How does history help us understand poverty and economics?

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History, which is the study of past events in order for us to comprehend and appreciate our present circumstances, is important for understanding poverty and economics because it serves as a useful map or guide that explains how wealth was, and is, divided throughout the members of society and world. History is a tool that can be used to help us understand why and how wealth and resources are unequally distributed to certain, or specific, individuals or to certain groups of individuals (e.g., social classes). Many historians, economists, political scientists, sociologists, and social and political philosophers have studied the relationship between history and wealth; however, none more prominently than the great nineteenth-century German theorist Karl Marx (1818–1883).

Marxism (as his theories of "Economic Determinism" have collectively come to be called) studies the history of human societies and their social relationships, along with the economical modes of production that are essential for their existence. Marxism, as a theory, is rooted in the understanding and comprehension of, what Marx calls, "historical materialism." Historical materialism is the belief that all of history can be told in the story of social classes and their struggle over the scarce resources that are found in nature and society. Historical materialism believes an individual's life choices, and thus their consciousness, is determined by their relationship to wealth and the modes of production that are able to produce wealth. Therefore, economics are the basis, or the foundation, of just about everything that is important within historical human society (i.e., the social structure). The important societal attributes that arise from society's economic base are things such as political laws and institutions, moral and deviant behaviors, customs, culture, crimes, and so on.

In short, human beings must work on, and within, nature to produce a means of subsistence in order to ensure their survival and their offspring's survival. In order to accomplish this, societies will naturally create a division of labor where work is divided among the masses. Without fail, certain work will be more valued than other work, and when this occurs, certain individuals will inherit more of the resources and property (i.e., wealth) than others. This will inherently create divisions of wealth, or in other words, social classes will form based on property ownership. These fortunate individuals will own the modes of production and will be able to live off of the labor of others. This way of life of the dominant, or ruling, class will be passed on from generation to generation, with each succeeding generation gaining more and more wealth and thus more and more power, while the others (the workers and the poor) will have less wealth and less power each generation.

However, according to Marx, society is not a static framework. It is a dynamic system where changes that occur in society's productive forces can produce changes in people's consciousness. This can create a social revolution if the dominant class is overthrown or displaced by a new emerging class, thus creating a new social system or social hierarchy. Marx believes you will see this occur throughout the many stages of human history, and if you want to understand the economics of today, or of any time, just understand the natural and social forces that make up human history.

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History plays a vital role in the development of poverty and a country's economic situation.

The Republic of South Africa provides an ideal example of this. Under the laws of Apartheid, black people were seen as inferior to white people in every way, and they did not have opportunities to work or be educated in the same way. This, simply put, led to massive divide between the rich (white) and poor (black).

Then, when Apartheid ended and everybody was seen as equal in the eyes of the law, the legacy of this division continued in economic terms. Black people who had not been educated under Apartheid were still not educated—they had their freedom and their vote, but did not miraculously receive the education and funding required to place them on the socio-economic platform that they should be on.

Therefore, South Africa's history of division and injustice still plays a huge role in the country's economic situation today. There are huge problems associated with programs like Black Economic Empowerment and Affirmative Action, which are all a result of the country's history.

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