Poverty cycle

The poverty cycle is a term for a social phenomena that has roots in ancient times. It is a catch-22 and a feedback loop that occurs because the method to acquire financial resources efficiently to survive and thus get out of poverty, can only happen if the method user has financial resources in the first place. This often means the poverty-stricken find it extremely difficult to get out of poverty because they do not possess enough resources to invest in economic growth. Communists often cite this as one of the reasons why capitalism is insufficient for human need. The problem recurs with the next generation – the children born in a poverty-stricken family are poor as well, and cannot break out of the cycle.

However, this phenomena has roots in feudalism as well. Serfs and peasants on a landlord's land often had to pay most of their crops tribute to their lord as rent, and only had enough for subsistence. This meant they did not have any financial resources left over to invest in economic growth, and thus to be able to buy their own land and grow crops without rent. This meant most peasant families remained so for countless generations.

Lack of education is one of the biggest causes of the poverty cycle. Education in a modern knowledge-based economy is one of the conditions to achieving economic growth, as it increases skill. A maximised education would require devoted time and energy, or extra-curricular reading. Children who are from poor families and have to work cannot maximise their education, even if the education is free. It would also require a conducive and hygenic environment, which is often not available to the poverty-stricken. This is even worse in countries such as India where public education in many areas is not available for free due to budget constraints. Tertiary education is often not free. These children thus often will not be able to break out of poverty because their reduced skillset reduces their potential income. With no means to provide a conducive educational environment for their children, the cycle begins again.

There are no easy solutions to the poverty cycle, but several are undergoing experimentation.

For example, mixed-income housing is being implemented in more and more cites as a possible solution to poverty issues. Mixed-income housing is an attempt to bring middle and lower class families together in the same neighbourhoods. This interaction between low and middle-income families helps the low-income families. The middle class residents can then help those less fortunate than themselves.

A gift economy such as that in anarcho-communism is also advocated by anarchists. This would mean total egalitarianism, rather than a sort of compromised position of welfare which many anarchists see as state socialism. This is naturally rejected by many of their more right-wing opponents.