This file is a short argumentative essay-note on national underdevelopment, dated May 1993 and later printed in Reflection and Remembrance. Its scope is broad but compressed: Sennholz moves from the pain of personal poverty to the problem of whole societies trapped in low productivity, short life expectancy, weak institutions, and anti-productive moral codes.
Individual poverty may be no disgrace, but it is always painful and annoying.
The opening distinction between individual and collective poverty lets Sennholz define poverty not chiefly as inequality but as insufficient production. Rich countries are characterized by high output and long life; poor countries by meager per capita production and early death. The statistical contrast supports a moral claim: poverty is not an abstraction but a social condition that wastes lives.
Indeed, much of the world's population lives in misery and dies in despair.
The essay’s main thesis is that development depends less on material aid than on the ideas, habits, property rules, and moral expectations that shape action. Sennholz rejects fatalism: poor countries face severe barriers, but poverty is not inevitable.
Increasing the productivity of an underdeveloped country is always difficult but never impossible.
His core conceptual move is to treat economic development as a civilizational change in thought and conduct. Productivity rises when societies abandon inherited dogmas hostile to saving, investment, exchange, banking, enterprise, and private ownership. This is why the essay devotes unusual attention to religion, education, envy, and fear: for Sennholz, these are not “cultural background” but active economic causes.
The dogmas of the past must be abandoned so that there can be new thought and action for income and wealth. In short, the old order must change and yield place to a new.
He then turns to institutions, especially property. Common ownership, anti-capitalist teaching, and hostility to monetary gain are presented as obstacles to development because they weaken the incentive and ability to accumulate capital. The argument is not merely technical; it is moral. A society that cannot justify property cannot reliably create or preserve wealth.
It is difficult to advance economically if for any reason a society espouses and clings to notions of common ownership in the means of production.
The essay’s sharpest polemic is directed against educational and ideological attacks on capitalism. Sennholz argues that if schools and intellectuals describe markets as exploitation, they teach citizens to distrust the very order that makes cooperation productive.
A society is destined to be poor if the voices of education tirelessly denounce and slander the private-property order commonly called “capitalism.”
Against that charge, he redefines capitalism as a moral system of peaceful exchange. The private-property order, in his account, disciplines conduct because buyers, sellers, employers, employees, and suppliers remain free to withdraw cooperation. Market success therefore depends on trustworthiness rather than predation.
Actually, the private-property order rests squarely on truthfulness, reliability, and voluntary cooperation among all groups and classes of society.
The final section broadens the diagnosis from property to public morality. Theft, confiscation, political plunder, redistribution driven by envy, crime, and fear all suppress investment and productive effort. Sennholz is especially interested in the hidden economic cost of insecurity: even the fear of violence or expropriation can turn communities into “economic wastelands.”
Economic poverty and misery flow from a code of morality that is hostile to economic production. There can be no prosperity where theft and plunder are commonplace, where private property is confiscated, expropriated, seized, blocked, or taxed away by political authority.
The relevance of the essay lies in its uncompromising classical-liberal theory of development. It makes poverty a problem of institutions and moral imagination: societies become richer when they protect property, permit capital markets, honor work and exchange, and reduce coercion. Its concluding sentence gives the whole piece its governing formula.
Moral, social, and economic ideas that guide human action are the key to human well-being. They make all the difference between wealth and poverty.
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