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Originally Posted by alansmithee
Milton Friedman won a Nobel Prize in economics for proving that poverty is not just a byproduct, but a necessity in a capitolistic society.
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Both statements are true:
capitalism needs social stability to keep chugging along. otherwise the unhappy (impoverished) might rise up. it also costs a hell of a lot of money to control a pissed of and disenfranchised population (witness wars and imprisonment).
capitalism also needs poverty to keep chugging. there are so many reasons that it's difficult to list them. maybe from the outset I can list it gives us a good reason to work hard. gives us a scapegoat when things go wrong. gives the entire system a ready work force to do the grunge work. keeps wages lower.
What you are pointing out would probably be best understood as one of the internal inconsistencies within capitalism. marx believed that capitalism sowed its own seeds of destruction by creating conditions that were objectively incompatible with each other (need social stability, need social instability). Thus, once the inconsistencies became apparent, challenges would arise and the system would implode.
So we are left with discussing the theoretical implications of capitalism versus what we are working with currently. Given that capitalism is here, its global, and doesn't really look to be on the decline in the near future, there is still an argument over how it operates.
There is nothing "natural" about the way any economic system works. Economic interaction, like I would argue all human interaction, is a social construction. That doesn't make it fake or illusory, but it does mean that human beings can change the rules. There is no external, objective, intrisic force that prevents human beings from realizing a different "flavor" of capitalism. But to the extent that we reify capitalism, we will be unable to understand that there are no rules other than the ones we ourselves create.
At some points in time, capitalists have come to understand this and promote stablizing programs. I'm not too happy about it, I'd like the thing to wither away myself. But we'd need to look at Friedman's writings more carefully to assess whether he also understood that the "necessity" of poverty to the smooth running capitalist economy must be understood with a healthy dose of realization that the long-term effects create very real problems to the system.