Sen points out that high

Sen (1985) points out that high investment rates resulted in industrialization and subsequent economic growth from 1960 to 1980. However, a failure occurred when countries with high and sustained growth rates did not increase life expectancy at birth, reduce mortality or diminish inequality.
Towards a critique of the concept and causes of poverty As long as neoclassical and neoliberals do not recognize the inherent problems of capitalism, they cannot explain poverty. We believe that the concept of poverty involves two components: (1) a deprivation of the material conditions for the reproduction of society, and (2) a failure to develop the full capabilities of human beings. The latter is a qualitative component, whereas the first is a quantitative component. The first component must be overcome before the second can be addressed, but fulfillment of the first does not involve achievement of the second (see Marx, 1959). A world without poverty involves satisfaction of both components. We are going to examine this argument more closely. In general, to ensure the material reproduction of society (the first component of our concept of poverty), an economic act consists of five moments (see Dussel, 2001): Since human beings do not have material reproduction guaranteed, poverty in its material aspect has always existed in humankind. However, each mode of production has its own characteristics. Three patterns, which can be seen in Figure 6, can be distinguished: (1) the entire D609 is in poverty due to poor development of the productive forces and the material reproduction of society is not fully guaranteed (second vertical line; this situation might be the case with primitive communism); (2) in the population there are rich and poor, which would be the case with modes of production such as slavery, feudalism and capitalism (diagonal line); and (3) in the population that there is no poverty as is the case with socialism because of the high productivity and different kind of institutions (high horizontal line). However, the aforementioned point 2 needs clarification. Slavery, feudalism and capitalism all have in common the existence of exploitation. In the first two modes of production, the productive forces are poorly developed, so the existence of poverty in material terms is in some sense inevitable. Meanwhile, in capitalism, even when there is exploitation, the specificity is the high degree of development of the productive forces; poverty could be eliminated in material terms as Karl Marx mentions (1887, 430): Capitalism can potentially eliminate material poverty but it is unable to do because of: (1) capitalism\'s purpose is profiting in the short run, not the material reproduction of human beings. For example, by the law of capitalist accumulation, capitalism always creates a reserve army of labor. It is good to have a lot of workers without employment, so wages can decrease because workers compete for a job in order to survive, also, it is good the so called flexibility of labor (2) Capitalism is prone to crises that make society poorer each time one occurs. So when capitalism is expanding, it can use more labor or less, depending on the degree of accumulation and exploitation rate, but when a crisis occurs, the material conditions of the population are severely degraded, which exacerbates poverty. Then, coming back to Figure 6, we have the following restriction: where X is the number of poor people, Y is the number of nonpoor people, a is the total endowment of the poor people (mostly wages),b is the total endowment of the nonpoor people (capital and income), and W is the total wealth of the society. In capitalism, material poverty can be reduced only by: Capitalism may end up with material poverty, but capitalism is prone to crises, or seeking higher profits reduces real wages of the workers, thereby increasing poverty levels, as has been the case in the neoliberal period. If capital and income were redistributed, capitalism would no longer exist, so solidarity, cooperation and redistribution are not key characteristics of capitalism. The points made in this Section 5 are summarized in Table 2. The first column indicates the time, the second column represents modes of production, the third column shows whether or not material reproduction of society is guaranteed in each mode of production and the last column presents whether or not human beings can realize their full capabilities (true development). Capitalism can end material poverty in theoretical terms at least potentially; however, the kind of poverty that capitalism cannot eliminate is where the human beings are exploited because in capitalism men and women are just workers and their lives are dedicated to serving others. Exploitation always exists and people cannot develop their full human potential because they are just commodities. Sen (2000, 7) argument “praised of capitalism by Karl Marx … of the American Civil War… related directly to the importance of the freedom of labor and contract as opposed to slavery and the enforced exclusion from the labor markets” is misleading and rejects history and social relations. It is true that Marx in several writings praised capitalism in opposition to other modes of production –as in the case of India in the 19th century–, but markets belonged to a social and historical space that had to be transcended. Two examples make clear Marx\'s point on view criticizing capitalist institutions. First of all, talking about private property and the way human beings search the satisfaction of their needs (1959, 49):