The problem of poverty is a central issue in thinking about underdevelopment. A way to organize this thinking is to ask what the different approaches to development see as missing in the lives of the poor. In broad terms, development thought has seen the poor as lacking income, the ability to satisfy basic needs, or the capabilities to lead a fully human life. In this chapter, we consider each of these possibilities in turn.

Growth and income

An emphasis on improving outcomes in developing countries by fostering economic growth can follow from neoclassical economics. The neoclassical approach takes as its building blocks information on preferences, endowments, and technology (Debreu 1959). In order for individual welfare to improve, given that preferences are held fixed by assumption, endowments need to increase or technology needs to develop. The emphasis on technological change is consistent with a focus on industrialization. And the idea of increasing endowments is also consistent with growth. Endowments, namely goods and services that individuals have access to for consumption and production purposes, would increase with growth and are themselves inputs for growth. Some of these services can be productive, such as those provided by labor or capital. From this point of view, we can also see why there might be a specific emphasis on increasing the productivity of labor. Hence, there is a neoclassical emphasis on human capital, the idea that through education and other means, workers will invest in their own productive capacity.

We speak about the poor as if we know who they are. We speak, for example, as if the arbitrary definitions used by government agencies to determine eligibility for their programs tell us who is poor and who is not. If we know who are the poor, the problem is what, if anything, to do about them. For some, knowing what to do about poverty means becoming an advocate for the poor, or for what their interests are imagined to be. Then, the problem becomes one of representation of interests, and possibly of the struggle on behalf of those interests against the interests of those who are not poor and whose interests might be opposed to the interests of the poor.

Sometimes we speak about poverty as if it were defined by wealth. The poor are those who do not have enough wealth. This is the approach taken by Adam Smith in the first paragraphs of The Wealth of Nations, where he defines the problem of political economy as the problem of wealth and poverty. When we speak this way, poverty often becomes a relative matter; the more wealth on average in our society, the more wealth we need to avoid being poor. This way of thinking about poverty makes it an implication of inequality, which, for some, makes poverty a problem of injustice. This follows if we convince ourselves that those who have less (and therefore are poor) do so because others have more.

Introduction

In Chapter 5, we considered the importance of the ideas of will, self, and identity. We suggest that the idea of will links what we do in the world to a creative act originating in the mind, which is the activity of imagining a world, or of conceiving an idea of a world, as it might be. The link between will and imaginative construction makes creativity a central element in our conception of work and its relation to freedom. We turn now to a fuller discussion of creativity so that its implications for work and poverty will become clearer.

A natural point of departure for doing so might lie in the common quality of work and creativity, which is that they are meant to produce something. Indeed, the term creativity is simply an extension of the term “to create”, which is something we imagine that working will also accomplish, if not always in the same sense. Yet, even though the two activities are linked in this way, we will begin not with the production of something, but with the prior mental act, which is the conception of what might be produced. Creativity begins not in the hands but in the mind, which means that all creativity in conduct, including creativity in work, begins with creative thinking, or at least with the creative mental process.

Thinking without presuppositions

Creativity in thinking refers to that quality of thinking that takes it out of already known channels.

A commonly stated motivation for economic policy is to benefit people's welfare, happiness, or satisfaction. We want to promote particular policies because of their beneficial impact on people's lives. Yet central aspects of conventional economic method seem to prejudge what makes people's lives go well. In the neoclassical conception, individuals choose goods and services to maximize utility subject to an income constraint, where income derives primarily from the sale of labor. Thus the goal of economic activity is consumption, which leads to higher utility. Consumption is constrained by income, so income and utility or satisfaction should be clearly related. Labor, on the other hand, is avoided, since it enters negatively into the utility function. Labor and leisure relate as negative to positive, the amount of work depending on a tradeoff between labor and leisure that is affected by the wage. Thus it is assumed that what makes life go well is income and consumption; what is to be avoided is labor. The amount of work performed depends on the amount of disutility that must be endured to derive income from the sale of labor. To the extent we want to maximize welfare, we would want to reduce work and increase income and consumption.

With this answer to the question of what makes life go well, we also have a solution to the problem of defining and alleviating poverty.

Around the time economics as a coherent body of thought was emerging, there was a change in the perception of the poor. This came near the end of a long development. R. H. Tawney describes this change as a shift between the medieval “conception of society as a community of unequal classes with varying functions, organized for a common end” and the modern idea of society “as a mechanism adjusting through the play of economic motives to the supply of economic needs” (1962: 13).

It is possible to argue against the simplicity of Tawney's picture. The chasm may not have been as wide as he imagined or its beginning and ending points located exactly as he stated. Nevertheless, as Gertrude Himmelfarb suggests, to deny the gap “entirely is, in a sense to affirm it.” The claim that society is and always was nothing more than the sum of the strivings of individuals in the material world, that the economy is and was independent from and never subjugated to other motives and standards, is a “peculiarly modern way of thinking, patently at variance with the beliefs most people lived with for most of history” (Himmelfarb 1983: 23–24).

Tawney found the origin of this change in thinking in the sixteenth century with the spread of commercial agriculture. It continued and hastened with the spread of industrial activity after that time. He located the new ethic in the teachings of Puritanism, which diverged sharply in many respects from medieval beliefs.

Work

In a setting where the classical economist's notion of subsistence applies, to be poor means to be unable to lead a life appropriate to a defined social position. Occupying such a position carries the meaning of existing for others, specifically for the community. If we use the term poverty to characterize those who lack something vital for living, in this setting poverty refers to the lack of a vital connection to the community. The poor are those who have been excluded from the community, or they are those whose community has somehow failed.

As we have suggested, this idea becomes difficult to apply where we deal not with members of a community, but with individuals, not with need defined by social position, but with individual need. Here, if poverty refers to a lack, it cannot be the older connection with the community that has been lost. Rather than referring to the failure of the connection with community, poverty now refers to a failure in the shaping or maintaining of an individual identity. While this identity may incorporate attachment to a group, this attachment is chosen rather than ascribed, and the individual seeks the group not to find an identity, but to express and realize it.

Associated with individual identity are a set of appropriate beings and doings. Focusing for the moment on doings, we can consider poverty the inability to make what we do in life an expression of our individual identity.

Definition and measurement of poverty

Our conception of poverty applies to a society committed to the ideal of freedom. Freedom means that individuals are able to determine the sorts of lives they lead rather than having their lives determined for them. When individuals are free in this sense, it is not known in advance what sort of lives they will have or what those lives will require. Then, when we try to define poverty, we cannot mean a lack of a predetermined set of goods or income. Ways of thinking that define poverty as a lack of subsistence goods or of goods that will suffice to address basic needs falter where needs are not predetermined.

Thus, attempts to apply these notions to modern societies characterized by rapid transformation of needs, and by a breakdown of the hold of group norms on the shape of individual lives, are bound to fail. We see this failure in two broad areas. The first is the effort to define poverty by specifying a level of income separating the poor from the non-poor, as is done in the United States and has been tried elsewhere. The problem of freezing what is a fluid set of needs is seen in the crude method of coming up with a minimal food budget and multiplying by three. But even where the exact method differs, the need to revise repeatedly and fundamentally the method to calculate poverty lines shows the difficulties in the approach.

Introduction

In this chapter, we explore the meaning work has for the individual. This meaning is expressed in the individual's emotional investment in work. Our emotions mark the significance objects, activities, and persons have for us. The importance of emotions lies in the way they provide the individual with “an orientation toward the world,” a “framework through which the world is viewed” (Lear 1990: 51–52). This orientation is not, however, of the sort provided by a map or a compass. The difference lies both in the nature of the space we find ourselves in, and in the nature of the orientation we need within it. The space in which our emotions orient us, unlike the physical space of the map or compass, is the interpersonal space of relatedness with others. Furthermore, maps and compasses offer a sense of position in space, whereas emotions invest our position in space with its significance. Our emotions tell us what matters and what does not; and they tell us how it matters, especially whether it is good for us or poses a danger to our well-being. The emotional orientation is subject to distortion and the guidance it provides is not always accurate. It is, nonetheless, vital to any study that concerns itself with the meaningful orientation of the individual in the space of interaction and social organization.

What is the essential thing that we lack when we are poor? Answers to this question often refer to a set of goods, basic needs, or a minimum level of income. Despite their differences, these concepts all connect to a long-standing tradition of thinking in political economy that emphasizes the idea of subsistence. The idea of poverty as the lack of subsistence has played a central role in political economy since the first pages of the Wealth of Nations, where Adam Smith distinguishes between what he calls the civilized and savage states of man on the basis of the “abundance or scantiness” of the supply of the “necessities and conveniences of life” annually consumed.

However straightforward we might imagine this idea to be, even for the classical economists it turned out to involve complexities. Thus, we find the classical theorists using the term subsistence in two significantly different senses (see Levine 1998: ch. 1). According to the first, subsistence refers to needs associated with maintaining the physical integrity of the human organism, natural needs of human beings considered part of a natural order. According to the second, subsistence refers to needs associated with a culturally and historically determined way of life. The first account makes poverty a threat to the organism's physical survival; the second makes it a threat to its cultural survival. The two threats need not, of course, be entirely separate matters.

In this chapter, I turn to the model's expectations for the behavior of non-elites. The central expectation to be tested is that people will vote for candidates from their own tribes in one-party elections and for parties whose leaders belong to their language groups in multi-party elections. As in Chapter 7, I identify and test a range of observable implications of the model using a variety of data sources and analytical techniques.

The chapter is divided into three sections. In the first, I estimate and compare rates of tribal voting in one-party and multi-party elections. These analyses demonstrate that, while tribal identities are not the only motivation for voters' choices in either type of contest, Zambian voters nonetheless vote along tribal lines at measurably higher rates in one-party elections than in multi-party ones. In the second section, I focus exclusively on voting patterns in multi-party elections. First I present evidence to support the central assumption in the model that voters put more emphasis on candidates' party affiliations than on their individual backgrounds. Then I show that this emphasis on candidates' party affiliations leads voters to allocate their support on language group lines.

In the third section, I test the model's implications in a more fine-grained way through a pair of controlled experiments. The first compares the performance across elections of candidates that ran in the same constituencies in back-to-back contests.

This chapter develops and analyzes statistically a model of economic development that is consistent with the description of the changes in the Polish economy presented in the previous chapter. This model draws heavily on the arguments of Joseph Schumpeter ([1911] 1934) and later works of organizational theorists in sociology and economists in industrial organizations. Schumpeter's proposition is that economic growth is the “new combination” of materials and processes to create new products, production methods, markets, raw materials, or organizations: he also says these “new combinations are, as a rule, embodied, as it were, in new firms which generally do not arise out of the old ones but start producing beside them” (Schumpeter, 1934, pp. 65–66). The emphasis is on new firm creation, survival, and growth as a means for transforming and expanding economic activity rather than on the transformation and growth of existing enterprises. In fact, the new economic organizations displace and replace the older, outmoded ones – what Schumpeter and others refer to as creative destruction. The key variables of birth, survival, and growth of new firms constitute the entrepreneurial process.

MODELING NEW-FIRM CREATION, SURVIVAL, AND GROWTH

In our simple model of economic evolution, there are three central variables: the creation of new firms, the survival rates of these firms, and the growth rates of the surviving firms. This emphasis on these variables as a means for transforming and expanding economic activity is the focus of work in organizational ecology.