[Marxism] Capitalism's new working class consumers

Marvin Gandall marvgandall at videotron.ca
Mon Jul 21 11:36:09 MDT 2008

Actually, the following quote is from Jim O'Neill, the author of the 
article. My preceding comments included that O'Neill was "plain wrong" in 
asserting that inequality was declining rather than increasing.

----- Original Message ----- 
From: "Louis Proyect" <lnp3 at panix.com>
To: "Marv Gandall" <marvgandall at videotron.ca>
Sent: Monday, July 21, 2008 12:56 PM
Subject: Re: [Marxism] Capitalism's new working class consumers

Marvin Gandall wrote:
> It is also evident that poverty is dropping dramatically around the world.
> According to our calculations, the number of people living on incomes of
> less than $1,000 dollars a year ($2.75 a day) has already dropped
> significantly from about 50 per cent of the world’s population in the 
> 1970s
> to 17 per cent by 2000. According to our numbers, it could be as low as 6
> per cent by 2015. On the more familiar World Bank defin­ition of one 
> dollar
> a day, the same dramatic shift is evident. Probably no more than 5 per 
> cent
> of the world’s population now suffers this indignity. Of course, this is 
> too
> much, but as long as the forces of globalisation continue we expect it to
> drop further.

World Bank Global Poverty Calculations Taken to Task
An Interview with Sanjay Reddy, Co-author of “How NOT to Count the Poor”
by Nathan Harrington
50 Years Is Enough Network

"How many poor people are there in the world? This simple question is
surprisingly difficult to answer." So begins "How Not to Count the
Poor," a new study published at www.socialanalysis.org by two Colombia
University scholars. In it, economist Sanjay Reddy and philosopher
Thomas Pogge mathematically dissect the process by which the World
Bank’s staff economists arrive at an estimate of the scope of global
poverty each year and reach the stunning conclusion that their
methodology is fundamentally flawed so as to yield results that could
not possibly be accurate. The extent, distribution and trend of global
poverty remains unknown, they conclude, but there is reason to believe
that the World Bank has been undercounting the poor, and that it has
come without sufficient justification, to the conclusion that poverty is
on the decline.

The significance of these revelations begins with the fact that the
World Bank is the only public institution in the world that claims to
know – down to the nearest 10,000 – how many people suffer from extreme
poverty. The estimates, Reddy and Pogge write, “are widely cited in
official publications of governments and international organizations and
in popular media, often to support the view that liberalization and
globalization have helped reduce poverty worldwide.” The discovery that
these estimates are virtually meaningless, then, is highly inconvenient
for the World Bank because if it is widely accepted and publicized, the
World Bank would be deprived of a trump card with which to defend its
neo-liberal policies – and the configuration of the global economy
itself – against a growing chorus of protest and dissent. The World Bank
has attempted to rebut Reddy and Pogge’s research with an article (also
available at www.socialanalysis.org) by Martin Ravallion, who manages
the Bank’s poverty estimation, but it has proven unpersuasive.

The many defects which Reddy and Pogge find in the World Bank’s
methodology range from straightforward to obscure. For one, the World
Bank starts by arbitrarily designating ‘one dollar per day’ as the
universal poverty line to be applied to all nations. But because a
dollar can buy more in some countries than others, World Bank economists
attempt to convert its worth using a method called “purchasing power
parity” adjustment. Existing purchasing power parity adjustments
identify the extent of purchasing power of the world’s people according
to their capacity to buy all goods and services consumed in the world
economy. This is not limited to the things they need to survive, such as
food, housing, clothing, and healthcare, but also includes limousine
service, luxury hotels, and pedicures, which will presumably not be
purchased by those without disposable income. Because services are
typically cheaper in poor countries than in rich countries as a result
of lower wages, purchasing power parity adjustments typically overstate
the ability of the poor to purchase basic necessities that are not
especially cheaper in poor countries. Furthermore, the growth of the
service sector worldwide may translate over time into the appearance
that the poor have increased purchasing power. In fact, the increased
consumption of these services by the non-poor does nothing to reduce


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