The Wealth of Nations: Age, Capitalism, and the Fallacy of "Free Market Poverty"

A common economic fallacy often heard in mainstream discourse is that African nations are poor because of free-market capitalism. This assertion is not just false; it’s precisely the opposite of the truth. African nations, for the most part, have been characterized by heavy government intervention, socialist policies, and weak property rights, hardly a free-market utopia. But there’s a more fundamental reason that explains much of the wealth disparity between nations, and it has little to do with capitalism. That factor? Median age.

The Demographics of Wealth

Take a look at the wealthiest nations on Earth, and you’ll notice a striking correlation: they are, by and large, older nations. The median age in countries like Switzerland (42.7), Germany (45.9), and Japan (48.4) is significantly higher than in African nations, where median ages often hover in the teens or early twenties. In contrast, the median age in Nigeria is 18.1, in the Democratic Republic of the Congo, it’s 17.3, and in Uganda, it’s just 15.9.

Wealth isn’t something that appears overnight. It is accumulated over time, as institutions, capital, and technological advancements compound. Nations with older populations have had generations to build up capital stock, establish property rights, develop financial markets, and refine their institutions. A country with a median age of 45 has had far more time to accumulate wealth than one with a median age of 18. This isn’t an indictment of young nations; it’s a simple fact of economic reality.

Institutions Matter, And So Do Policies

Now, some may argue that institutions matter more than demographics. That is partially true. Strong legal systems, enforceable contracts, property rights, and a culture that rewards innovation and savings are crucial. However, many young nations in Africa also suffer from policies that actively stifle wealth creation. Instead of embracing the free market, many of these nations have leaned towards socialism, government planning, and state intervention.

Consider South Africa, a nation that should be far wealthier given its abundant natural resources and industrial capacity. Yet, decades of government overreach, socialist economic policies, and regulatory strangulation have led to stagnant growth, high unemployment, and declining productivity. Zimbabwe is another example of how anti-capitalist policies—expropriations, price controls, and currency manipulation—have decimated economic prosperity.

In many African nations, businesses face excessive red tape, burdensome taxes, and regulatory uncertainty. Instead of allowing market forces to determine prices, many governments engage in price controls and subsidies that distort economic incentives. The result? Markets fail to function efficiently, capital is misallocated, and economic stagnation follows.

The Real Problem: Hampering Youth’s Upward Mobility

The tragedy of many African nations is not that they are young, but that their young people are trapped in an economic system that restricts their ability to create and accumulate wealth. The youth are not being given the opportunity to build businesses, own property, or engage in free trade without undue government interference. Instead, they are subjected to inflationary policies that erode savings, heavy-handed regulations that limit entrepreneurship, and welfare systems that breed dependency rather than empowerment.

Contrast this with historical examples of young nations that embraced market principles early on. The United States, in its early years, was a young country with a rapidly growing population. But instead of shackling its youth with state intervention, it allowed free enterprise to flourish. The same is true for places like Hong Kong and Singapore—nations that started with little but embraced capitalism and became economic powerhouses within a generation.

Conclusion: Free Markets Are the Solution, Not the Problem

It’s time to put to rest the myth that capitalism is responsible for Africa’s poverty. The reality is that wealth is built over time, and nations with older populations have had more time to accumulate capital. Furthermore, many of these young nations have actively undermined market mechanisms with socialist policies and government overreach, further stunting economic growth.

If African nations wish to escape poverty, they must do what every wealthy nation before them has done: embrace economic freedom, secure property rights, reduce government intervention, and allow their people—especially the young—to engage in productive enterprise. Economic prosperity is not a matter of luck; it is a function of time, policy, and market freedom.

The sooner we acknowledge this reality, the sooner these nations can begin their path toward genuine prosperity.