Poverty and Wealth

The definition of poverty and wealth

Let us start by defining poverty. Later in the explanation, we will provide a definition of wealth too.

Wealth and poverty facts

We will look at some facts about poverty below, including the difference between poverty and wealth, different types of poverty, causes of poverty and consequences of poverty.

Difference between poverty and wealth

When someone lives in poverty, they struggle to afford the basic necessities of live. On the other hand, having wealth allows one to live an excessive life in terms of material and non-material goods. There is a growing gap between poor and wealthy people, in terms of their social practices, beliefs and even culture, argue some sociologists. We will mention how poverty and wealth affect one's life chances and circumstances.

Types of poverty

Sociologists have defined poverty in various ways, distinguishing between four main types of poverty:

• Absolute poverty

• Relative poverty

• Subjective poverty

• Social exclusion

It is difficult to measure all types of poverty. The World Bank measures world poverty by the '$1 a day' formula. If a person's income is below this line, they are classified as poor.

Causes of poverty

There are three general approaches to the causes of poverty. Some blame the individual, others blame the system, and the rest shift the focus from blame to personal experience for the existence and continuance of poverty. These are known as:

• The cultural and individualistic explanation: This approach argues that society offers equal opportunities to everyone and that poverty is an individual failure.

• The structural explanation: This points out that some social groups are much more privileged when it comes to opportunities and staying out of poverty than others.

• The intergenerational transmission (IGT) explanation: This perspective proposes that the transfer of capital through generations (or lack thereof) is responsible for poverty.

Consequences of poverty

Poverty has several consequences, which can differ in scope for people of developed and developing countries. The outcome of poverty can be more severe for certain social groups within a society.

The two most important general consequences of poverty are segregation and worse life chances.

Segregation as a consequence of poverty

Sociologists argue that poverty means economic segregation, which leads to social segregation, as the poor can’t afford to participate in the social and cultural activities of the non-poor. This will eventually lead to physical segregation, where the poor and the wealthy live in entirely different locations without any interaction; they often don’t even meet or see each other.

Worse life chances as a consequence of poverty

Poor people generally have worse life chances than wealthier people. Mills (1959) listed life chances as follows:

• Survival during the first year after birth

• State of general health

• Avoidance of crime

• Educational achievements

• Viewing of fine art

Fig. 1 - According to Mills, people living in poverty are less likely to see fine art in their everyday lives.

Why does poverty continue to be present in contemporary society?

Sociologists who have adopted the absolute definition of poverty claim that as standards of living improve everywhere in the world, absolute poverty will decline and disappear.

Nonetheless, sociologists examining poverty from the relativist perspective argue that poverty has always existed and will always exist because there will always be a certain level of social inequality.

What is wealth?

Matheson and Summerfield (2001) defined wealth as the ownership of the total of a person's assets at a given point in time. They differentiated wealth from income, which they defined as a flow of resources (cash or kind) over a longer period of time.

Assets people have for personal use, such as a car or a house, are significant in measuring cross-cultural differences in poverty and wealth between societies. Assets that people have for their potential sale value, such as stocks, shares, or a second house, are often called marketable wealth and help measure poverty and wealth within a society.

Sociologists have defined three types of wealth apart from financial capital: human, social, and cultural. These all play a significant role in the wealth and income inequality in societies of both the Western and non-Western worlds.

What is the role of income?

Peter Townsend (2004) pointed out that earnings are not necessarily the same as income, as the latter can include savings, investments, social benefits and pensions.

Reasons for inequality

There are various reasons for the socioeconomic inequality the UK has experienced in the past decades. The most significant changes were:

• The decline of manufacturing: This led to many workers losing their jobs and not finding employment due to a lack of skills and qualifications.
• The rise of service industries: This led to lower wages due to the proliferation of "unskilled" jobs.
• The decline of trade unions: Without unions, workers can't organise themselves and fight effectively for higher wages.
• Unemployment: There can be many routes to unemployment, but it often has only one outcome - poverty.
• Benefit and tax changes: Cutting back on benefits or raising taxes can be a serious issue for the poor.

Poverty and wealth inequality: sociological perspectives

Let's examine some of the primary sociological views on poverty and wealth: functionalism, the New Right, Social Democrats, feminism, Marxism, and Weberianism.

Functionalism on poverty and wealth inequality

Functionalists believe that society is a complex system where poverty and social inequality fulfil a certain role. According to them, the social structure is based on meritocracy, meaning that the individual has to demonstrate certain skills and qualifications in order to acquire certain roles in society. Some roles are more important in society than others, and for these roles, the best people are needed, who then have to be rewarded more for their education, skill and work (Davis and Moore, 1945).

Functionalists think that economic inequality is both functional and necessary in society, and is therefore beneficial for society if it continues to exist. Their view on economic inequality also shows that they blame the individual for their poverty.

Neo-functionalists, like Gans (1971), believe that poverty can be functional for some groups of society, like the middle classes, but dysfunctional for others, most obviously for the poor. He claimed that the middle classes have an interest in the continuing prevalence of poverty in society. According to Gans, poor people benefit the wealthy in many ways:

• They take up the "lower-class jobs" that wealthier people don't want to do

• Welfare services helping the poor provide jobs for the middle classes

• Poor people extend the value of goods, such as used/old clothes and not-so-fresh food products, that the middle and upper classes do not want any more

• The poor provide jobs to professionals (doctors, teachers, lawyers) who are not qualified enough to set their rates high and work for the wealthy

Criticism of the functionalist perspective

• The comparison of the significance of different types of jobs is not as straightforward as functionalists make it seem.

• In reality, the most important jobs are not necessarily the most rewarded, as functionalists claim.

• People have different opportunities available to them according to social factors such as their ethnicity, gender, class and age, so achieving financial success is not solely dependent on merit, as functionalists argue.

• Finally, critics claim that even if the functionalist perspective of society stands, it does not justify the extremities of both wealth and poverty present in Western societies.

The New Right on poverty and wealth inequality

The New Right blames the individual for their own poverty. They believe that as long as state welfare makes it possible for people not to work and earn for themselves, poverty will continue to exist in society. They also blame 'dysfunctional' family forms for the existence of poverty and encourage the government to promote the two-parent, nuclear family form.

Charles Murray (1984) claimed that the 'destruction of status rewards' caused social problems such as poverty. Murray and others like David Marsland (1996) blame the individuals of an 'underclass' for not wanting to work, choosing to stay unemployed and letting the state take care of their families.

Adopting the culture of poverty explanation, they argue that the values of poor people are different from those of wealthier citizens. The poor are more impulsive, less ambitious and less forward-thinking, which is why they can't get out of poverty (Murray, 2012).

Social Democrats on poverty and wealth inequality

Social Democrats such as Anthony Giddens saw a Third Way between the New Right's approach and Marxism. They assert that inequality is desirable in society as long as it is based on meritocracy and on equality of opportunity.

Social democrats saw it as the state's responsibility to provide the disadvantaged, old, sick and poor with financial protection if they can't compete in the market effectively; and with education and training if they want to get back into the labour market.

Fig. 2 - Social democrats support the idea of state-funded education and training for unemployed people who want to re-enter the labour market.

Ruth Lister (2000) claimed that the aim should not be to bring perfect social equality. The aim is complete equality of opportunity and social inclusion, as Anthony Giddens put it (1998). Lister saw paid work as the solution to the problem of poverty.

Feminism on poverty and wealth inequality

Feminists think that poverty will exist until there is complete gender equality and until patriarchy is abolished.

They describe how women are excluded from certain opportunities in many areas of life and work, which eventually lead to poverty being more widespread and more severe for women:

• Public sphere: Historically, women have been excluded from the public sphere. Their traditional roles restricted them to the home, where they engaged in unpaid labour through domestic work and childcare.
• Economic sphere: While men can enter the primary labour market, women are often restricted to the secondary labour market, which is characterized by low wages, low benefits and temporary and part-time work.
• Workplace: Feminists argue there is both vertical and horizontal gender segregation in the workplace. Men are more often in higher positions than women, and even when they are on the same level, men do different types of work than women.
• Ideology: According to feminists, the ideology of patriarchy deludes women into thinking that their second-class status is natural and desirable to them.

Marxism on poverty and wealth inequality

Karl Marx argued that the unequal distribution of wealth and income is inevitable in a capitalist society. He saw class inequality, caused by the exploitation of the proletariat by the bourgeoisie, as the cause of poverty.

Marx contended that people are taught through institutionalised education, the media, and religion that inequality is not only inevitable but desirable. Until they wake up to the real causes of inequality, poverty will continue to exist.

However, Marxists are also not supportive of huge welfare benefits. This is because they think the poor are being policed by welfare service workers and that the poor need to get into terrible states of poverty and deprivation to realize they cannot go on longer. This will lead them to start a revolution against the system that exploits them.

Instrumentalist Marxism on poverty and wealth inequality

Ralph Miliband (1969) argues that in capitalist societies, the members of the government and people in positions of power tend to come from similar backgrounds. Consequently, they act to secure the interests of their own class, the ruling elite and their businesses.

Weberianism on poverty and wealth inequality

Max Weber did not think poverty was a natural state and believed it could be ended. He saw the cause of poverty and wealth in the nature of the system. He argued that Protestant values created the ideology of capitalism that is based on aspirations toward individual wealth and power.

According to Weber, a person's class determines their potential for economic success, while their status influences their effectiveness in the social sphere. He argues that status especially is influenced by an individual's ethnicity, religion and education. The Weberian theory did not condemn capitalism like Marxism, but argued that poverty in the developed world can be reduced through the elimination of class and status differences.

Weber also claimed that in the developing world, people have to find the aspects within their religions which will stimulate motivation to acquire material wealth. Led by this aspiration, people will acquire individual wealth and poverty will eventually decline.

Criticism of Weber's approach:

• Marxists point out that Weber ignores the power of the wealthy in being able to underpay and exploit their workers due to the availability of a competitive labour force.

• Feminists argue that Weber ignores the additional disadvantages women face in the labour market.