making it enough to extract their natural resources, to prevent those internal markets from developing industry and becoming competitors to the products which the occupying country was exporting to those colonies.

Beyond that, majority of those newly independent countries were kept in a pseudo-colony state through puppet or compliant governments, through financial measures (IMF, World Bank, other financial arrangements or demanding payment for the colonial infrastructure built), and if everything failed, by overthrowing the government or fostering a civil war and then backing a party which would do their bidding.

“If you don’t obey, we will wreck you” was the message. It was not an accident, a random occurrence or a byproduct of any political event: It was the decided method for fighting with the “Domino Theory”.

Domino theory – Wikipedia

This Anglosphere developed theory proposed that if any country was let to be free of the existing ‘global system’ (aka, pseudo colonial system), and let to follow independent development, others would immediately follow their example and therefore this would cause a crash of the ‘world order’. Ie, countries would turn socialist or communist.

As you will understand from the summary, domino theory took it as a given that those countries would succeed and they would be taken as examples.

That’s because they were successful – USSR have moved to become an economic powerhouse by 1960, and the internal reports of Kennedy administration was concluding that their massive economic growth was attracting smaller countries to follow the same model.

This was very bad.

Because at the end of Ww2, 75% of the world ended up in US control sphere as FDR administration calculated. And before the war ended, the budding military-industry complex in US had had already assigned a ‘role’ to every single country they came to control – one country would produce rubber and sell it to US, another would produce sugar cane and so on. And all of them would buy US products.

Whenever a country followed an independent development route and started to produce what they were not allowed, US bashed their heads in – Indonesia got their coup, which not only killed the attempts of their socialist government to diversify production, but also killed ~30,000 leftists, socialists, intellectuals in the process. It put Indonesia back into being a raw materials producing colony. New York Times dubbed it ‘a great victory for democracy’ at the time…

A sugar and cigar producing country rebelled. US was not able to ‘put them back in their place’ this time.

That country is Cuba.

As an alternative, US went the route of using its control of the 75% of the world which was under its influence to starve Cuba.

A blockade, an economic warfare so complete that it may have costed US taxpayer billions of dollars in the 60–70 years just to implement, leave aside the cost of the lost trade. Even as of this moment, a few million dollars per year is being spent to ensure that no ships carrying Cuban goods sail from foreign ports to American ports.

This is before the fact that CIA used unmarked planes to bomb Cuban factories – any type of factory they tried to build was bombed, but Cigar factories, and sugar cane production seem to have been left alone.

Cuba in the Cross-Hairs: A Near Half-Century of Terror

The Batista dictatorship was overthrown in January 1959 by Castro’s guerrilla forces. In March, the National Security Council (NSC) considered means to institute regime change. In May, the CIA began to arm guerrillas inside Cuba. “During the Winter of 1959-1960, there was a significant increase in CIA-supervised bombing and incendiary raids piloted by exiled Cubans” based in the US. We need not tarry on what the US or its clients would do under such circumstances.

You may notice that US kept Cuba ‘in its place’ by not allowing them to produce anything more than cigars and sugar cane – just like how it would be if they stayed a colony. Incidentally, Cuba is a healthcare powerhouse because it was not possible for US to clandestinely bomb hospitals on an ongoing basis.

But the biggest example of the ‘message’ sent to countries which may err in thinking about ‘independent development’ (socialism) was Vietnam.

Kennedy administration started Vietnam intervention at the height of Cold War and the recent popularization of the Domino Theory, and Vietnam was intended to ‘set an example’ to tell other countries what would happen if they ever entertained the idea.

Entire country was wrecked by bombing. Agent Orange, a special chemical weapon was developed to make sure nothing grew on Vietnamese soil, the policy for bombing was conveyed by a notable war criminal who is dubbed the biggest foreign policy statesman in US, Kissinger, using the words “Anything that flies, on anything that moves”. Meaning, US was to bomb any living creature to oblivion by using anything that flew. Civilians, women, children, even goats.

US Air Force did their task admirably. From bombing civilians to carpeting farm fields with Agent Orange.

Children are still born with birth defects in Vietnam today as a result of the chemical weapons used.

So basically the proposition was ‘you either stay a colony and a good obedient little market’, or we make you end up like this.

As a result, majority of African, Asian and South American countries followed capitalist development. And they were not able to develop one inch from being small little markets and resource producers for the countries which kept them as such.

………..

Nordic countries however, despite not being able to acquire such markets and satellites, implemented the Socialist policies first advocated in First Socialist International, and they were able to raise the life standards of their citizens over 50 years~.

This, creating an educated, conscious population, resulted in them being able to foster and keep various industries which were not already dominated by big players.

Finland’s Nokia is a good example of this, coming at the right time, but especially coming from a country which was forcibly put into a neutral country status by both sides of the Cold War, therefore a country neither US could intervene and stage a coup to keep them down, nor USSR could intervene on their part.

Similarly no Nordic country has suffered a US backed regime change operation, a civil war or the similar – their position were too precarious to risk, and therefore they went rather unscathed during Cold War.

So, they were able to turn Socialist to the extent which they were able to. And this has been the basis of their success

The socialist principles they adopted include, but are not limited to:

  • Huge amount of strict regulations which prevent corporations from doing what corporations in more capitalist countries like US are doing
  • Doubled by regulations which seep in from Eu, increasing the effect
  • High personal income/wealth taxes, which force the rich owners of the corporations to keep the wealth in corporations instead of hoarding, therefore fostering investment
  • Strict working condition requirements that bump up safety and quality of work life
  • Laws and regulations that mandate workers having a say in how their corporation is run – from worker councils to syndicates/unions
  • Socialized healthcare that ensures population stays healthy and functional, ramping up the available workforce
  • Socialized free education that raises the average level of education of entire country, increasing the qualify of workforce
  • Large social programs which do not allow you to go down, homeless, hungry or out in the cold
  • Guarantees and help regarding unemployment
  • Strong safety net against disability or similar situations
  • Public funding of elections or similar measures, which prevent the power of money in politics and forces democratic measures
  • State ownership or large shareholder-ship of major industries, like Norway’s sovereign wealth fund which owns their oil resources

None of these are imaginable in US, for example – an actual country which not only reveres Capitalism, but follows it as close as it can.

Leaving aside the abundant knowledge about total lack of comparable social protections, amenities, working conditions, minimum wage or similar standards, free education etc in US, the US corporations demonstrate what kind of environment what a real capitalist environment is:

You can knowingly sell a drug which will kill ~150,000 people, make $11 bn profit, and get away with it in US

You can profit at the expense of killing people en masse

You can sell lead painted toys to children, poison an incalculable number to have health defects into the future, and get away with merely $2.3 million fine

You can just leave people to die when they cant pay for healthcare

You can avoid paying people enough to retire, and then even eat their retirement funds in stock market

The examples are so varied and endless that they would deserve their own answer to give the full picture.

That is Capitalism.

That is economic freedom. Not the economic freedom of the 70 year old Walmart greeter whom Walmart put in their store door after bankrupting his small business – but Walmart’s freedom to bankrupt that small business owner and put him to work at 70 years of age as a ‘door greeter’…

Has one of your relatives or friends, or even someone from your family bought a drug like Avandia and died from heart attack?

Buyer beware. Its your responsibility to know what to buy in Capitalism. Next time you people make better choices and you do not buy drugs which will kill you, and maybe more of you won’t die.

Despite working hard for 40 years you still don’t have enough money in retirement and you are starving? Almost majority of your generation is in the same boat?

Tough luck. You should have worked even harder. Even if it wouldn’t make you any better.

Suddenly developed a health condition but you don’t have enough money to pay for healthcare and the insurance refuses because you will eat into their profits?

Suck it up. Free market. No pay, no play.

……..

That’s the Capitalism which Nordic country citizens don’t have.

What they have is this

Social democracy – Wikipedia

Its called Social Democracy, and was designed as a transition in between Capitalism and Socialism.

And it uses many Socialist principles as they were first laid out in First Socialist International at the end of 1800s.

Incredibly, it seems a lot of people from those countries err in thinking that Capitalism is giving them all the benefits which they are enjoying today.

Hopefully they will never have to learn the difference in between what they have, Social Democracy, and what they think they have, Capitalism, by living through any of the ‘benefits’ of Capitalism like many Americans are living and learning today.

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