THE NATURE OF MASS POVERTY

JOHN KENNETH GALBRAITH

HARVARD UNIVERSITY PRESS                       1979

PART IV

 

Chapter 3: The Equilibrium of Poverty

The accepted diagnosis of mass poverty – insufficient capital, backward technology – went beyond its strategic convenience. It had also the blessing of the most reputable economic thought. What was recommended for the poor countries was what had served, and seemed still to serve, in the rich countries. No serious and exacting thought was given to the possibility that both economic circumstances and economic motivation might be fundamentally different in the poor country from such circumstances and motivation in the rich. In particular, the normal tendency of the rich country could be to expanding output and income. And the assurance of the resulting reward would then affect aspiration – what the beneficiaries, reflecting on the pleasures of more personal income, refer to in resounding terms as incentives. If one has some certainty of getting more, it will be worth trying to get more.

In the poor country, by contrast, the tendency could be to an equilibrium of poverty. An increase in income could set in motion the forces that would eliminate the increase and restore the previous level of deprivation. Improvement could devour itself.

And it is far from unreasonable to suppose that so malign a tendency would have an effect on motivation. Motivation, like so much else, is subject to conditioning by its culture. If forces, great or overwhelming, act to inhibit or exclude economic improvement, will not people – some, if not all –abandon the struggle?

What seems plausible is real. The tendency of the rich country is to increasing income; the tendency of the poor country is to an equilibrium of poverty. And in each there is accommodation, in the one case to the fact of improvement, in the other to the hopelessness of the prospect. This is the difference at the extremes. As always in economics, differences are of degree; between the rich country and the poor are many intermediate shadings. But at the extremes the differences are stark. To these differences and their origins, I now turn.

• The factors making for improved material well-being in the rich countries of the non-Communist world are matters of general agreement.
• Disagreement arises not in the identification of the elements of progress but in the weight to be accorded the individual items and how they should be given expression.
• Its essentials were: savings over current consumption to purchase capital; a progressive technology to embody or make use of the capital; a political and social system that allows and encourages the individual to seek his (or her) own betterment; and a regulation of the whole process, in the main by the market.
• Concern over population growth ceased to be economic in any decisive sense.
• Expenditures on health care and education came to be referred to as an investment in human capital, serving the same purpose as investment in diesel engines or nuclear reactors.
• Among the requisites of improving well-being in the rich countries was that business depressions would be prevented or offset.
• In the years of Great Depression governments should intervene as needed to maintain a level of aggregate demand that would employ all or nearly all of the available labor force and maintain pressure for a continuing expansion of plant capacity.
• Capital supply, technology to embody it, education, even regulation of aggregate demand, are equally intrinsic components of socialist well-being.
• Blessed by the capitalist industrial world and extensively graced by socialist thought, it is easy to see why the elements of the remedies for poverty just mentioned seemed universal.
• A country with a low rate of growth – Britain was the depressing case – was regarded as exceptional as well as slightly depraved.
• Growth was normal, and social virtue lay with the greatest rate of growth.
• This improvement, in combination with a declining rate of population increase, almost certainly had its effect on aspiration.
• Many, if not most, people could look forward to improving real income in most years.
• Some assurance of reward is surely essential for effort; motivation is a function of success.
• The chance for improvement and the resulting motivation being present in the rich countries, they were then assumed to be present in the poor.
• It was a grievous miscalculation.

A first, if obvious feature of mass poverty must be emphasized; it is, overwhelmingly, a rural affliction. That is because the elementary requisites of existence – food clothing, and basic shelter – all come from the land. The mass urban poverty of the poor country, that of Calcutta, Cairo, Mexico City, is a relatively modern phenomenon, a development of the last 50 or 75 years. It is not benign. It is, however, one step up from rural deprivation. That is why these cities have grown. In the United States, as elsewhere in the world, it is not always seen that life in a meager rural cabin, with only the most elementary food and clothing, slight educational opportunity, no health care, and much social discrimination, can be worse than life in any urban ghetto. And urban poverty, the world over, is not the typical manifestation of deprivation. The poor of India, Bangladesh, Pakistan, Indonesia, Egypt, nearly all of Africa, and much of Latin America are still, to the extent of 70% to 80% of the total population – much of Africa even more – in the rural villages. It is, accordingly, on rural poverty that attention must be centered.

It is rural poverty, also, that is intractable. Here people have lived at or near the minimum necessary for survival for a long time; for practical purposes, always. And here the condition persists because they live in an equilibrium of poverty. Few things allow of escape from life at a minimum level of subsistence; when something does, there are forces which operate to return the people to something approaching their former level of deprivation. Improving income here is not normal. It is and always has been unknown.

It is the equilibrium of rural poverty which evokes, as an explanation, the hitherto mentioned circular causation. Since life is near the bare level of subsistence, there is no saving. Without saving and the resulting capital investment, there can be, from within the agricultural economy itself, no investment in improved agricultural technology – in irrigation, hybrid seeds, pesticides, fertilizer, improved machine cultivation. Without such investment there can be no improvement in income that allows of saving and further investment.

• In October 1953, a young Cornell anthropologist, W. David Hopper, took up residence in the village of Senapur in northern India and for the next 15 months studied its agricultural economy in intelligent detail.
• He concluded: “An observer in Senapur cannot help but be impressed with the way the village uses its physical resources. The age-old techniques have been refined and sharpened by countless years of experience, and each generation seems to have had its experimenters who added a bit here and changed a practice there, and thus improved the community lore.”
• Other scholars have reached broadly similar conclusions.

This impression of optimal technical achievement, given the resources that are available, is substantially at odds with the accepted beliefs of agricultural education, especially in the United States, conclusions that are again heavily influenced by the available remedy. Also if one’s trade is supplying agricultural advice, one must believe it is useful. Such advice being available and inexpensive, such belief becomes the basis of policy. However, the possibility of technical improvements with small investment cannot be excluded. High-yielding hybrids are an obvious case, although investment in fertilizer and very frequently in water supply is necessary to realize anything approaching their full potential. And before coming to social resistance to change, there is another highly practical consideration which excludes it.

• That is the nature of risk calculation in the poor community. Risk is higher for the cultivator who adopts it than for the expert who recommends it.
• For the affluent Western farmer, crop failure means loss of income. This is disagreeable, but it does not often involve physical deprivation, certainly never life itself.
• To the family that lives on the margin of subsistence failure means hunger, possibly death.
• Rural poverty has a yet more vital aspect. Its equilibrium, if broken, will normally be restored.
• If income increases, the tendency will be to a new equilibrium, at or near the previous level of income.
• The increase will, in effect, consume itself.
• In northern and western India in the last century, the British built vast irrigation works to supplement the insufficient or uncertain rainfall.
• The result of this investment was the survival of people who world otherwise have died, the birth of children who would not otherwise have been born.
• There was an increase in population which shared the increased food supply and returned the people to the previous deprivation and restored the equilibrium of poverty.
• In the poor country any improvement in income is nakedly exposed to he pressures of consumption. Added workers from the increased population have a progressively lower yield.
• The law of secular diminishing returns can be indefinitely postponed in its operation in the rich country. It still works inexorably in the poor rural community.

So to summarize, the poverty of the poor country denies its people the means for improvement. And if these become available, there are built into the structure of poverty the social and biological forces by which improvement is aborted, the poverty perpetuated.

In the rich country, in contrast, circumstances are not only different, they are very nearly the reverse. Here incomes are higher than the minimum necessary for adequate nutrition and health and, for many, high enough to be disabling; here also the largest share of all saving is by corporations and thus protected from the pressures of consumption. So saving and investment come easily, even automatically. For this reason, population increase in the rich countries can yield increasing returns. And, in any case, the birth rate is under control, and the death rate does not respond to improved well-being. A world of difference thus divides the two cases – in one case, an equilibrium of poverty and, in the other, the protected dynamic of change. But this may not be the greatest difference. The more important difference is in acculturation – in accommodation to the culture of poverty.

Chapter 4: Accommodation