Capitalism's Grip on American Poverty
The United States stands as one of the wealthiest nations globally, boasting a robust economy and being home to some of the world's richest individuals and corporations. However, the coexistence of prosperity and a number of citizens living in poverty raises critical questions about the distribution of wealth and the effectiveness of current economic systems. Financial services have done little to prevent the continual rise in poverty rates and economic hardships such as rising housing costs and stagnated wages have contributed significantly to the exacerbation of poverty. Even with all this, this isn’t an answer to why poverty stubbornly persists in America. Thus, we must look at America’s economic system to find the root cause. Under the American framework of capitalism, economic divisions will persist as poverty is a necessary consequence of capitalism. In order to truly address and eliminate poverty, we have to go beyond superficial and temporary relief measures and institute radical and comprehensive policy changes.
Even though the United States has dramatically increased federal spending over the last 55 years, poverty rates have still only increased as 12.4% live in poverty in 2022, up from 7.4% in 2021. Researchers point to stagnant wages and increased housing costs as key contributors to this rise. Over the past three decades, wage growth at the bottom of the income distribution has stagnated, leaving many full-time workers below the poverty line. The federal minimum wage, failing to keep pace with the rising cost of living, perpetuates economic disparities. The situation is particularly dire in cities like New York, where 40% of working families struggle to afford basic necessities. While financial services are touted as solutions, they often fall short, unable to benefit those who need them the most. According to The Education Trust, “Whenever barriers are created for any relief program, all too often they exclude low-income and low-wealth individuals, even when the program was explicitly created to serve them.” In fact, only 1 in 4 extremely low income families who need assistance even receive it. For example, in 2020, for every dollar budgeted for TANF nationwide, poor families directly received just 22 cents. Another example is loan forgiveness with middle and lower income families bearing the burden of regressive policies.
Services ostensibly designed to provide relief reveal exploitative undertones, underscoring a more profound structural issue that explains the persistent nature of poverty. In America, poverty emerges not merely as an unfortunate byproduct but as a necessary function within the framework of capitalism. American corporations, serving as the driving forces behind capitalism, have gained notoriety for engaging in practices such as union busting and the exploitation of labor. These corporations use their monopolistic dominance to undermine the collective bargaining power of workers, impeding their ability to advocate for fair wages furthering perpetuating economic disparities as “commodities and services can be obtained at lower prices so long as wages are depressed by the existence of the poor and capital retains its power to extract profits.” Capitalism directly fosters this behavior as its purpose is to profit in the short run, not the material reproduction of human beings. Through the creation of a reserve army of labor which means a lot of workers will not be employed, it will create competition for employment to survive thereby allowing wages to decrease. When an economic crisis occurs such as a recession, market crash, or depression, the material conditions of the population severely decrease, exacerbating poverty. In summary, the relationship between capitalism and poverty is functional rather than antagonistic.
The government's minimal intervention in addressing such behaviors is evident, primarily driven by their vested interest in maintaining the current economic status quo. Significantly, individuals heavily depend on these corporations for their convenience and luxuries. The American lifestyle itself thrives on the existence of economically disadvantaged individuals who provide goods at a low cost. Take, for instance, Amazon, a cornerstone of many people's daily lives. While we enjoy the swift delivery of our packages, the unseen reality involves extensive exploitation. Amazon engages in “anti-union practices, among them firing many workers in retaliation for backing a union.” While workers attempt to go up against billionaires and trillion-dollar companies with an endless amount of resources, America’s labor laws are far too weak to protect them. Thus, even if we believe we are not directly complacent in the perpetuation of poverty, there is no ethical consumption under capitalism as consuming goods or services will inherently cause harm.
While unwilling to give up their luxuries, Americans are cognizant of their privilege and try different methods to assuage any bubbling guilt. Samuel Smiles’ indication of a moral disparity between the wealthy and poor blames their economic status on an inherent condition and individual failure thereby removing the system from fault. While he wrote this idea in 1859, it is just as prevalent today as individuals believe that people in poverty are there due to inadequate work ethic or a poor attitude. Contrastingly, corporations and influential figures feel compelled by their large, critical audience to assist the poor but do so in performative ways that lack real impact and may even be harmful. Companies manipulate their marketing to present a more benevolent image than their actual practices warrant. Social media influencers participate in volunteer activities for photo opportunities, leveraging these events to appeal to their audience, only to depart at the earliest convenience. Such actions reveal the superficial nature of their involvement creating an almost dystopian vision of how different economic statuses interact with one another.
Ultimately, breaking the cycle of poverty necessitates either a radical shift in policy or a profound overhaul of America's economic system. Radical policy changes entail the establishment of comprehensive social welfare programs, the adoption of true progressive taxation, and the introduction of a universal basic income. Alternatively, transforming the economic system involves fundamental shifts in the mode of production, such as reassessing the prioritization of profit over people, promoting responsible business practices, and fostering a cooperative and inclusive economy.
This transformation requires a departure from the prevailing paradigm of unchecked capitalism, creating an environment where businesses prioritize social and environmental responsibility alongside profits. Corporations, given their comparable influence to governments and their role in shaping societal structures through capitalism, must recognize a broader responsibility beyond mere profitability and shareholder interests. They should consider the profound impact their operations have on entire populations and focus on contributing positively to society.
While these ambitious actions may appear quixotic, it is crucial to acknowledge that societal change often commences with visionary and bold initiatives. Taking incremental steps toward these objectives can gradually reshape the landscape and yield meaningful progress. More immediately feasible policy changes include reinforcing labor laws to safeguard workers' rights, advocating for a higher federal minimum wage to ensure a living income, and implementing measures for more affordable housing to address the housing crisis disproportionately affecting low-income individuals and families. However, it is essential to recognize that these pragmatic measures represent only a fraction of the comprehensive changes required to effectively break the cycle of poverty in the long term.
Bibliography
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