Had I not met Professor Dasgupta, I might have wondered from reading his book whether “Dasgupta” was the name of a large committee or a small research institution. An Inquiry into Well-Being and Destitution is a work of encyclopedic learning and matching ambition. It is not just the title of this book that recalls the beginnings of the modern discipline of economics in Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations. Smith was a moral philosopher, a historian, and a political theorist; The Wealth of Nations is among other things a tract on moral philosophy, social change, and the duties of government as well as what we now call economics. An Inquiry into Well-Being and Destitution, as well as being a contribution to development economics, is among other things a tract on moral philosophy and political theory, on the duties of government in developing countries, and on the connections between economic analysis and such disciplines as the science of nutrition. The bibliography runs to eighty densely packed pages, and anyone who had mastered even a small part of that literature would be a distinguished practitioner of modern economics and well informed about a great deal else.
Professor Dasgupta teaches at Cambridge but wants to be read by many people besides graduate students in economics. He therefore spreads his net wide. He is concerned with the economics of extreme poverty, and has a lot to say about undernourishment as both a cause and an effect of poverty, as well as about the problems of soil erosion, the consequences of poorly defined property rights, the place of women’s education in tackling problems of overpopulation, and the fate of the unemployed worker in India.
Because he is an economist who understands that economics is often reviled for its narrow view of human motivation—reducing all our hopes, wishes, and fears to the pursuit of “rational self-interest”—Professor Dasgupta wants to incorporate a richer understanding of human experience within economic analysis. And since economists are often complained of for trying to apply “Western” techniques of analysis to societies whose economies are built on habit, tradition, and personal ties rather than the fluid and flexible impersonal transactions of the developed marketplace, he tries to show how the economist’s analytical methods illuminate the predicament of landless laborers and villagers facing crop failure in the Indian subcontinent and sub-Saharan Africa. All this is done with an unusual combination of boldness and subtlety.
An Inquiry into Well-Being and Destitution raises many questions. One is why books like this are so rare, and so hard to bring off successfully. I should say at once that to the extent that Professor Dasgupta aims at a general audience, he is not wholly successful. His Inquiry is a difficult book; it is neither pretentious nor willfully obscure, but it is stiff going. Dasgupta packs the mathematical demonstration of his results into “starred” chapters, but he expects a lot from his readers elsewhere. He gives the impression that he dreams in algebra, and one would do well to read him within reach of a good library.
It is in many ways a sad state of affairs that economics has become so technically forbidding that economists and the lay public have lost touch with each other. Keynes, to look no further back, was no mean logician—his first work was a treatise on probability—but he remained a skeptic about the role of mathematics in economic analysis. It is not irrevelant that he was also a powerful polemicist in public affairs. Dasgupta himself thinks that the contemporary divorce between economics and ethics is particularly unfortunate. Economics began as one of the “moral sciences”—the eighteenth-century term for the human sciences. In nineteenth-century Cambridge the “moral sciences” sheltered philosophy, psychology, politics, and economics. John Stuart Mill discussed the problems of the social sciences under the rubric of “the logic of the moral sciences,” and when he wrote his own Principles of Political Economy, he added “with some of their applications to social philosophy” to the title.
In Cambridge, Alfred Marshall separated economics from other social studies at the turn of the century, but the economics faculty still shelters political scientists and sociologists. Oxford has never thought it right to allow undergraduates to study economics divorced from philosophy and politics (save in conjunction with engineering and management); the London School of Economics is properly the “London School of Economics and Political Science.” In the United States, the emancipation of economics from philosophy, history, and sociology took many years. The domination of the “Chicago School” of Hayek and Milton Friedman during the past thirty years is a wry commentary on the economists of the turn-of-the-century Midwest. They practiced Christian economics, institutional and historical economics, and whatever the most apt label might be for the mordantly skeptical social commentary of Thorstein Veblen.
That economics ought to have some direct bearing on ethical issues seems obviously right and obviously wrong. It is obviously right because ethics is concerned with the human search for what does us good; we are constantly trading one good thing for another, trying to get the best possible outcome for ourselves, our families, those to whom we owe duties of various kinds. Economists claim to study rational action. It would be alarming to think that morality had no rational basis.
Yet moral argument is concerned to get people to change their ideas about what is good and bad; economics has no such concern. If Americans become still more frightened of violent crime and buy even more guns, the American Gross National Product will rise; the moralist may complain that the rise in GNP corresponds to no increase in human happiness, but the economist could say that his professional business is only to show how—paradoxically enough—crime can “pay,” not just for crooks, but generally.
This division of labor between economics and ethical commentary is not enough for Partha Dasgupta. One of his purposes—he devotes the first hundred and forty pages of the Inquiry to it—is to clear economics of the charge that it fosters a passive and “consumerist” moral vision. The charge is made not because economists roundly defend consumerism but because they assume that what matters about human beings is their capacity both to experience pleasure and to make choices that will increase pleasure. The idea that human beings are rational “utility-maximizers” suggests a certain passivity in the economist’s idea of the good life, as though a successful life were nothing more than a stream of agreeable sensations. Nobody believes this as a matter of moral conviction; it comes with the discipline, in the way unexamined assumptions usually do. A reductio ad absurdum of such theories of the good life was offered by Robert Nozick in one of the more striking images of his Anarchy, State and Utopia. If what matters is agreeable sensation, he asked, what would be wrong with a world in which we turned out not to be human beings after all, but brains in vats of an appropriate fluid, wired to have nice sensations? What went on in these brains would include deluded beliefs about the world, but so what?
The hideousness of the image provides the answer. Plainly what we mind about includes truth, engagement with the world, and freedom. Like Amartya Sen, who has also attacked economics’ obsession with a passive conception of “welfare,” Dasgupta makes much of the idea that “agency—or freedom—is an indisputable component of the good life. Dasgupta argues not only for the importance of civil liberties, and the “negative” freedoms of liberal, constitutional states, but also for the importance of “positive” liberty—capacities and abilities, the resources people need to make something of their own lives.
Among the payoffs of broadening the range of economic analysis to include these things some are obvious enough. The passive and acquiescent peasants and landless laborers in underdeveloped countries may appear more or less content with their lot. But they are poor in resources; they lack information, energy, access to employment, credit, materials, and markets. More interestingly, perhaps, concentrating on positive liberty underlines for the analyst the importance of the distribution of power within poor households and shifts our gaze from the male head of the family to the capacities and resources of women and children. As we have recently begun to learn, it is there that we have to look for answers to problems of overpopulation and environmental degradation. Simple measures of income per head give us a rough indication of the well-being of families in richer societies, but they tell the development economist very much less than she or he needs to know.
If one of Professor Dasgupta’s purposes is to reconnect economics with moral common sense, another is to show that some of the sacrifices that have often been thought necessary for the sake of economic development are not necessary, and that societies that have made them have not profited from them. The most glaring is the sacrifice of civil liberties and the rule of law for the sake of economic growth. A comparison often made is between India and China; in India, democracy has continued to work during the fifty years since independence; famine has been avoided, but economic growth has been slow, and the threat of over-population and environmental disaster increasingly hangs over the country. In China, there have been several man-made catastrophes during the past half-century costing millions of lives, but economic growth has recently been rapid and population growth is not wholly out of control.
Drawing on some not very elaborate statistical data, Dasgupta shows that even if constitutional government and the rule of law are not indispensable to economic development—the nineteenth-century liberal’s optimistic view—it is clear that they do not retard it. The Indian balance sheet does not look at all bad alongside China’s, even if we allow only a small weight to the importance of civil liberties. The real disasters in the developing world have been in sub-Saharan Africa, where civil liberties have been almost nonexistent and where many countries have experienced substantial negative growth in income per head. Reading John Rawls’s Theory of Justice, many students have drawn from his discussion of civil liberties and material well-being the impression that political repression is likely to help economic growth. But it isn’t so. Something that Amartya Sen seems to have been the first to notice must give us particular pause. In no country with a modicum of political liberty and a free press has there been a famine such as those that killed millions in Bengal in 1943, and more recently in Ethiopia and Somalia.
Moreover, any assessment of how well people are living must include the freedoms they enjoy and the things their income is spent on. Among “middle-income” societies, Dasgupta points out, the citizens of Costa Rica have rather less income per person than those of Iraq, and only two thirds the income of those of Iran. Happily for them, they spend none of it on an army, while Iraq and Iran have wasted vast amounts of money fighting each other, a folly that Iraq compounded by provoking a war with the United States. Unsurprisingly, life expectancy in Costa Rica is eleven years greater than in Iraq and Iran and infant mortality less than one third as great.
The economics of very poor societies is extremely difficult to understand for a great many reasons. The vast cultural divide between most of the observers and most of the observed raises the obvious question whether the behavior of poor villagers in the third world is governed by norms and values that outsiders may find hard to comprehend. If that is the case, how can they alter it in any reasonable fashion? Dasgupta acknowledges the importance of such considerations. As he observes, the norms that govern local behavior “can be exploitative, or just plain silly.” For instance,
In rural communities in the foothills of the Himalayas in the state of Uttar Pradesh in India, women give birth to their children in cowsheds and remain there for one to two weeks. They aren’t permitted to return to their homes any earlier because they are regarded as impure. The [Indian] Centre for Science and Environment…reports that village folk in those parts believe cowdung and urine to be good disinfectants. They also believe that the mother and child are protected by the cows from evil spirits. Infant and maternal mortality rates are significantly higher on account of this practice, cowsheds being notoriously unhygienic.
One benefit of educating women is that they cease to believe in such practices.
Sometimes what is at issue is the decay of ethical and social standards that once served a useful purpose. One of the sadder instances is the erosion of the self-restraint that once averted “the tragedy of the commons.” It is an axiom in economics that a resource that is owned in common, or available for use without a rent reflecting that use, will be over-exploited. The North Atlantic fisheries are a good example. What any one boat does makes no decisive difference to the stocks of fish, so each fisherman feels he has every reason to catch all he can. Restraint only lowers his own catch without preserving total stocks to an appreciable extent. On that basis, you’d expect common land always to be over-grazed; if other people put all the cows they can on the land, I’d better do so too. The interesting fact, however, is not that there is extensive over-grazing in the third world, but that until recently there was little. Partly, this reflected less pressure from population growth than is now the case. But it also reflected the ability of village communities to enforce norms of self-restraint that protected the continued use of common property.
To be concerned with the place of norms and values in economic life raises wider questions than most economists wish to deal with; but these concerns are relevant to the conditions not only of the very poor but of many others as well.
Once Dasgupta concentrates on the lives of the very poorest people, the consequences for economic analysis are intriguing. In advanced societies, there is a clear line between consumption and savings; savings are the result of consumption forgone today for the sake of greater consumption tomorrow. In really poor households, however, consumption is itself a form of investment; when poor people eat better, they fare better and produce more. Their health and strength improve.
This is not a small point; the conventional wisdom for forty years after World War II was that rapid industrialization was the way forward and high rates of savings were needed to support it. It was a view that had the imprimatur of the Nobel Prize-winner W. A. Lewis. But it was wrong. Diverting resources away from the consumption of poor people has been a bad bargain; their productivity has been so low that sub-Saharan Africa has invested something like 18 percent of GNP for a growth rate of 1.4 percent. The moral, as Dasgupta puts it, is that “increases in the consumption of basic needs are a form of investment with high returns in poor countries.”
This conclusion raises the question of the role of government in the economic development of the poorest societies. In recent years skeptics have argued both that the overseas aid given by the developed world to the underdeveloped world has been wasted and that the governments of underdeveloped countries have at best pursued foolish policies and at worst predatory ones. Others have pointed to the success of Japan, Taiwan, Korea, and Singapore as evidence that governments can foster industry, reform agriculture, and create an energetic, ambitious, disciplined work force into the bargain. Professor Dasgupta takes a careful but not an equivocal middle position. He is no enthusiast for wholesale intervention. Governments that try to support particular industries in a way the market will not—trying to “spot winners”—will run unjustified risks. Moreover, they are too likely to throw good money after bad and prop up ailing enterprises long after they should have been allowed to expire.
There are also problems of “moral hazard,” which are familiar in developed countries’ welfare systems but are particularly acute in countries that cannot afford to waste resources. “Moral hazard”arises wherever a policy gives people an incentive to behave in a way that does economic or social damage. Thus broadly applied food subsidies that lower food prices reduce the incentive to work, while the food may also end up disproportionately in the hands of the better-off. There is evidence that this has happened in Egypt. If food is handed out cheaply, entrepreneurs will be tempted to buy it and resell it. If free public health care is as good in quality as private fee-paid health care, the rich benefit needlessly, and too much is spent on health care for the good it does. People who do not need the benefits being offered will be able to exploit the system. In poor countries, moreover, the state is often seen as an alien force so that exploiting whatever loopholes it leaves is seen as legitimate resistance.
The response cannot be to throw up our hands. The Indian government, as Dasgupta writes, has at various times dealt with the problem of food subsidies by subsidizing only coarse grains; the rich won’t eat them, so the poor get all the benefit. If health care is supplied in overcrowded clinics in the slums or in poor villages, the long wait for treatment is enough of a deterrent to those who can afford private medicine. If we worry that the availability of free food will encourage the rural poor to withdraw from the labor market, we can, Dasgupta writes, provide free food only during the periods when there is almost no employment to be had. One of Dasgupta’s most original thoughts is that poor countries need “liberalization” but not so much in the sense that they need to be freed from government controls. Instead their people need to acquire a sharper sense of the distinction between private interest and public interest.
Like other recent writers on development, Dasgupta looks to a change in the balance of power inside the poor household to do some good. Prosperity and a fairer deal for women reinforce each other. Much has recently been made of the correlation between increased education for women and the control of fertility. The one thing that appears to be guaranteed to reduce the birthrate in most poor societies is educating women. Dasgupta mentions a qualification to this. Either independently or in conjunction with more education, a woman’s ability to work outside the household has a powerful effect on fertility.* Here we can see a virtuous circle in operation. Where a woman can work, the household does not need so many children to keep its members alive; conversely, the cost (in income forgone) of pregnancy, child-birth, and child rearing is increased.
In the absence of female employment we can, as Dasgupta often and gloomily emphasizes, see at work a vicious circle. There is, he points out, an interaction between poverty, over-population, and environmental decay that appears to have no self-correcting features. Really poor families certainly think of children as a provision against old age and as a form of investment, which is one reason why boys are so valued; but children may be even more important as an immediate source of labor: in rural households in the Himalaya foothills, “children in the age range 10–15 years work one-and-a-half times the number of hours adult males do, their tasks consisting of collecting fuelwood, dung, and fodder, grazing domestic animals, performing household chores, and marketing.”Such families are caught in a bind: their productivity is very low so they need all the hands they can muster. If all families have many children, the environment is destroyed, so more children are needed to gather fuel and fodder, to graze animals, and so on. Since fertility only diminishes when human beings are very close to starving to death, the prospect of this downward spiral curing itself is not good.
Dasgupta is a calm critic, but he is something less than friendly to writers like J.L. Simon who have argued that a rising population is good for economic growth even in poor countries. Most poor women want access to birth control; but even if they have that access, they may be overwhelmed by the family’s need for labor. Finding ways of educating girls, and employing women, works in favor of controlling fertility since it can relieve the pressure to have more children by altering the economic demands of the family.
Dasgupta has much to say about another matter in which government policy can make a difference—agrarian reform. “Land reform,”he shows, has often been a disaster, because just expropriating the holdings of large landowners has rarely increased agricultural output. What is needed is family farms; in poor countries they are more productive than larger farms, and they provide the most direct ways to produce the food that poor villagers need. Equality as such is not a goal; we have seen how easy it is to turn privately owned estates into collective farms and end up with equality of starvation.
Families need to own their farms, or to have the sort of control over them that is equivalent to ownership. Only then can they get credit, and only then will they have an incentive to treat their resources intelligently. It takes governments to establish a legal system that will protect their rights, and it takes intelligent politics to put in place a scheme of reform that provides adequate compensation for those who lose land when family farms are created. All of which brings us back once more to the centrality of civil liberties and open government. Unless there is a free press and mechanisms of political responsibility, policies cannot be evaluated and improved, and private squalor is merely reinforced with public squalor.
There is much in Professor Dasgupta’s Inquiry that I have not mentioned. His passing remarks on how many recalcitrant facts a theory can decently leave unexplained would provoke a class in the philosophy of science. His discussion of recent ideas about the duties one generation owes to the next would provoke another. I suspect that there are more economists who can appreciate Dasgupta’s moral philosophy than philosophers who can appreciate his economics, but both will surely benefit from reading his arguments. In spite of the grimness of much of his subject matter, the book yields the pleasure that only a very clever thinker can give his readers. I wish that Dasgupta would now bend his talents to the politically much needed task of giving the non-specialist reader an idea of why the path of economic development has been so painfully slow for so much of the world, and why there is reason to think we can do better.
May 11, 1995