A capitalist economy features steady, vigorous competition among capitalists, i.e., those who provide the money and take the risks and benefits of ownership.   They and their surrogate managers buy equipment, goods and labor services to create products for sale.   "Buy cheap and sell dear" is their slogan to increase profits, which means that they will want to pay laborers as little as possible.   Some capitalists with unsufficient capital, ability, motivation, and luck will "go broke" and lose their investments and maybe everything else, while others will make "a living".   A favored few will make enormous profits.   Inevitably, a continuum of incomes among persons and families ranging from the poorest to the richest, however defined, will be the result.   Thus, in a capitalist economy, money creates greater amounts of money and greater average living standards, which are distributed unequally among its people.

Various socialist experiments were conducted throughout history to equalize incomes by groups ranging from small religious bodies to large nations, but all were unsuccessful to raise general living standards, although some communist governments , like those of the Soviet Union (Russia) and mainland China, eliminated abject poverty and occasional famines that plagued their former feudal societies.   However, socialist and communist communities and nations all failed to produce sustained income and wealth for most of their citizens, compared with capitalist nations, and the causes of their failures can be summarized as follows: Acquisitive people with ability and motivation resent sharing equally with those with less ability and motivation, so the former either stopped making much effort or moved elsewhere.   Why work hard and long when you get no more money and wealth than when you work less?   The capitalist model is the only model that ever shown sustained, if uneven, improvement in living standards for most of its people.   However, in a capitalist economy, those who have must deal somehow with those who have not.   This function is administered increasingly by governments rather than private citizens and charitable organizations.   It is the government that reduces the productive efficiency of capitalism to produce more equality in income and wealth among its citizens.   Examples of how governments deal with poverty follow.

On August 6, 1640, land was alloted to educate poor children in Newport, RI. ^{Carruth 17}

In 1646, in the Virginia colony, the first law provided for the education of poor children.   Justices of the peace were to bind children of the poor as apprentices in industrial and agricultural trades.   Book learning was an addition that might be required by the justices. ^{Carruth 17}

In 1886, the first settlement house, the Neighborhood Guild of New York City, was started by Dr. Stanton Coit.   It provided many social services for the poor in cities. ^{Carruth 345}

In 1889, Jane Addams began the Hull House, a settlement house in Chicago's slum area.   Settlement houses were patterned after the Toynbee Hall in London. ^{Carruth 351}

In Sep., 1929, national income statistics showed about 60% of U.S. citizens had annual incomes of less than $2,000, which was considered a bare minimum to supply a family with the basic necessities of life. ^{Carruth 472}