An Inquiry into Well-Being and Destitution 
by Partha Dasgupta.
Oxford, 661 pp., £35, July 1993, 0 19 828756 9
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The project of ‘developing’ the South, the countries of Latin America and the poorer former colonies of Asia and Africa, dates, as a deliberate project, from the Forties and early Fifties. It showed its origins. Economically, development meant industry. Adam Smith and Marx, it was assumed, were right. Output could most effectively be raised by moving as quickly as possible to capital-intensive mass production. David Hume’s alternative, to think in terms of a ‘product cycle’, of simple agriculture at one end and advanced manufacture at the other, and to position oneself at the point at which one could make the most of one’s endowments and of trade with other countries, was all but forgotten. Politically, development meant a directive state. The countries of the North had themselves recovered from depression and mobilised for war by bringing their economies under direct political control. There seemed no good reason, after that war, to suppose that for its development the South should not do the same. Politicians in the South concurred. They wanted to catch up, and were happy to have strong powers to do so.

The project seemed at first to succeed. Rates of economic growth in the South in the Fifties, Sixties and early Seventies were higher than anyone had expected. And according to some of the most persuasive indicators, such as the average expectation of life at birth, welfare seemed to be improving too. The successes, however, were deceptive. Most of the growth in output and income came from the export of primary commodities, of food and minerals, to a booming North. It confirmed Hume rather than Smith or Marx. Only in East Asia, and there only by the Seventies, was much of it coming from the export of manufactured goods. And even in those countries which were selling agricultural products, people in the countryside were doing markedly less well than those in the cities. Inequalities of all kinds were increasing. And many of the contentedly directive governments (most of them supported by a superpower patron) were unwilling to extend civil and political rights or to open themselves to electoral defeat.

The self-deception, now, is clear. Interest rates in the North rose after the second oil-price rise in 1979, and the demand for imported food crops and other commodities began to decline. The cost of Southern countries’ debt went up, and their earnings went down. Many had to turn to the multilateral institutions for help, and to accept the institutions’ conditions. These would anyway have been severe. But they were made more fierce than they might have been by a change of mind in the North. Economically, it was agreed, development might still mean industry. But this should no longer be financed by debt. If Southern countries couldn’t raise the revenue for it by exports or taxation, they would have to rely on private investment. Politically, the North insisted, states should be less directive. They should sell off their unprofitable enterprises, cut their social spending, stop protecting their currencies, and open themselves fully to imports. They should, in short, restructure themselves. And uninterested now in pursuing its Cold War in the South, Washington added that they should think about becoming ‘democratic’. By the end of the Eighties, funds were flowing back from the South to the North, incomes in Latin America and Africa were lower than they’d been in the late Seventies, and except in India and China, poverty everywhere had increased. But there had been some elections.

What isn’t clear is where this leaves thinking about ‘development’, about what it might consist in and how it might happen. It’s still Smith, not Hume, who dictates the general strategy, though Marx, of course, has fallen by the wayside. Development has to mean growth, and growth (East Asia, it’s assumed, makes the case) means manufacturing for export, even if the investment for this is not forthcoming. The ‘structural adjustments’ of the Eighties, it’s true, did ask governments to let farmers charge proper prices for food. It was absurd to keep their incentives and production so low, and to spend scarce foreign exchange on the one necessity that almost every Southern state could provide for itself. The multilaterals have also now acknowledged the adverse effects of restructuring on the poor; the President of the World Bank this year insisted that all the Bank’s programmes should include some provision for softening their impact on the poorest. But few have a clear conception of what the balance should be between private and public support.

This, in Partha Dasgupta’s opinion, is ‘the central problem of the social sciences’. In this inquiry, he suggests a way, at least for poorer societies, to solve it. His models, he says, shouldn’t be taken too literally. Although he is himself a theoretical economist, his models start in political philosophy, and go beyond what most economists think of as economics into the real conditions of life in the South. An Inquiry into Well-Being and Destitution is in many ways as impressive as Hume, Smith and Marx themselves. It doesn’t, however, contest them on their own ground. There’s just one reference in Dasgupta’s index to ‘industrialisation’, two to ‘international trade’. He agrees that the extraordinary successes of Japan, South Korea, Taiwan, Singapore and Malaysia owe everything to the export of manufactures. He also agrees that the ‘infant industry’ argument is more generally correct. If a country wants to industrialise, it has initially to protect its industries from more efficient competition from others. But the political temptations of this are enormous, and what at first makes sense can turn – as in many places it did – into a stagnant and expensive mess. Dasgupta is probably right to think that the success of this strategy in East Asia owes more to historical luck and administrative good judgment than to theory. (In the early Eighties the South Korean Government instructed the large corporations whose success it had nurtured, Hyundai, Daewoo, Samsung, Lucky Star and the others, to pass a quarter of their profits to the governing party: few other economies could have survived corruption on this scale.) The real difficulties are in the countryside. The fundamental questions are what the state, any state, should try to do about these, and how the governments of states that preside over poor rural populations (Dasgupta concentrates on South Asia and sub-Saharan Africa) should do it.

A state, he suggests, exists to promote the well-being of its citizens. This doesn’t mean that it should concern itself with the citizens’ actual happiness. States of mind are none of its business. And even if they were, no state could do much to improve them. The contract, as Dasgupta wants to think of it, is a contract between a state and its citizens to enhance the benefits of social co-operation on terms (in Tim Scanlon’s famous formulation) that neither side can ‘reasonably reject’. It requires the state to facilitate, and if necessary itself to provide, the conditions in which (within sensible limits) the citizens are at liberty, as individuals, to do what they want to do. ‘As individuals’, Dasgupta insists, is important. Liberty means independence, and that means not having to depend on others. (Some of our best pleasures may come from dependencies. The state’s concern is only that we should not have them forced upon us.) It’s a conception that brings together what liberal political philosophers have more usually tended to see as ‘two disparate conceptual frameworks: contractual theories of justice, and theories that see justice as involving the maximisation of some overall social objective’. And we can get to it, Dasgupta adds, skipping over the problem of disputes over what’s to be provided for whom, by lowering John Rawls’s ‘veil of ignorance’. No one knows in advance where they’re going to stand, and exactly how much of what they’ll need when they discover where they do stand. Having agreed to the contract, the state provides ‘the background institutions’ that are necessary to honour it, and the citizens set off to lead their lives. These institutions, Dasgupta wants to say, provide ‘rights’, so-called ‘negative’ rights to civil and political freedoms and ‘positive’ rights to certain minimum conditions of life.

At the start of the Eighties, few worried about the relation in the South between these two kinds of right. Officials, sensitive to the overriding concerns of the Cold War, kept a polite silence about the absence of civil and political liberties. Many academic observers, seeing an analogy with the ‘development’ of the North in the 19th and early 20th centuries, and inclined to accept that its more deliberate pursuit in the South required vested interests to be overridden, were convinced that liberties and the distribution of some more positive public goods too would have to wait. The mood has now changed, and Dasgupta presses such data as there are from 1980 itself to argue that it is right that it should have. Some comparatively poor countries had already done quite well (in one or two cases, like China and Sri Lanka, spectacularly well) in reducing infant mortality and improving the expectation of life and literacy. And some (Botswana, Gambia, India, Mauritius, Sri Lanka again) had also extended a reasonable number of civil and political rights. More recent figures, Dasgupta does not add, tend to support him further. But in both cases the sources are unreliable, the measures are coarse, and the correlations between them say nothing about what might be causing what.

Prompted nevertheless by the figures to pay particular attention to health, and guided by a scepticism about the way in which economists have thought about consumption and the distribution of ‘consumption goods’, Dasgupta looks more closely: the larger part of his book is taken up with trying to give some shape to a prodigious amount of empirical research. Not surprisingly, Dasgupta makes this research show that poor health is associated with poverty. And its adverse effects on work reduce productivity and make poverty worse. As the circle in which the poor are caught becomes more vicious, they take steps to reduce the increasing uncertainties. They have more children, and households divide their labour further to spread their risks. This, although rational, serves further to lower their productivity. It also puts increasing pressure on those resources which are not readily renewable, a pressure that’s already intense in virtue of the long-standing habit in development projects of pricing those resources that are on the site of the project at zero. Those people without assets spend more and more of their lives without getting any work at all, and are the first to fall through the floor. Meanwhile, many of those in the countryside who do have access to land deteriorate with the land itself. The problem, therefore, is not one of consumption alone. Governments are wrong to accept the old assumption that money spent on subsidies and transfers is money lost to production. On the contrary, it’s a crucial investment. They’re also, like many economists, wrong to think that it will do to see consumption and production in the countryside as happening in indivisible things called ‘households’. The deepening difficulties of the poor not only change the relations between these. Inside them, the uneven allocations of labour and food disadvantage women and through women, children too.

Little of this, in a general way, is new. No one, however, has gone so far beyond the generalities and brought so much of the many bits of available information together. No one, certainly, has thought it through so hard. For public authorities in the South, the irresistible implication of the arguments Dasgupta develops is that they ought to concentrate on providing civil and political liberties, legal services, protection against force, fraud and theft, nutrition, primary health care, potable water, sanitation, basic education and better communications. In matters of production, they should pay more attention to agriculture, and encourage agriculturalists themselves to be more involved in the policies which affect them. Dasgupta makes much of this. Information about local resources is necessarily local. And if part of the task is to alter the allocations of effort and reward within the household, and if a liberal state can’t interfere in these allocations directly, it has to listen to those, above all to the women, who might be able to do so.

How this is all to be achieved isn’t Dasgupta’s concern. Financially, he suggests at the end of the book, a change of direction is not inconceivable. Roughly 4 per cent of the national income of developing countries goes to defence: if diverted, it could do much, even in Africa. Indeed the IMF itself is now asking some of its clients to reduce their military budgets. But the post-Cold War disorder in parts of the South will not encourage them to do so – and there are at least three further difficulties.

The first is that almost no Southern state, even if it were to find the money and think of itself in the enlightened way in which Dasgupta would like it to, has the practical capacity to implement the changes. The central administration of most of these states is less bloated than it was, but it’s still fairly weak, and where it exists at all, the local administration is usually appalling. The donors, multilateral and bilateral, have succeeded in cutting back those bits of the state they don’t approve of, but they’ve yet to concentrate their minds on building up those that are necessary. The second difficulty is deeper. Dasgupta’s whole case rests on a sharp and steady conception of the distinction between the public realm and the private, but this distinction is unsteady in the South. States which once thought of almost everything as public are on the way out. Of the smaller ones, only Cuba and North Korea remain, and their end could be only weeks away. Even in China, though Deng is still warning his generals that what the counter-revolutionaries want is (of all things) a ‘bourgeois liberal republic’, much is now being conceded. But there are still several dozen states, including many of those in sub-Saharan Africa, where almost everything, including the apparatuses of state themselves and their revenue, are thought of as private prebends, to be enjoyed by the soldiers and politicians who can get their hands on them and the factions who are willing to help. The third difficulty is perhaps the deepest of all. Several East Asian states have passed the point of return to an agrarian base. China, which is now receiving more foreign investment than any other developing country, soon will. Thailand is close, and Vietnam may be next. But this isn’t in prospect for most of Africa, and is now in doubt for some countries in Latin America too. Even if the governments of these places were to find the money for what Dasgupta proposes, were to be able to set up the ‘background institutions’ with which to carry it out, and were to see themselves as disinterestedly liberal – stiff conditions all – they’d have to accept that Hume, after all, was right: not every country can reach the top of the product cycle. The force of Dasgupta’s case is that even for these there is hope.

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