Douglas Irwin, Dartmouth economics professor and head of Dartmouth’s Political Economy Project, has a terrific piece this morning on the dramatic fall in the global poverty rate from 1990.

The stats are amazing: extreme poverty fell from 36 percent in 1990 to 15 percent in 2011. So what’s behind this? Aid programs from the West? Nope, it’s the spread of capitalism:

To what should this be attributed? Official organizations noting the trend have tended to waffle, but let’s be blunt: The credit goes to the spread of capitalism. Over the past few decades, developing countries have embraced economic-policy reforms that have cleared the way for private enterprise.

China and India are leading examples. In 1978 China began allowing private agricultural plots, permitted private businesses, and ended the state monopoly on foreign trade. The result has been phenomenal economic growth, higher wages for workers—and a big decline in poverty. For the most part all the government had to do was get out of the way. State-owned enterprises are still a large part of China’s economy, but the much more dynamic and productive private sector has been the driving force for change.

In 1991 India started dismantling the “license raj”—the need for government approval to start a business, expand capacity or even purchase foreign goods like computers and spare parts. Such policies strangled the Indian economy for decades and kept millions in poverty. When the government stopped suffocating business, the Indian economy began to flourish, with faster growth, higher wages and reduced poverty.

The economic progress of China and India, which are home to more than 35% of the world’s population, explains much of the global poverty decline. But many other countries, from Colombia to Vietnam, have enacted their own reforms.

Irwin recalls that the policies of socialist firebrand Julius Nyerere made him a darling of Western intellectuals—but Nyerere’s policies impoverished his country. But now that Nyerere’s system is being dismantled Tazania is seeing economic improvement.

Why are we not reading about the falling poverty rate? Irwin says that the paucity of reporting is because the narrative runs counter to what the Western intellectuals, who depict capitalism as a degrading system whereby the rich get richer and the poor get poorer, believes.