Poverty is falling, despite capitalism

Again and again I find contributions or interviews of lifestyle leftists who like to claim that capitalism is to blame for poverty and that it has to be replaced by something better. By which system? This is usually not answered, but one can ideologically already think where it leads, in socialist or communist systems.

And yet, despite its bad image, capitalism has been able to reduce poverty in many countries like no other system.
On the website Our World in Data, you can find wonderful graphics that show how it has developed over the last decades:



I have created a table here with ChatGPT, which compares different, though not all aspects of the social systems capitalism, socialism, communism. In its pure form, capitalism is not good at first glance, which is why we have the social market economy in Germany, where, for example, people who lose their jobs are supported financially by the state and thus by the taxpayers of the country through unemployment benefits and assistance programs.
Also, the disadvantages such as environmental pollution are reduced by government guidelines and laws.

In the distribution of income, for example, the inequality in wages and access to the labor market is improved. But even here it is not perfect and at least in Germany, there are still companies and cases where women earn less than men despite the same work performance.
Through rich taxation, these are also limited here, although this approach can also turn around with too high taxes and the people, with the capital and the companies, leave the country. Already today, Germany is one of the countries with the highest taxes in the world, and in 2022, 1.1 million German citizens have left the country. So in addition to a capital there is also a brain drain.

What do you think? Is social market economy the solution or is there a better solution?

I for one think that except for the German bureaucracy, actually the social market economy is working quite well and only that there are still problems to be fixed here, such as increasing poverty and support from the state for people to start businesses and become self-employed so that they can in turn create jobs.

Capitalism Socialism Communism
  • Efficient allocation of resources
  • Strong incentive system for innovations
  • High degree of individual freedom
  • Equality and justice
  • Social security
  • Less social class conflict
  • Classlessness
  • Strong sense of community
  • No exploitation
  • Inequality and injustice
  • Market instability
  • Pollution and waste of resources
  • Slow progress and innovation
  • Bureaucracy and ineffective planning
  • Less individual freedom
  • Lack of incentives and motivation
  • Forced collectivization and expropriation
  • Restrictions on individual freedom
  • Labor as a commodity
  • High unemployment in times of crisis
  • Precarious employment
  • Better working conditions
  • Unemployment usually cushioned by the state
  • Workers have more say
  • Work is seen as a self-evident duty
  • Workers have little influence on their work
  • No unemployment in theory, but in practice there are waiting lists for work
Innovation power
  • High incentive for innovation through competition and profit generation
  • Rapid dissemination of new technologies and ideas
  • Private companies invest heavily in research and development
  • Innovations are often government-driven and serve the common good
  • No strong competition between companies, therefore fewer incentives for innovation
  • Slow diffusion of new technologies due to bureaucratic hurdles
  • Innovations serve the entire community and not just private companies
  • No competition between companies, therefore no incentives for innovation
  • Government planning can hinder innovation
  • Rapid technological progress and economic growth
  • More opportunities for self-realization and personal development
  • Wide range of goods and services
  • Stable economic system with uniform growth
  • Protection against monopolies and market power of large companies
  • No extreme economic fluctuations as in capitalism
  • No economic growth as primary goal
  • State planning can lead to slow development
  • No diverse range of goods and services
  • Inequality in income distribution and wealth distribution
  • The rich get richer and the poor get poorer
  • No guarantee of social security and protection against poverty
  • Greater equality and fairer distribution of income and wealth
  • No extreme poverty or wealth
  • Social security and protection against unemployment by the state
  • Classless society with equal income distribution
  • No differences in income distribution
  • No incentives for higher benefits or higher standard of living
  • The collective takes precedence over individual needs


Further sources:



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Posted by Petr Kirpeit

All articles are my personal opinion and are written in German. In order to offer English-speaking readers access to the article, they are automatically translated via DeepL. Facts and sources will be added where possible. Unless there is clear evidence, the respective article is considered to be my personal opinion at the time of publication. This opinion may change over time. Friends, partners, companies and others do not have to share this position.

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