Investing in Poverty

Investing in Poverty

by Susan Rosenthal

Book Review: Jeffrey Sachs, 2005, The End of Poverty: Economic Possibilities for Our Time. Penguin Press, 416 pages.

World poverty is a serious problem. More than a billion people barely survive on less than one dollar a day. Every year, nine million people die from hunger and other preventable causes – the equivalent of eight World Trade Center bombings every day.

Contrary to popular belief, it wouldn’t take much to end such poverty. The World Bank estimates that $124 billion, or little more than $100 per poor person per year, would do it. This sum is less than 0.7 percent of the GDP of the 22 rich “donor” nations.

Washington pledges foreign aid with such fanfare that most Americans think the United States spends more than 20 percent of its budget to help poor countries. In fact, the U.S. donates just 0.12 percent of its GDP to foreign aid. It spends more than 30 times that amount on the military. Eradicating poverty is not a priority because the poor provide cheap labor, which is the key to higher profits.

Jeffrey Sachs is an economic adviser to the United Nations, whose views on poverty have become popular partly because of his association with rock star Bono.

Sachs warns that too much poverty threatens the security of richer nations, causing wars and insurrections that cost more than it would cost to reduce poverty. However, Sachs does not call for an end to poverty. He wants a more sensible capitalism. As he says,

“The goal is to end extreme poverty, not to end all poverty, and still less to equalize world incomes or to close the gap between the rich and the poor. This may eventually happen, but if so, the poor will have to get rich on their own effort.1

Sachs calls for charity, not justice. He thinks the rich should help the poor out of “enlightened self-interest,” not because the rich owe compensation to the poor for getting rich at their expense. The word “reparations” appears nowhere in this book. Sachs absolves the capitalist class of any responsibility for creating poverty.

“Africa’s problems, I have noted repeatedly, are not caused by exploitation by global investors but rather by its economic isolation, its status as a continent largely bypassed by the forces of globalization.”2

Sachs does not deny that Africa has been devastated by three centuries of slavery, a century of colonial rule, post-colonial exploitation and crushing debt. Nevertheless, he thinks that these burdens do not explain Africa’s “long-term developmental crisis.” He argues that the economic Grand Canyon between Africa and the United States is the result of different growth rates – Africa is poor because it grew slowly, while the U.S. is rich because it grew more quickly. He admits that having more wealth to start with contributes to faster growth, but never links America’s faster growth with the massive wealth it accumulated from the labor of African slaves! His racist conclusion is that Africa has been “poor since time immemorial.”

Sachs wants more multi-national corporations to invest in poor nations, offering reassurance that such investment would be profitable. As he stated in the British Guardian,

“Ending poverty is a grand moral task, and a geopolitical imperative, but at the core, it is a relatively straightforward investment proposition.”3

Sachs recommends more industrial free-trade zones run on low-cost labor, in the belief that “sweatshops are the first rung on the ladder out of extreme poverty.” To Sachs, working in a sweatshop is preferable to dying from starvation, as if that were the only alternative.

The working class has created more than enough wealth for the capitalist class, and should not have to produce for it a minute longer. The real alternative to poverty and starvation is not sweatshop labor but socialist revolution, which would remove from private hands what should be socially shared.

Sachs accuses the anti-globalization movement of being “too pessimistic about the possibilities of capitalism with a human face.” He advocates nine steps to “heal the world” including “Redeem the Role of the United States” as a “leader and inspiration in democratic ideals,” and “Rescue the IMF and the World Bank” by restoring their roles as “champions of economic justice and enlightened globalization.” Surely, a socialist revolution would be easier!

Sachs’ wants to join rich and poor in “a common bond of humanity, security, and shared purpose across cultures and regions.” However, this kind of unity only preserves the wealth of the capitalist class and perpetuates the poverty of the working class.

1. p.289.

2. p.356.

3. Sachs, J.D. (2005). The end of the world as we know it. Guardian (UK), April 5.

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