1 Introduction: Poverty, ideology and development
1 Monetisation refers to the increasing use of money in the exchange of goods and services, and hence an economy that is increasingly monetary.
2 Commodification (or commoditisation) refers to an increasing share of consumption and production based on buying goods and services through market transactions rather than producing these goods and services oneself or accessing them through non-market forms of exchange. With reference to labour, it refers to labour itself being treated as a commodity in labour markets.
3 This implies that demographic transition is related to technological changes, such as increased control over mortality and fertility, which are disseminating throughout the world at various speeds and are affecting all societies, rich and poor alike, as part of a global process. On the other hand, the economic growth experiences of countries, while influenced by technological dissemination, are not necessarily determined by it, but rather are ruled by an alternative and overlapping set of parameters related to the global expansion of capitalism. To further paraphrase this (to my own perilous responsibility), the enlightenment is not the same as capitalism. The two are interdependent, but not necessarily in a deterministic causal manner (determinism meaning that technological dissemination will stimulate capitalist growth in the manner that was experienced by the currently advanced industrial economies). This offers a useful perspective to the dilemma faced by many development theorists, as it is often assumed that ‘modernisation’ in one form or another will ultimately lead to a fairly deterministic economic outcome in the long run. In other words, it is possible to observe societies that modernise without necessarily making their way up the ladder of economic hierarchy.
4 Cf. Spivak (1988), Scott (1998), Harriss (2007), Li (2007, 2017), Ferguson (2015), Flores (2015), Peck and Theodore (2015), Roy (2010) or Roy and Crane (2015), among others.
5 Hickel (e.g., 2016, 2017) is one exception in this respect, although his is mostly a critique of World Bank poverty data based on a rich synthesis of secondary sources. As such, he joins in the tradition of authors such as Wade (2004).
6 I do not mention some of the most egregious recent examples in order to avoid contributing to journal strategies of raising citations and impact factors with such contributions. Moreover, as far as I can tell, these are mostly less-sophisticated variations on some of the earlier positions on this issue, often written from a Marxist perspective, such as Warren (1980).
7 See http://cep.lse.ac.uk/_new/events/event.asp?id=194.
8 Satterthwaite (2004) makes a similar argument with respect to the underestimation of urban poverty.
9 For discussions on universalism, see Fischer (2012) and Sanchez and Martinez (2014, 2016).
2 Unpeeling the politics of poverty measures
1 Apparently, Thatcher first said this, although I do recall Blair repeating this in several interviews in the mid-2000s. In any case, Thatcher also said that one of her greatest achievements was Tony Blair.
2 Some might argue that Goal 8 provided a list of policies, but these are again better understood as principles, e.g., ‘deal exhaustively with the debt problems of developing nations’, not how to deal with them.
3 Latest data downloaded on 6 March 2017 from Cepalstat.
4 Jerven (2015) makes similar arguments, although looking at different literature.
5 Although, as pointed out by Sumner (2016), the data for the 1980s is so sparse that it is surprising that the World Bank was fine with using it to make estimates or draw trends for this period.
6 See Fischer (2009b, 2015, 2018a) for an explanation of how development itself tends to engender foreign exchange shortages due to the import intensity of modern consumption and investment in peripheral countries, and hence external vulnerability. See Jervon (2013) for a similar reaction to this point made by Collier.
7 Of course, the PPP line was constructed based on the average official poverty lines of a number of poorest countries with available data, and then converted into PPP terms, so we can only assume that they approximate such an absolute poverty line, based on the assumption that these poorest countries were accurately using such a line. See the next chapter for further discussion.
8 For instance, see Fischer (2012) for a discussion of the 2012 WDR on jobs (WB 2012), or Fischer (2010) on the 2004 WDR on services (WB 2003). In a recent presentation at the 2017 conference of the Development Studies Association of the UK and Ireland, Shanta Devarajan, the acting chief economist of the World Bank group and lead author of the 2004 WDR, more or less rehashed many of the arguments and even evidence from the 2003 WDR on services, perhaps demonstrating that they still adhere to the same positions.
9 Personal communication with Andy Sumner, 13 April 2018.
10 As explained further in Chapter 6, the two main tangents of modern neoclassical theory, e.g., the Solow and Arrow-Debreu models, do not actually define labour productivity or bring it into the models, but instead mimic it with endowments. Moreover, capital is treated as a substitutable good, substitutable with consumer goods, e.g., corn for eating or corn for planting. Accordingly, it is not possible to have a conception of labour productivity being enhanced by capital with such a conception of capital. So, in total factor productivity measures, the residual is treated as an amorphous ‘efficiency’, but not as productivity, whereas the contribution of the factor endowments of land, labour and capital are treated in terms of quantity inputs, but again not in terms of productivity (see Felipe and McCombie 2012 for extensive critiques).
Efficiency and productivity are subtly but fundamentally different. For instance, increasing labour productivity is often predicated on being less efficient with the use of other inputs, such as land being used up for the tire tracks of a combine harvester, versus labour-intensive practices of farming that maximise the use of the land at the costs of lower labour productivity. They only equate in terms of labour productivity being conceived in terms of efficiency in the use of labour inputs, but that is arguably a misleading logic, because the logic of productivity is generally oriented towards using the same amount of labour to produce more rather than just ‘being efficient’ with its use. In other words, it is not driven by efficiency concerns but by revenue/profit concerns. Again, this is a weakness with the conception and treatment of capital/technology within neoclassical theory.
11 Indeed, as noted above, the tentative mea culpas by some IMF staff, e.g., Ostry et al. (2016), generally maintain that the general direction was not wrong and adjustment was in fact necessary for establishing growth recoveries, but that the IFIs had been overly zealous in applying the cure.
12 See a discussion of this by Amsden (2010).
13 In response to these criticisms, Mkandawire (2005, pp. 5–6) notes that the ‘most women-friendly’ policies are found in societies where universalism is also an integral part of social policies. More generally, he also advocates for the notion proposed by Skocpol (1991) of targeting within universalism as a means to adapt to difference and diversity. As discussed further in Chapter 7, it should be noted that there is a huge degree of difference between targeting within a universalistic system and targeting within a segmented and residualist system of social provisioning. Arguably, it is much more difficult to comprehensively address special needs within the latter, such as learning disabilities among children or sexual and reproductive health issues among women.
3 Money-metric measures of poverty
1 For instance, in many of the country cases that I have researched, proxy surveys are conducted at best only once every five years.
2 She wrote that it is ‘the compartmentalism of economic life which partly explains the widespread belief among economists that savings and investment are rare, even as concepts, in indigenous economic life; the economist is so unfamiliar with the forms such savings and investment are apt to take that he does not know where to look for evidence of their existence’ (Hill 1966, p. 16).
3 I do not deal here with issues such as adult equivalence scales. For good discussions of this, see Deaton (1997), Hussain (2003) or Saith (2005). On issues of household composition and intra-household allocation and sharing, particularly with respect to gender, see Folbre (1986, 2012), Kabeer (1994) and Folbre and Nelson (2000).
4 At the time of final editing, apparently there have been no new poverty figures – either a poverty line or a survey – since the last data that were derived from the 2011–2012 NSSO survey and that were used to calculate the Tendulkar line. The country is awaiting the results of the 2016–2017 NSSO survey on consumption expenditure (email communication with Jayati Ghosh, 4 February 2018).
5 https://en.wikipedia.org/wiki/Poverty_in_India (last viewed on 2 February 2018).
6 This insight came from a discussion with André Perfeito in Brazil in 2016. For further detail, see the Central Bank of Brazil FAQ document: www.bcb.gov.br/conteudo/home-en/FAQs/FAQ%2002-Price%20Indices.pdf.
7 See Ghosh (2018) for a critique of the use of PPP measures in measurements of inter-country inequality.
8 E.g., the regular flagship reports of the FAO are now presented in terms of food and nutritional security. Also see www.fao.org/ag/humannutrition/nationalpolicies/meetings/en/.
9 See Sathyamala (2016, ch. 4) for an excellent discussion of the debates surrounding the ‘small but healthy’ hypothesis and the work and influence of P.V. Sukhatme more generally.
10 These involve choices with respect to the use of adult equivalence scales, economies of scale in consumption, the treatment of missing and zero incomes, and the range of possibilities for adjusting household survey incomes for misreporting. They acknowledge that there are at least five other important issues that are also open to assumptions and choices, but they do not deal with these due to data limitations. These include: income adjustments to correct for price variations across regions; the prices used to estimate the value of own-production for self-consumption; the choice of base year in the use of purchasing power deflators; imputed values of public services or subsidies into the definition of income; and the use of the standardised poverty lines across individuals, regardless of differences in person-specific capabilities and needs (Székely et al. 2000, p. 15).
11 Perhaps coincidentally, this line corresponded to a World Bank calculation of a dollar-a-day PPP line for China in 1998, which they estimated at 885 yuan, although this World Bank PPP line was then adjusted downwards to 772 yuan in 2000 (ADB 2003, p. 101). The downward revision was a new line given that the adjustment far exceeded that required to account for deflation (see Fischer 2005, p. 124).
12 Note that the divergence observed in this case would have been even greater had Hussain (2002) indexed the official line to deflation. He did not, presumably to reflect the commonly cited official measures.
13 See Deaton and Dreze (2009) for an alternative interpretation of this incongruence, although it is nonetheless widely accepted that levels of malnourishment in the Indian population have not declined even in the 2000s, despite rapid growth and apparent poverty reduction.
14 Admittedly, as demonstrated above in the case of China from 1998 to 2000, the higher line could have revealed different poverty rate trends despite this indexing issue given that it transects the income distribution data at a higher income stratum in each year. This was probably the dominant concern of Chen and Ravallion in conducting their revision exercise as it would have upset the well-established narrative of the World Bank up to that time. See Himanshu (2008) for a critical discussion of these revised PPP poverty lines, although he does not deal with CPI indexing except with reference to consumption weights (e.g., see p. 40).
15 See the excellent work by Wuyts (2011) on this matter. Also see Günther and Grimm (2007) for an econometric discussion of this point in the case of Burkina Faso.
16 For a discussion on repressed health expenditure in China, see the work of Wang (2004).
17 However, it is not necessarily capitalist if we follow the Marxist schema of the capitalist who purchases commodities with money to make more money (M-C-M’), versus more simple forms of exchanging commodities for money to purchase commodities (C-M-C’).
18 A scattering of references to subsistence capacity can be found in the environmental literature, although only as a synonym for carrying capacity, not in the sense used here.
19 E.g., see Satterthwaite (2004) on the underestimation of urban poverty.
4 Multidimensional measures of poverty
1 See Laderchi et al. (2003, pp. 256–257) for a useful discussion of these methods used by the HDI.
2 We have observed this, for instance, in our interviews with various statistical and other government staff, as part of our ongoing research on the external financing of social protection in seven developing countries.
3 Also see Fischer (2014) for further elaboration of this theoretical distinction.
4 For a clear example of this line of reasoning, see Stiglitz (1986).
5 For instance, see Stiglitz (1986) for an example of a convoluted way of explaining why sharecroppers might not act the way theoretical economists think they should act.
5 The social exclusion approach
1 See www.worldbank.org/en/topic/social-inclusion#1 (last accessed 23 July 2018).
2 For instance, see Kingdon and Knight (2007) for a survey of this literature and its relation to poverty.
3 This criticism is addressed in detail in Gore et al. (1995) and Gore and Figueiredo (1997). Hall and Midgley (2004, pp. 10, 54) also mention this criticism in passing.
4 For instance, see the webpage on poverty and social exclusion on the site of the Employment, Social Affairs and Inclusion Department of the European Commission at http://ec.europa.eu/social/main.jsp?langId=en&catId=751 (last accessed on 23 July 2018).
5 Initially, social inclusion was not defined by the World Bank as the terms of participation, although the webpages of the World Bank do not reveal when revisions were made to the text of the website. See: www.worldbank.org/en/topic/social-inclusion (last viewed 23 July 2018).
6 Green (2007, p. 27) makes this same point with regard to poverty discourses of the World Bank.
7 For instance, see Kingdon and Knight (2007) for a survey of this literature and its relation to poverty.
8 This elegant passage nonetheless somewhat contradicts his previous assertion (as discussed in the previous section) that social exclusion should only refer to catastrophic ruptures if it is to be a useful analytical concept.
9 Recall, for instance, the psychological trauma that was unleashed in the US following 9/11 among Americans who were far removed from any threat.
10 See Hussain (2003, pp. 19–21), who finds lower poverty rates among migrants than among local residents in one-third of cities of a 31-city sample in China in 1999.
11 Chant (2007) also makes similar arguments as Jackson, although due to space, I will only deal with Jackson’s arguments. Levitas (1996) also explores gender from a similar angle of inequality, which Room (1999, p. 170) suggests as an example of the relational aspects of social exclusion.
12 With respect to churning, Hills (1998) makes the important insight that high mobility is not necessarily contradictory with high levels of inequality.
6 Locating modern poverty within the creation and division of wealth: Towards a structuralist and institutionalist political economy approach in poverty studies
1 For some discussion of this, see Fischer (2008b). I also observed this, for instance, in a lauded income-generation programme run by an NGO in rural India based on selling micro-health insurances, in which the return for the labour time involved in these sales was in effect far below the minimum local wage for women agricultural labourers. The implication was that those who sold the insurances did so for reasons other than earning income, such as the social status or clout that came from representing the NGO locally. They were also only able to do so because they were ironically not very poor, with sufficient resources to afford offering almost voluntary contributions of labour to the NGO and not working at the minimum wage. This obviously leads to sustainability issues, given that it is difficult to maintain incentives for performance on such a basis.
2 Some argue that in Sweden this is at least partly an artifact of the fact that the Swedish accounting for market incomes includes many people who are earning nothing, although the point remains that the redistributive system has been a massive mechanism for instituting some of the lowest levels of inequality outside of some socialist countries.
3 See Fischer (2014b) for detailed discussion of this point.
4 See Cohen and Harcourt (2003) for an excellent discussion of this point.
5 Let us assume that overheads such as expensive lawyers’ offices are not part of productive capital but, rather, are part of status-signalling devices (because a lawyer can be equally effective working at home or in a public library).
6 For a good discussion on other related points, see Felipe (2010, pp. 279–288).
7 For instance, see Bernard et al. (2008).
8 See Ndikumana and Boyce (2011) for some interesting estimates of capital flight from sub-Saharan Africa.
9 See Fischer (2010c).
7 Social policy and the tension between identification and segregation within social ordering and development
1 This precise definition of universalism was explained to me by the social protection expert of a country office of the World Bank in Asia during recent fieldwork in March 2018 (country undisclosed for reasons of confidentiality).
2 Again, see Martinez and Sanchez-Ancochea (2016) for some excellent discussion and examples of this.
3 I am grateful for Emma Dadap Cantal, one of my PhD students, for pointing out this distinction to me.
4 For instance, a group of UN independent experts wrote a letter to the UN (www.ohchr.org/Documents/Issues/Development/IEDebt/Open_Letter_IMF_21Dec2017.pdf) and another was signed by 53 economists, myself included (www.networkideas.org/news-analysis/2017/12/53-economists-write-to-imf-directors-on-approach-to-social-protection/).
5 There is little discussion in the 2013 WDR of the relationship between industrial policy and employment besides a few passing and generally derogatory comments (e.g., pp. 37, 217, 218 and 247), although on p. 218 there is favourable mention of the discussion of industrial policy framed within a theory of comparative advantage by Justin Lin, former chief economist of the World Bank. Two other approaches are also briefly considered, although none of the stronger positions in support of industrial policy are presented.
6 I avoid the use of the term ‘middle class’ because the precise meaning of this term has become excessively nebulous in its recent usage by economists and multilateral institutions, particularly in terms of definitions based on non-poor income status, starting from incomes as low as two PPP dollars per day; e.g., see Ravallion (2010). Any precise sociological meaning is absent from such definitions.
7 Mkandawire (2004, p. 1) defines social policy according to its economic functions, i.e., interventions in the economy to influence livelihoods and income, which is more precisely a definition of social protection. I have expanded this to include the social functions of social policy, such as the provisioning of schooling and health care to effect education and health outcomes in a population, which may or may not have an income effect.
8 See an introductory overview by Hujo and Gaia (2011).
9 For studies on the effect of social policies on women’s labour force participation, see İlkkaracan (2012a, 2012b).
10 An example of targeting within universalism would be policies to address learning disabilities within an integrated and publicly funded education system. For one of the classic formulations of ‘targeting within universalism’, see Skocpol (1991).
11 A strong example of this argument is expressed by Goodin and Le Grand (1987, p. 215) with reference to Northern welfare states. They argue that ‘the beneficial involvement of the non-poor in the welfare state is not merely wasteful – it is actually counterproductive. The more the non-poor benefit, the less redistributive the impact of the welfare state will be.’
12 Also see the work of Bob Deacon on this issue (Deacon 2012).
13 See Palacio (2017) for a review of these informality debates and detailed research in Ecuador that demonstrates that these arguments are misattributing tenuous evidence as perverse incentives, when in fact the benefits of going formal and accessing social security are so large that they greatly outweigh the value of the cash transfer in question. She also provides an argument that informality, in the case of the women receiving the cash transfer, is mostly the result of quite rigid structural and institutional obstacles operating in labour markets for these women, thereby questioning whether there is any choice in any case.
14 See an interesting study on this by Brito and Kerstenetzky (2011).
15 Again, see Mkandawire (2005, p. 13, citing various authors) on this budgetary ‘paradox of targeting’ whereby resources directed towards the (targeted) poor actually fall sharply during or after the shift to a targeting regime is made, thereby undermining the claim that such targeting allows for the same amount of resources to be used for greater poverty-reducing impact. As pointed out by Ghosh (2011, p. 5), such reductions can also be partly masked by the shifting of some expenditure items, such as when spending on publicly provided services to poor people is diverted to fund conditional cash transfer schemes.
16 See Kerstenetzky (2011) for some discussion on the role of minimum wages.
17 See Fischer (2009a) for further discussion on this point with respect to Western China.
18 For instance, see Langford (2010) – although, by targeting, he means the use of targets in the MDGs, not targeting in social policy.
19 For instance, this dimension of social policy is entirely absent from the consideration of various criticisms of rights-based approaches by Gready (2008). Gready does discuss how rights-based approaches have re-politicised development, in the sense of bringing attention to disempowerment and of speaking truth to power, but he does not consider the substantive policy dimension of politicisation as discussed here. Exceptions include Langford (2009), who does consider some of these dimensions in his engagement with notions of trade-offs as typically presented in welfare (i.e., neoclassical) economics.
20 I am indebted to numerous discussions and communications on these issues with Carole Samdup, Senior Advisor on Economic and Social Rights at Rights and Democracy in Montreal, Canada.
21 See Anttonen et al. (2012) for an excellent overview of universalism in social policy. The institutionalist political economy approach presented here of conceiving universalism along three dimensions (access/coverage, cost/price and financing), which draws from Fischer (2012), can be seen as complementing their presentation as well as that of Martinez and Sanchez-Ancochea, as noted above.
22 See Mehrotra (2000), Mkandawire (2005) and especially Kwon (2005) and Ringen et al. (2011).
23 See this argument in Fischer (2011b, 2014b).
24 For instance, Stamsø (2009) discusses the segmented nature of social policy in Norway with respect to housing policy in terms of tax benefits for home owners and targeted subsidies for those outside the property market.
25 See www.levyinstitute.org/topics/employer-of-last-resort-elr-policy.
26 For instance, in many Latin American countries, such as Brazil, the tertiary level of education is well subsidised and public universities are some of the best, whereas the opposite holds at the secondary level, with the ironic result that the students who manage to access the affordable and high-quality public universities are those whose families had the resources to pay for private secondary schooling. See Di John (2007).
27 See Bachelet (2011). For an excellent review, see Ocampo (2012).
28 See Mackintosh (2006) for a discussion of health along these lines. Note that this usage of the term ‘commodification’ is slightly different from the way it is used by Esping-Anderson (1990), as mentioned previously, who uses the term with reference to dependence on labour markets. Here, I am referring more precisely to something being treated (or not) as a commodity. His usage arguably confuses the meaning of commodification, insofar that it is relevant to ask whether labour has ever really been decommodified within capitalist welfare state regimes and whether this was ever the intention of such regimes. This is in contrast to understanding welfare and social security according to their insurance function, which is in effect very much in harmony with commodified labour and very much a counterpart of modern capitalist labour regimes. See Fischer (2014b) for further discussion of this point.
29 See description of this in Lin (2012) and also see a review of prominent debates on health care in China in Chen and Xu (2012). Also see Fischer (2016b).
8 Conclusion: Poverty as ideology in an age of neoliberalism
1 Buğra (2015) also points out that in Friedrich Hayek’s conception of economic liberalism, market freedom must be underpinned with strong moral rules. In this sense, there is not necessarily a contradiction, as is often assumed, between the rise of modern and political forms of religious conservatism or fundamentalism and neoliberalism, such as in the US, parts of Latin America, Turkey or India.
2 For an interesting discussion of this in Northern welfare states, see Rodger (2012). See van Gent et al. (2018) for an example of segregationism in the Netherlands.
3 Wilkinson and Pickett (2009) also observe that inequality seems to have an effect not just on the poor but also the non-poor.
4 The understanding of diversified rural livelihoods is one of the generic insights coming out of the literature on livelihoods. The idea of streamlining was classically made by Tony Atkinson and also by Amartya Sen.