From Poverty to Prosperity

The Intellectual Foundations of Capitalism

Capitalism, as discussed in the previous lecture, developed from a lineage of philosophical and ideological evolution—most notably through Enlightenment thinkers such as John Locke. The founding of the United States represented a tangible manifestation of these ideas, as it remains the only nation founded explicitly on the principles that underlie capitalism: individual rights, limited government, and liberty.

Because of these principles, America rapidly became the leading capitalist country in the world. Capitalism did not emerge arbitrarily but grew organically after the intellectual soil had been prepared. The roots of its prosperity are deeply embedded in ideas.

Defining Success: Human Flourishing as the Standard

To evaluate capitalism or any political-economic system, we must first define the standard of success. Some advocate for equality of outcome, but this measure often overlooks the more significant achievements of human life. A more rational and life-affirming standard is individual human flourishing:

Do individuals have the opportunity to pursue meaningful lives?
Can they improve their conditions?
Is there room for personal growth, health, wealth, and purpose?

Capitalism, when measured against this standard, excels. Before its rise, nearly all people were equal—in their shared poverty, suffering, and lack of opportunity. Capitalism did not create inequality; it created prosperity. Even the poor today live in conditions far superior to the elites of the pre-industrial age.

Measuring Human Flourishing

Health: Life expectancy is a key indicator. Societies that flourish are healthier, live longer, and suffer less from plagues, pandemics, and physical toil.

Wealth: Wealth allows individuals to trade for values—music, travel, comfort, education—that enhance life.

Choices: Capitalism allows for personal and professional freedom. In the past, one’s career and fate were often fixed. Today, people can choose their paths.

Work Conditions: The evolution from labor-intensive agriculture to intellectual, specialized, and automated work aligns with human nature as a being of reason.

Leisure: With capitalism, work hours have dropped, and opportunities for personal enrichment have expanded.

Life Before Capitalism

Thomas Hobbes’ description of life before modern progress—”solitary, poor, nasty, brutish, and short”—captures the grim reality.

Daily wages often couldn’t buy enough bread.
Disease and famine were widespread.
Trade and innovation were restricted by laws, lords, and licensing guilds.
Serfdom was common—people were legally bound to land and denied property rights.
Intellectual freedom was nearly nonexistent. Saying the wrong thing could lead to imprisonment or death.

From 500 to 1500 AD, GDP per capita remained stagnant. Scientific observation stopped. The Dark Ages, particularly due to the rise of authoritarian ideologies, halted human progress.

The Enlightenment and Scientific Revolution

The Enlightenment rekindled the flame of reason. With it came scientific discovery and a demand for freedom to act, build, and trade. The invention of the steam engine in the early 1700s marks the beginning of applied science solving real-world problems.

Textile production soared from 500,000 pounds to 12 million pounds.
Cotton prices dropped 99%, making clothes and fabric affordable for the masses.
Entrepreneurship thrived. Capitalism became a permissionless system of experimentation and innovation.

By the 1800s, England was the workshop of the world, producing goods, doubling wages, and mechanizing agriculture.

Capitalism in America

America was capitalism on steroids. With fewer feudal remnants and more ideological commitment to liberty (except in the South), the U.S. became the freest economy in history from 1790–1914.

93% of patents between 1790–1860 came from the North.
Innovations: telegraph, phonograph, electric light, airplane, automobile, etc.
Wages and wealth soared. The U.S. became the most prosperous nation.

Factories provided better alternatives to field labor. Despite myths, even factory work was a step up from agrarian life. Cities became hubs of opportunity, culture, and civilization.

Child Labor and Wealth

Child labor existed long before capitalism—in fields, not factories. Capitalism didn’t create child labor, it eradicated it.

When a society’s average income reaches ~$12,000, child labor disappears.
Wealth allows families to send children to school rather than work.

The key: rising prosperity created by capitalism.

Quality of Life Improvements

With capitalism came profound changes:

Urbanization surged.
Health standards improved with sewers, water treatment, baths, and soap.
Life expectancy in England rose from 33 in the 1500s to 60 by the early 1900s.
Women gained time, ambition, and eventually access to jobs.
Air conditioning, washing machines, savings accounts, sanitation—all improved living conditions dramatically.

The Role of Ambition

Ambition thrives under freedom. As individuals began to value their own lives, ambition became culturally possible. Ambition is not arrogance; it’s the desire to make the most of life. And capitalism gave people the tools and freedom to act on that desire.

Why Not Ancient Greece?

Despite having reason and early individualism, Ancient Greece lacked the technological and experiential foundation. Capitalism is a late bloom of centuries of trial, error, suppression, rediscovery, and progress.

The 1,000-year gap between Rome and the Renaissance was a dark age for reason and science. Only after the Enlightenment did the world regain its curiosity and unleash the power of the individual.

Final Thoughts

Capitalism changed everything. It liberated minds, extended lives, created choices, and gave humanity the tools to flourish. From a world of disease, serfdom, and poverty, we now inhabit one of opportunity, prosperity, and dignity.

The question is not whether capitalism is perfect—it is whether anything else has ever come close.