THE NATURE OF MASS POVERTY

JOHN KENNETH GALBRAITH

HARVARD UNIVERSITY PRESS                       1979

PART I

Preface by JKG

This book had its origins almost two decades ago in India. In those years, the early sixties, the United States had a large and costly program of assistance to Indian agriculture. Its purpose was to help increase Indian food supplies and to lessen, however slightly, the poverty which is the fate of nearly all in India who make their living from the land. One did not doubt that our motives were humane as well as sensibly self-interested. But I soon became persuaded that our efforts were sadly misguided and that the error extended on to the Indians with whom we worked.

What we had decided were the causes of poverty with which the Indians and we sought to contend was derived not from thought but from convenience. There were, broadly speaking, only two things we could provide to lessen the deprivation – we could supply capital and, in principle, useful technical knowledge. The causes of poverty were then derived from these possibilities – poverty was seen to be the result of a shortage of capital, an absence of technical skills. The remedy included the diagnosis. Having vaccine, we identified smallpox. Only by accident could a therapy so selected be successful. There was, alas, no such accident.

My thoughts, accordingly, turned to a more valid explanation of mass poverty and the associated remedial response, so far as one can reasonably be offered, and I continued to reflect on this after my return to Harvard in 1963, where I resumed courses that I had previously initiated on the problem of development in the poor lands. But I had first to finish The New Industrial State and  Economics and the Public Purpose, the large enterprise on which I was launched before going to India. And there were other diversions, including politics and the continuing and highly unrewarding distraction of the Vietnam War.

Finally, time and opportunity came. In the winter of 1977, my colleagues at the Graduate Institute of International Studies of the University of Geneva encouraged me to schedule a series of lectures on the subject, and these I later revised and repeated at the Radcliffe Institute.

When publication of this book was discussed, Arthur Rosenthal, the director of the Harvard University Press, heard my reference to the lecture-room antecedents with grave alarm. It was the reaction of an experienced and discriminating man, the survivor of much pain. For it is the aberration of nearly all professors that they can publish their lectures, as it is the aberration of great business executives that they can make pamphlets of their speeches on the case for free enterprise. Subject matter apart, what is meant to be heard cannot be read. A lecture or speech is naturally discursive, for the audience needs time for digestion. For the average listener there must also be occasional repetition. When reading, he can, as he needs, go back over the material himself. So, as a broad rule, no lecture or speech should ever be published. And, if published, it should never be read. These chapters originally were lectures; they have been rewritten and now, I trust, are by way of being a book.

I begin with consideration of the seemingly sensible explanation we now regularly offer of the poverty of the poor country and the way these causes evaporate when tested against practical experience.

Chapter 1: How Poverty Is Now Explained

To be poor is believed by many who are, and most who are not, to be an unpleasant thing. If there is a difference of opinion here between the rich and the poor, it is in the depth of feeling on the subject, something on which practical experience will be thought to heighten sensitivity, although this is not wholly certain. There is a strong possibility that in many societies the poor react to their economic situation with less anxiety than do the rich, a point to which I will return.

Two forms of poverty can be distinguished. There is that which afflicts the few or, in any case, the minority in some societies. And there is the poverty that afflicts all but the few in other societies.

The causes of the first kind of poverty, that of the poor individual or family in the predominantly affluent community, have been much investigated and debated. What characteristics – moral, genetic, familial, environmental, educational, racial, social, hygienic – cause some persons to be excluded from the general well-being? This, the cause of case poverty, remains a question of considerable importance. Study has yet to produce general agreement. There remains even a residue of thought which holds that those who so suffer were divinely intended for their fate or have been accorded the suffering that, from personal deficiency, they rightly deserve. But this is not the kind of poverty with which I am here concerned.

My concern is with the causes of poverty in those communities, rural in practice, where almost everyone is poor – where, if there is wealth or affluence, it is the exceptional fortune of the few. The causes of this mass rural poverty, in contrast with case poverty, have been much less investigated. Instead, to an astonishing degree, the causes are simply assumed. When explanations are sought, numerous and exceptionally confident answers are given. When examined, these answers have one feature in common: they are universally unsatisfactory. They are subject to contradiction by practical experience or they confuse cause with consequence or, while serve casual conversational purpose, no one wishes to risk them in serious scientific discourse. Or, as noted in my preface, they are selected not for their validity but for their convenience.

• The most common explanation of mass poverty is that the community, usually the country, is “naturally poor” – the soil is rocky, arid, or insufficient; there are few minerals, hydrocarbons, or other natural resources.
• Were Japan a poor country, its poverty would be explained along the lines just given, but its catastrophic natural endowment goes unmentioned only because it is rich.
• Since World War II, four hitherto poor communities have enjoyed a great and sustained increase in widely distributed income – Taiwan, Singapore, Hong Kong, and Israel. None is favored as to land or natural resources.
• Iran and the Arabian peninsular are all rich in the currently most cherished of resources, which is oil. The ordinary citizen of Iran and most of those of greater Arabia live brief lives in a squalor not appreciably improved over that of their forebears in the then-embracing empire of the Sassanids and Shapur I.
• In the United States, West Virginia, a state with a singularly rich store of natural resources – water, power, forests, superb seams of coal – regularly ranks among the bottom five states in per capita income.
• Connecticut, with poor land, no natural resources beyond some long-exhausted iron mines and a few underprivileged forests, ranks first.
• The relation of resources to well-being is so erratic as to be flatly worthless.

The next most commonly offered explanation of poverty and well-being invokes the nature of government and the economic system. A reference to resource endowment as a cause of poverty is made casually. The economic system as a cause of poverty is invariably cited with passion. The people are poor because they have not perceived the advantages of free enterprise, free competition and the market. Their energies, accordingly, are frustrated by a stupid and costly bureaucracy. Alternatively, they are poor because they are exploited; the surplus that they produce is appropriated by predatory landlords or capitalists. And this poverty persists because, since all goes to the owners of property anyway, there is no incentive to improve. Since the period immediately following World War II when both, in effect won independence, China under Communist auspices has almost certainly done far more to conquer mass poverty than has India, which, while it employs socialist rhetoric, remains a property-owning republic with capitalist entrepreneurs who, for studied rapacity, can probably claim to be the equal of any. But Hong Kong, Singapore, and Taiwan have all made greater progress than China. All are indubitably capitalist. This experience suggests that it makes far less difference as regards the causes or conquest of poverty whether a country is capitalist or Communist than whether it is Chinese or not. And the latter is an explanation that both socialists and nonsocialists would join in rejecting.

• Eastern Europe, at a somewhat higher level of well-being, shows the practical unwisdom of stressing the economic system as a cause of or an antidote for poverty.
• Let it be supposed that in 1880, one journeyed around Eastern Europe over the territory that is now celebrated as the socialist camp.
• The highest and best-distributed standard of living is found in what is now the German Democratic Republic.
• The next highest would be in Bohemia, now in Czechoslovakia, followed by Slovenia and Croatia in what is now Yugoslavia.
• Hungary and the Austrian and German parts of Poland, Rumania, and Bulgaria would be yet poorer.
• Poorer still would be Macedonia, Montenegro, and parts of Serbia. Across the border in Imperial Russia, the living standards of Poles and Ukrainians would also be exceedingly mean.

Nearly a hundred years have now passed. For a third of this time these countries have been Communist. The same journey today would show virtually the same relative states of prosperity and poverty.

• Not only does the ranking remain generally unchanged as between countries, it remains undisturbed within countries.

Between 1948 and 1972, total domestic production in Slovenia, the richest area of Yugoslavia, increased at an average rate of 6.9%. In Kosovo, the poorest region, the growth rate averaged 6.1%. However, the rate of population increase was three times as high in Kosovo as in Slovenia – from 1950 to 1971, 22.8 per thousand as compared with 7.5. In consequence, the per capita product of Slovenia, which was three times that of Kosovo in 1947, was 5.7 times that of Kosovo in 1972.

• The difference in per capita income between Slovenia and Macedonia, Montenegro, and Bosnia-Herzegovina also sharply increased in these years, although less sharply.
• Slovenia and Croatia, the two relatively prosperous parts of Yugoslavia, were, like Czechoslovakia, Hungary, and the more prosperous parts of Poland, ruled from Vienna before World War I.
• For assessing the causes of poverty in Eastern Europe, it is obviously more important to ascertain whether the country or region in question belonged before 1914 to the Austro-Hungarian (or German) Empire than to assess the modern impact of Communism.

I’ve so far been concerned with the comparatively persuasive explanations of poverty. Another set of causes, which, in fact, could be consequences, are more self-evidently simple-minded. Thus it is regularly said that the country is poor because it lacks capital for development. It is fully as informative to say that it lacks capital for development because it is poor. Savings for investment accrue only when there is a surplus beyond what is required for immediate consumption. Where poverty is general, there is no such surplus.

Similarly, it is said that the country is poor because it lacks trained, educated, or experienced technical and administrative talent. Few ever emerge to comment on the poverty of the new African countries without some such observation. Educated manpower is likely to be scarce in a country that has been unable, because of its poverty, to afford an educational system. Industry is also an aspect of affluence – of a standard of living that goes beyond food, elementary clothing, and elementary shelter that come from the land. If, being poor, the country has no industry, it will be devoid of people trained and experienced in the management of industrial enterprises. If the absence of trained and experienced people is a cause of poverty, it is surely a result.

• Cause and consequence are equally interchangeable in the common assertion that poverty is the result of ineffective, erratic, corrupt, or otherwise inadequate government.
• The quality and character of government is a function of the income of the people by which it is supported. Poverty is both a cause and a consequence of what Gunnar Myrdal has called the soft state.
• This last point is of much political importance, for on no matter has the effect of uninformed action been more distressing.