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Can Capitalism Help the Poor?

My Thoughts on How Capitalism Helps the Poor:

A friend recently asked me “can capitalism help the poor?” I wasn’t surprised by the fact that he asked the question, I’ve seen variations of that question online recently. People ask “does capitalism help the poor?” Or, “how can capitalism help the poor?” What does surprise me is that no one in America seems to understand how beneficial capitalism has been for society. It pulled hundreds of millions of people around the world out of poverty. Additionally, it created thriving middle classes in many nations and increased prosperity for all. Capitalism is a great force, we just have to learn the facts so that we can adequately defend it.

Why Capitalism Helps the Poor:

So, why does capitalism help the poor? Because of the rise of socialism in America, few people can answer that question. However, after doing some reading, I can name two main reasons. Those are the freedom provided by capitalism, and its unique ability to create wealth.

Freedom in Capitalism:

As this meme suggest, the freedom provided by capitalism is immense. Free markets give people the ability to rise up from awful circumstances and build something. One of the big points I took away from the best book about the Gilded AgeThe Republic for Which it Standsis that many great industrialists started off poor. But, they were able to use their ambition and talent to rise up above their circumstances and become fabulously wealthy. Instead of remaining in the vise-like grip of poverty, as they would in less free nations, they were able to use free markets to rise up and be successful. Without the freedom provided by capitalism, that would not have happened. Like I talk about in my “The Virtue of Capitalism ” post, capitalism is moral in part because it is what created the freedom to be successful despite your starting circumstances. No other system had provided that opportunity; before American capitalism, wealth was mainly hereditary or at the mercy of the state. With capitalism, people are free to be successful as long as they are competent and able.

Additionally, free markets and the freedom in capitalism help the poor because freedom lets people use their talents as they see fit. Instead of relying on some stat-appointed bureaucrat to tell them what to do, people are able to use their unique abilities to become successful. That freedom is unique to capitalism. In america, people aren’t directed by the state to be in a specific industry, or tied to their lord’s land as a serf. Instead, they are free to do as they please. That has helped America erase poverty in most areas. People are free to live and work where they please, which increases wages and opportunity.

The freedom inherent in capitalism is shown by the ladder in this meme. People need a way to climb out of the pit of poverty. Capitalism is the only system that gives them that ladder.

The Concept of the Creation of Wealth:

The concept of the creation of wealth was created by capitalism. As I mention in my “The Virtue of Capitalism” post, wealth was thought to be static before capitalism. Because of that, ideologies such as mercantilism were created that required violence and the seizure of money for someone to become rich. That made it almost impossible for the poor to rise up out of poverty.

But, capitalism changed the game. Instead of wealth being static, it could be created. Merchants and manufacturers could use their talents to build fortunes rather than seize them. Additionally, capitalism meant that there was no longer any justification for profit-based war. That helped the poor immensely; now their houses or farms were no longer being pillaged by invading armies seeking to seize wealth and grow richer. Instead, new manufactures rose that sold goods that were beneficial to those that they were being sold to. They made fortunes through selling rather than seizing, which helped erase poverty. The poor worked in factories and made wages that they were able to save, thus improving their quality of life. They no longer had to worry about it being stolen by some pillaging army.

Also, the concept of the creation of wealth means that there could be new money in the system. That may seem obvious now, but back when that concept arose it was revolutionary. It meant people of all classes could grow richer as the rising tide of wealth in the monetary system lifted all boats. Rising profits and sales meant rising wages. Rising wages meant people buying more goods and investing more money. Investments and increased buying power led to higher profits and increased manufacturing. And the cycle continued, with the freedom provided by capitalism allowing people to find better wages, opportunities, and goods in the cycle, thus benefiting the best. It was a virtuous cycle that lifted millions of Americans out of abject poverty and into the comfortable lifestyles that many know today. That rising tide would not have existed without capitalism helping the poor.

Why Socialism and Big Government Hurt the Poor:

When people ask “can capitalism help the poor,” what they are really asking is “would socialism be more beneficial to the poor?” The answer is a resounding no. Socialism keeps people impoverished. Without free markets and freedom of opportunity, no one can rise out of poverty, and many are forced from the middle and upper classes into either poverty or gulags.

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Once the rich and middle classes have been eradicated by socialism, there is no opportunity for new investment. That means stagnant or falling wages, limited innovation, and no ability to advance. As the meme up top shows, big government and socialism only provide enough through wealth distribution to maintain the status quo at best. Often, there is not enough for that once socialists run out of other people’s money, so living standards fall and millions starve.

I recently posted about “Why Socialism Always Fails.” Just look at places like Venezuela to see why it always fails; socialist states don’t allow entrepreneurs to thrive. And without entrepreneurs, wealth can’t be created and the economy won’t advance or grow. No economic growth means that the poor can’t rise out of poverty and their living standards remain just as bad, if not worse.


So, hopefully after reading this you will know how to answer the question “can capitalism help the poor?” Your answer should be a resounding “yes.” Capitalism leads to freedom and the creation of wealth. Those two forces have done more than anything else to lift people out of poverty. In America, they have led to an almost total eradication of abject poverty. That huge success is often missed because capitalists don’t talk about it enough. We rarely talk about the huge and real successes of free markets, but the socialists talk about mostly illusory potential successes of socialism all the time. And they constantly point out the limited flaws of free markets, such as income inequality.

I would prefer for a society to be varying levels of rich rather than all on the same level of abject poverty, such as in Venezuela. Capitalism leads to wealth and a rising tide of wealth. Socialism leads to poverty. Choose capitalism and help the world correctly answer the question “can capitalism help the poor?”

By: Gen Z Conservative


The Virtue of Capitalism:

The best book you will read about the Gilded Age and the many successes of capitalism in that era:

And buy that book here:

Why Socialism Always Fails: