Poverty Removal Measures of Amartya Sen and the Smithian Dilemma

I. Introduction

The new millennium emerged with the most scintillating achievement of the human race in the form of communication revolution which has enabled the process of globalization to climax into turning the entire world into a global village. Thus the most luminous gem has been added to the crown of our material achievements ever since the dawn of civilization. Unfortunately the magnificent edifice of our material glories has cast a stark shadow in the form of poverty, inequality, deprivation, exploitation, unemployment and all other forms of social injustice. In fact, the entire history of human civilization has been checkered with glorious achievements and abject injustice. All the negative aspects associated with our material progress may be summarized as poverty and deprivation. The term poverty may be looked upon in both absolute and relative sense. Both have been in existence ever since the emergence of private property and have gone on snowballing along with material progress. Absolute poverty in primitive clan societies was caused undoubtedly by lack of productive power of the clans, i.e. lack of adequate scientific and technological knowledge to exploit nature to meet their basic requirements. But this argument cannot by any means be put forward to explain the existence of poverty since the beginning of civilization and it is more so for the modern era with unbelievable achievements in the arena of industrial production. So the real cause of poverty could hardly be associated with undeveloped productive capability of the human race. It is to be sought elsewhere, viz. the heinous psychosis of the minor property owner class to exploit and enslave the majority. From this standpoint the most coherent explanation of poverty and injustice is to be found in the works of Karl Marx and Frederick Engels. They have used immaculate logic to associate poverty and injustice with private property, division of labour, exchange, competition, family and the State. So, according to the Marxian approach, poverty and injustice could be eliminated only in a social situation –Communism according to Marx and Engels– where the above six basic causes of poverty are completely nonexistent. The first step towards the progress to Communism is establishment of Socialism through proletarian revolution.

However, the crumbling of most of the so called socialist regimes during the late 1980s and early 1990s has raised doubt about the feasibility of the Marxian solution. The desirability of the Communistic society has also been challenged even by many staunch adherents of the Marxian doctrine. There has been a widespread frustration among the communists and adherents of the concept of socialistic pattern of society in the so called mixed economies like pre-globalization India. The consequence has been a complete about turn, blind worship of uncontrolled market economy, i.e. the so called capitalistic system. This paradigm shift has resulted in unbelievable material progress since the late 1980s, but with the dawning of the new millennium the horror of increasing poverty and deprivation has been haunting the conscientious minds. The most prominent voice that has raised protests against blind adherence to free market mechanism is that of Amartya Sen who has emphasized that to contain the maladies associated with material progress in the era of globalization, public action is essential. He has considered pluralistic democracy as the most desirable form of government which could ensure growth with social justice along with human freedom. Although better than authoritarian forms of governing in many respects, political party based democracies are overburdened with widespread corruption based on criminal-trade union-politician alliance. Sen emphasizes the role of the mass media and awareness of the common people to break through this vicious circle and make the politicians, running the governments, work in a desirable fashion.

Unfortunately this optimistic note of Sen has come up against a serious hurdle pointed out by Adam Smith long ago. According to Smith a psychosis common to most of the people, whatever be their own positions, is that they admire the powerful and the rich –whatever be the means of their achievements– instead of the really worthy ones, viz. the honest and virtuous who has failed to achieve power and wealth. This has, in fact, spelt out a gloomy prospect for the human race. In this article we endeavour to take up these issues. Accordingly, in the rest of this article, we are going to take up in detail the following topics: Poverty Concepts, Marxian Approach, Sen’s Approach and Smithian Dilemma.

II. Poverty Concepts

The phenomenon of poverty has posed the most serious challenge to development efforts in the new millennium. This primeval malady is the source of many other serious maladies. In modern economic literature the question of absolute poverty has justifiably been considered as the most primary issue, although attention has also been drawn to the question of inequality, both intra-nation and inter-nation.

At present, the most pressing problem, of the third world countries comprising the overwhelming majority of world-population, has been the precarious situation generated by absolute poverty in its extreme form and, therefore, at least on the theoretical plain, the major concern of economic policy of the government of each of these countries has been to devise appropriate and fruitful means to reduce the intensity of the problem of absolute poverty. The question has also been a matter of deep concern for the developed countries, but for completely different reasons. Continuation of abject poverty in the third world countries generates enough provocation for the poor of these countries to resort to violence, organized or anarchic. Thus poverty in less developed countries –LDCs– has both direct and indirect adverse consequences – directly by material deprivation of the majority and indirectly by paving the way for violent discontent.

Now as we turn to the question of removal of poverty, we immediately come upon the tricky question of quantitative measurement, without which it is hardly possible to frame any realistic target-oriented poverty removal policy. To this end the crudest approach considers income as the criterion of defining poverty and attempts to measure poverty by the Head Count Ratio –HCR–. In this measure at first the minimum income necessary for provision of subsistence requirements is determined. This threshold income is called the Poverty Line. At the next step, data on the number of persons with income below this critical level are collected. At the final stage this figure is expressed as a percentage of the total population of the country under consideration.

The most important question in connection with the HCR is the definition of the critical income level pertaining to the poverty line. The critical poverty line income differs from country to country depending on the variability of per capita income, structure of national income, ethnic and cultural factors that make a world of difference in the concept of subsistence requirement. Generally the poverty line income for a poor country is less than that for a relatively opulent country.

Notwithstanding these inter-country differences, the World Bank has defined a general Poverty Line for the world as $1 per person per day at purchasing power parity. Although this may enable the World Bank to have a rough idea about overall poverty in the world, for policy framing of the LDCs, the standard may seem too high and for the highly developed nations, too low. The third world countries afflicted with abject poverty are compelled to set a much lower margin of income for the Poverty Line and device policies to raise income of the poor in relation to this critical level. For example, the official Poverty Line in Indian, based on minimum calorie requirements for sustenance of life, is much below the World Bank standard.

Apart from this conceptual limitation, the HCR has revealed limitations from the policy stand point as the measure fails to quantify the income gap of the poor from the Poverty Line. Thus it does not provide any guideline as to the magnitude of the total income gap to be covered if a country wants to remove poverty of a targeted segment of the poor. Moreover this measure is also a poor instrument of inter-country comparison of poverty.

The poverty gap measures have been devised to take into income shortfall of the poor from the Poverty Line. There have been various indices of this category to take into account specific aspects of poverty gap. The details of all these measures and the mathematical formulas are irrelevant for this study[1].

Amartya Sen has criticized the income-based poverty measures as they fail to take account of deprivations in terms of basic amenities of life such as literacy, healthcare, safe drinking water, pollution-free atmosphere. So he has defined poverty indices based on these aspects of human living, popularly known as capability-based indices (Sen, 1984) (Sen, 1993). In this connection, the Human Poverty indices of UNDP –United Nations Development Program– are worth mentioning (UNDP, HDR 2003, pp. 342-43). Sen’s approach would be taken up in a subsequent section.