From poverty to power - Oxfam-Québec
From poverty to power - Oxfam-Québec From poverty to power - Oxfam-Québec
3 POVERTY AND WEALTH A TWENTY-FIRST CENTURY ECONOMICSorganise, they can use their increased scale and bargaining power toreduce costs, negotiate better prices or wages, and expand their sales.When they are organised, people can also convince authorities toalter the structure and rules governing markets to ensure that they geta fair deal. To marshal the power of markets to meet the grand challengesof this century will require action by both states and citizens,and a new approach to the main tool used to understand markets: economics.Time is short: the global economy needs to move rapidly to a‘smart’ course of pro-poor, sustainable growth, or else climate changeand natural resource constraints will become increasingly disruptive,undermining growth and exacerbating poverty and inequality.ECONOMICSEconomics is a broad but divided discipline, comprising dozens ofschools of thought covering almost every aspect of human existenceand spanning the political and philosophical spectrum. However, thisrich diversity of analysis and insight is seldom visible in the economicdebates at the centres of power.For much of the twentieth century, two such schools, the neoclassicaland the Keynesian, battled for intellectual supremacy and forthe ear of decision-makers. In recent decades, the neoclassical schoolhas been in the ascendant. Within the neoclassical school, there havebeen many thoughtful efforts to engage with the deep nuance andcomplexity of development, but in practice, economic policy makingis often dominated by a much cruder, ‘dumbed-down’ version thatargues for simplistic solutions to complex problems (liberalise, privatise,avoid a fiscal deficit at all costs). While some economists undoubtedlypander to this need for simple messages, others squirm. TheInternational Monetary Fund’s disastrous response to the Asianfinancial crisis of the late 1990s drove an exasperated Joseph Stiglitz(Nobel laureate turned World Bank chief economist) to lament the‘third-rank students from first-rate universities’ who were runningthe Fund. 2The dominance of this version of the neoclassical school rests notsolely on the frequently inquisitorial attitude it takes toward otherapproaches, but also on the simple, compelling, yet deeply flawed109
FROM POVERTY TO POWERpicture it offers of the world: that of people and institutions asindividual actors relentlessly pursuing their own self-interest.Assuming human society to consist of atomistic, utility-maximisingindividuals with fixed preferences enables neoclassical economists todevelop the complex mathematical models that give their disciplinethe appearance of an ‘objective’ science. Such models in turn allowpolicy makers to make predictions – implement policy Y and theeconomy should grow by X – which then justify the allocation ofscarce resources, although economists themselves often place heavyhealth warnings on any effort to predict the future.The assumptions behind these models often ignore the complexitiesof real life, in which attitudes, beliefs, and social and political relationsinfluence behaviour as much as does individual self-interest. 3 Marketsare often assumed to be natural, when in fact they are governed bydetailed rules on contracts, access to credit, competition, collectivebargaining,and so on.Such rules are not arrived at in a political vacuum:they reflect the relative strength of those involved in, or excludedfrom, negotiating them. Prevailing attitudes about the value of particularwork are also fundamental, and are often unquestioned byconventional economic thinking.By making income a proxy for utility (or happiness), the neoclassicalapproach views development primarily as being about generatingrising incomes, and sheds little light on how markets can achievedevelopment in the broader sense, based on rights and dignity. 4 Evenwithin the realm of income, the conventional view focuses on absoluterather than relative incomes, either at a national or individual level,thus often downplaying issues of equity. 5 In this view of the world,poverty reduction takes place as a spin-off of wider economic growthand redistribution, as an afterthought rather than as a central tenet ofeconomic policy making.Two essential shortcomings of the use of mainstream economicsin development are, first, its failure to measure and value unpaid workin the home, rearing children or caring for the sick and elderly; andsecond, its tendency to downplay environmental degradation. Bothfailings spring from a reluctance to engage with the non-monetaryeconomy, and both must be remedied if policies are to achieve environmentaland social sustainability.110
- Page 76 and 77: 2 POWER AND POLITICS WE ORGANISE, T
- Page 78 and 79: 2 POWER AND POLITICS WE ORGANISE, T
- Page 80 and 81: 2 POWER AND POLITICS WE ORGANISE, T
- Page 82 and 83: 2 POWER AND POLITICS WE ORGANISE, T
- Page 84 and 85: 2 POWER AND POLITICS WE ORGANISE, T
- Page 86 and 87: 2 POWER AND POLITICS WE ORGANISE, T
- Page 88 and 89: 2 POWER AND POLITICS I OWN, THEREFO
- Page 90 and 91: 2 POWER AND POLITICS I OWN, THEREFO
- Page 92 and 93: 2 POWER AND POLITICS I OWN, THEREFO
- Page 94 and 95: 2 POWER AND POLITICS I OWN, THEREFO
- Page 96 and 97: I VOTE, THEREFORE I AMWhether in Fl
- Page 98 and 99: 2 POWER AND POLITICS I VOTE, THEREF
- Page 100 and 101: 2 POWER AND POLITICS I VOTE, THEREF
- Page 102 and 103: 2 POWER AND POLITICS I VOTE, THEREF
- Page 104 and 105: 2 POWER AND POLITICS I STEAL, THERE
- Page 106 and 107: 2 POWER AND POLITICS I STEAL, THERE
- Page 108 and 109: 2 POWER AND POLITICS I RULE, THEREF
- Page 110 and 111: 2 POWER AND POLITICS I RULE, THEREF
- Page 112 and 113: 2 POWER AND POLITICS I RULE, THEREF
- Page 114 and 115: 2 POWER AND POLITICS I RULE, THEREF
- Page 116 and 117: 2 POWER AND POLITICS I RULE, THEREF
- Page 118 and 119: 2 POWER AND POLITICS I RULE, THEREF
- Page 120 and 121: 2 POWER AND POLITICS I RULE, THEREF
- Page 122 and 123: 2 POWER AND POLITICS FROM POVERTY T
- Page 124 and 125: PART THREEAn economics for the twen
- Page 128 and 129: 3 POVERTY AND WEALTH A TWENTY-FIRST
- Page 130 and 131: 3 POVERTY AND WEALTH A TWENTY-FIRST
- Page 132 and 133: 3 POVERTY AND WEALTH A TWENTY-FIRST
- Page 134 and 135: 3 POVERTY AND WEALTH A TWENTY-FIRST
- Page 136 and 137: LIVING OFF THE LANDThe smoky, cold
- Page 138 and 139: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 140 and 141: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 142 and 143: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 144 and 145: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 146 and 147: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 148 and 149: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 150 and 151: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 152 and 153: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 154 and 155: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 156 and 157: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 158 and 159: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 160 and 161: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 162 and 163: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 164 and 165: 3 POVERTY AND WEALTH LIVING OFF THE
- Page 166 and 167: 3 POVERTY AND WEALTH THE CHANGING W
- Page 168 and 169: 3 POVERTY AND WEALTH THE CHANGING W
- Page 170 and 171: 3 POVERTY AND WEALTH THE CHANGING W
- Page 172 and 173: 3 POVERTY AND WEALTH THE CHANGING W
- Page 174 and 175: 3 POVERTY AND WEALTH THE CHANGING W
FROM POVERTY TO POWERpicture it offers of the world: that of people and institutions asindividual ac<strong>to</strong>rs relentlessly pursuing their own self-interest.Assuming human society <strong>to</strong> consist of a<strong>to</strong>mistic, utility-maximisingindividuals with fixed preferences enables neoclassical economists <strong>to</strong>develop the complex mathematical models that give their disciplinethe appearance of an ‘objective’ science. Such models in turn allowpolicy makers <strong>to</strong> make predictions – implement policy Y and theeconomy should grow by X – which then justify the allocation ofscarce resources, although economists themselves often place heavyhealth warnings on any effort <strong>to</strong> predict the future.The assumptions behind these models often ignore the complexitiesof real life, in which attitudes, beliefs, and social and political relationsinfluence behaviour as much as does individual self-interest. 3 Marketsare often assumed <strong>to</strong> be natural, when in fact they are governed bydetailed rules on contracts, access <strong>to</strong> credit, competition, collectivebargaining,and so on.Such rules are not arrived at in a political vacuum:they reflect the relative strength of those involved in, or excludedfrom, negotiating them. Prevailing attitudes about the value of particularwork are also fundamental, and are often unquestioned byconventional economic thinking.By making income a proxy for utility (or happiness), the neoclassicalapproach views development primarily as being about generatingrising incomes, and sheds little light on how markets can achievedevelopment in the broader sense, based on rights and dignity. 4 Evenwithin the realm of income, the conventional view focuses on absoluterather than relative incomes, either at a national or individual level,thus often downplaying issues of equity. 5 In this view of the world,<strong>poverty</strong> reduction takes place as a spin-off of wider economic growthand redistribution, as an afterthought rather than as a central tenet ofeconomic policy making.Two essential shortcomings of the use of mainstream economicsin development are, first, its failure <strong>to</strong> measure and value unpaid workin the home, rearing children or caring for the sick and elderly; andsecond, its tendency <strong>to</strong> downplay environmental degradation. Bothfailings spring from a reluctance <strong>to</strong> engage with the non-monetaryeconomy, and both must be remedied if policies are <strong>to</strong> achieve environmentaland social sustainability.110