Although poverty is a phenomenon as old as human history, its significance has changed over time. Under traditional (i.e., nonindustrialized) modes of economic production, widespread poverty had been accepted as inevitable. The total output of goods and services, even if equally distributed, would still have been insufficient to give the entire population a comfortable standard of living by prevailing standards. With the economic productivity that resulted from industrialization, however, this ceased to be the case—especially in the world’s most industrialized countries, where national outputs were sufficient to raise the entire population to a comfortable level if the necessary redistribution could be arranged without adversely affecting output.

Several types of poverty may be distinguished depending on such factors as time or duration (long- or short-term or cyclical) and distribution (widespread, concentrated, individual).

In industrialized societies the chief cyclical cause of poverty is fluctuations in the business cycle, with mass unemployment during periods of depression or serious recession. Throughout the 19th and early 20th centuries, the industrialized nations of the world experienced business panics and recessions that temporarily enlarged the numbers of the poor. The United States’ experience in the Great Depression of the 1930s, though unique in some of its features, exemplifies this kind of poverty. And until the Great Depression, poverty resulting from business fluctuations was accepted as an inevitable consequence of a natural process of market regulation. Relief was granted to the unemployed to tide them over until the business cycle again entered an upswing. The experiences of the Great Depression inspired a generation of economists such as John Maynard Keynes, who sought solutions to the problems caused by extreme swings in the business cycle. Since the Great Depression, governments in nearly all advanced industrial societies have adopted economic policies that attempt to limit the ill effects of economic fluctuation. In this sense, governments play an active role in poverty alleviation by increasing spending as a means of stimulating the economy. Part of this spending comes in the form of direct assistance to the unemployed, either through unemployment compensation, welfare, and other subsidies or by employment on public-works projects. Although business depressions affect all segments of society, the impact is most severe on people of the lowest socioeconomic strata because they have fewer marginal resources than those of a higher strata.

Collective Poverty

In contrast to cyclical poverty, which is temporary, widespread or “collective” poverty involves a relatively permanent insufficiency of means to secure basic needs—a condition that may be so general as to describe the average level of life in a society or that may be concentrated in relatively large groups in an otherwise prosperous society. Both generalized and concentrated collective poverty may be transmitted from generation to generation, parents passing their poverty on to their children.

Collective poverty is relatively general and lasting in parts of Asia, the Middle East, most of Africa, and parts of South America and Central America. Life for the bulk of the population in these regions is at a minimal level. Nutritional deficiencies cause disease seldom seen by doctors in the highly developed countries. Low life expectancy, high levels of infant mortality, and poor health characterize life in these societies.

Collective poverty is usually related to economic underdevelopment. The total resources of many developing nations in Africa, Asia, and South and Central America would be insufficient to support the population adequately even if they were equally divided among all of the citizens. Proposed remedies are twofold: (1) expansion of the gross national product (GNP) through improved agriculture or industrialization, or both, and (2) population limitation. Thus far, both population control and induced economic development in many countries have proved difficult, controversial, and at times inconclusive or disappointing in their results.