Neo-liberal capitalism, which is the latest phase of capitalism, involves a slowing down of the GDP growth-rate, both because of the increase in inequality it entails and also because of the inability of state intervention to jack up the growth rate through Keynesian measures. Neo-liberal capitalism therefore necessarily implies a slowing down of employment growth too, and to levels even below the rate of growth of world labour-force. A rise in the relative size of labour reserves is thus not just a fact of, but is necessarily associated with, contemporary neo-liberal capitalism.

This does not of course mean that all countries that adopt the capitalist panacea for overcoming unemployment and poverty would necessarily come a cropper; what it means is that those countries which do succeed through the capitalist panacea would be doing so only at the expense of other countries, that it is impossible for all countries to progress towards “development”, in the sense of alleviation of distress of the majority of the population, through the pursuit of the capitalist path of development. Indeed on the contrary since the relative size of the labour reserves is a major factor underlying poverty, the pursuit of capitalism today would necessarily aggravate absolute poverty in the world economy as a whole.

The intellectual sleight-of-hand of institutions like the World Bank becomes clear here. From the fact that some countries manage to shake off their backlog of poverty by promoting capitalist development, they suggest that all countries can do so, which is directly contradicted by the available statistics of the world economy. Those countries which shake off poverty do so only by making other countries wallow in even more accentuated poverty.

In fact countries that are small in size, that have in absolute terms small labour reserves, and can attract the relocation of productive investment from the metropolis to their soils, can well succeed in overcoming poverty and effecting “development” through the pursuit of capitalism; but these constitute the exceptional cases, which, far from constituting the general situation, prove precisely the contrary.