Poverty is a by-product of societal desorder at scale
We often talk about poverty as if it is a personal failing—as if it’s just a lack of grit, talent, or old-fashioned hard work. Even when people try to be a bit more sympathetic, there is still this lingering idea that the market is a level playing field and those who don’t ‘make it’ simply didn’t play the game well enough. But to my mind, that’s getting the whole thing fundamentally wrong.
If you want to understand why poverty sticks around, it is better to think of it as a massive coordination problem, or what we might call ‘missing complementarities’. You can have someone who is incredibly bright and hardworking, but they will still struggle if the world around them can’t quite stitch together the roles and skills that actually make productivity possible.
You see, markets are brilliant at amplifying things once they are already moving, but they aren’t always great at being the ignition. When you have got a solid base of firms, decent infrastructure, and plenty of demand, the market does its thing almost effortlessly—people find each other, they specialise, and everything scales up beautifully. But below a certain threshold, the whole engine just stalls.
Think about a young person with heaps of potential; he’s willing to learn and ready to work, but there aren’t any stable firms nearby. Because hiring is such a gamble in that environment, businesses stay tiny, which means he never finds a spot where his specific talents can actually grow. From the outside, it looks like he lacks ambition, but from where he’s standing, it is just a rational response to a world where being a specialist simply doesn’t pay.
This is where those missing pieces really matter, because a good job is never just about the person doing it—it relies on managers, suppliers, tools, and a predictable stream of customers all existing at the same time. A business idea is just a dream without credit or logistics to back it up. These things only work when they’re bundled together, and if you only find one piece of the puzzle in isolation, it’s essentially useless. So, instead of building something substantial, people end up scattered across a dozen marginal tasks just to get by. In order to pass the poverty trap threshold, you can’t just rely on a single factor being present; you have to bundle all the necessary factors together in large enough quantities so that they, collectively, generate the synergies needed for setting the machine in motion.
You can see the problem quite clearly if you imagine a taxi firm. Having a fleet of shiny cars but no one to drive them means you’ll be bankrupt by the end of the month; on the flip side, having hundreds of eager drivers but not a single car just leads to mass unemployment. Neither the car nor the driver has much economic value without the other, and that is exactly how it works in the wider economy.
In a poverty trap, the market doesn’t nudge things upwards; it just stabilises a ‘low-level’ version of reality. Small firms stay small, work stays informal, and talent remains hidden because there isn’t a structure there to call it out.
This is why the ‘hands-off’ approach usually fails those at the bottom. It assumes that if you just leave people alone to experiment, something viable will pop up, but when you’re near that threshold, most experiments just fail. It isn’t because people are incompetent; it is because success requires everyone to move in sync, and the signals they need to do that are either too noisy or just not there yet. A bit of decentralised trial and error often leads nowhere, and people end up scattered across various marginal activities instead of coordinating on the few things that would actually make everyone better off.
When you look at it this way, poverty has a real ‘threshold’ feel to it. Below a certain point, the system just can’t bootstrap itself, but once you push past that line, everything starts to feed into itself—matching improves, skills become visible, and suddenly the market looks like it’s working perfectly, even though the rules haven’t changed.
It explains why a tiny, well-timed push from the state or a large institution can do what a thousand individual efforts can’t. They can act as the scaffolding, absorbing those early risks and helping everyone jump across that gap together. The goal isn’t to plan every detail forever, but just to get the system over that hump so it can eventually run on its own steam.
Ultimately, this shifts much of the weight off the individual and puts it back on the environment. In really tough settings, you basically have to be an ‘extraordinary’ person—a genius or incredibly lucky—just to escape, and that’s a pretty poor benchmark for a fair society. Most people are just normal. They aren’t business prodigies or superhumanly resilient, and they shouldn’t have to be. Just being a decent, hardworking person should be enough to get by, provided the system around you offers a stable place to land. When we only celebrate the ‘outlier’ success stories, we are basically admitting that the system only works for the exceptional few.