Why Is India Poor?

Why are some nations rich, and why is India poor? Various answers have been offered, from the absence of "economic freedom" to the absence of property titles. However, the most important reason for mass poverty in our country is that we are woefully short of Capital.

The factories, the highways, streets and roads, the buildings, the shops and the supermarkets of the West are all Capital that has been invested so that the productivity of human labour there is greatly enhanced. Thus, workers there save both time as well as labour. With very little physical effort, and using very little time, these people produce much more than the average Indian. Hence they are rich and we are poor. 

As Ludwig von Mises put it: 

...what makes hundreds of millions in Asia and Africa destitute is that they cling to primitive methods of production and miss the benefits which the employment of better tools and up-to-date technological designs could bestow upon them. But there is only one means to relieve their distress—namely, the full adoption of laissez-faire capitalism. What they need is private enterprise and the accumulation of new capital, capitalists and entrepreneurs.

Mises then goes on to say:

The poverty of the backward nations is due to the fact that their policies of expropriation, discriminatory taxation and foreign exchange control prevent the investment of foreign capital while their domestic policies preclude the accumulation of indigenous capital.

Thus, it is our The State that is to blame for mass poverty. They have taken away our freedoms; further, they are obstructing foreign Capital while also consuming domestic Capital.

Yes, this socialism, planning, inflationism, welfarism and obstructionism must go - and laissez faire capitalism must take its place. Mises says:

All those rejecting capitalism on moral grounds as an unfair system are deluded by their failure to comprehend what capital is, how it comes into existence and how it is maintained, and what the benefits are which are derived from its employment in production processes.

That's right: Our rulers do not know what Capital is. Hence we are poor.


This Predatory State is the root cause of mass poverty in India.

PS: The quotes are from Mises' The Anti-Capitalistic Mentality, a little book I strongly recommend, which you can read online here. The extracts above are from Chapter Four, pages 65-66.