The causes of poverty are viewed differently by various schools of economic thought.

 

The causes of poverty are viewed differently by various schools of economic thought. Classical economists argue that the market is self-regulating and poverty stems from a lack of individual effort. Marxist economics sees poverty as a structural outcome of capitalism, where wealth accumulates with capitalists through exploitation. Keynesian theory attributes poverty to insufficient effective demand, leading to recession and unemployment. Neoliberalism claims that excessive government intervention distorts markets and entrenches poverty, advocating for freer markets as the solution. Institutional economics points to flawed systems—such as education, welfare, and labor markets—as root causes, suggesting that proper institutional design can mitigate poverty. Behavioral economics focuses on irrational human behavior and decision-making biases that exacerbate poverty. Finally, Modern Monetary Theory (MMT) argues that poverty results from inadequate government spending and asserts that sovereign states should invest more in employment and welfare using their own currency. These differing perspectives significantly shape policy approaches to addressing poverty.