Neoclassical and structural analysis of poverty: winning the ‘Economic Kingdom’ for the poor in Southern Africa

Abstract

In situations characterised by historical injustice in the distribution of economic resources, such as in many southern African ‘settler’ countries, there is a powerful intuitive case that ameliorative and palliative public policy is insufficient to significantly affect poverty reduction. This is because of the dulling effects on growth caused by significant structural inequality in the distribution of resources. However, the proposition that inequality is a problem for poverty reduction is contentious. This article reviews the neoclassical and structuralist literatures on the relationship between growth, inequality and poverty. It argues that the first is inconclusive and, furthermore, can only be so, while the second requires to be made more relevant to the discussions of how redistribution and inequality relate in legitimate policy and practice. The concept of property regimes can help here, within a more contextual understanding of development in practice as not necessarily involving growth and economic progress, but as being subject to periodic phases of ‘de‐development’, or well‐being retrogression. The paper concludes that state‐sponsored redistribution policy has an important role to play in changing underlying property regimes for the benefit of the poor in southern Africa. Inequality does matter, and a consideration of radical, redistributive social change is worth rehabilitating as an efficient means of reducing poverty, particularly in situations of low or fluctuating growth. This consideration, in turn, requires a political acceptance of the legitimacy of a broader role for economic public policy and state action.

Notes

Sarah Bracking is in the Institute for Development Policy and Management, University of Manchester, Harold Hankins Building, Booth Street, West Manchester M13 9QH, UK. Email: [email protected].

See Nederveen Pieterse (2002) and Milanovic (2003) for a comprehensive critique of the neoliberal understanding of income inequality and globalisation.

That is, it employs a relative, rather than absolute frame of reference, which confounds, in itself, their assertion that the incomes of the poor are raised ‘about as much’ as the incomes of the rich (Milanovic, 2003: 670, 681fn); its causal assertion of openness leading to growth is empirically demonstrated as temporally reversed for the key countries of India and China (Rodrik, 2000; Bairoch, 1997; Yotopolos, 1996; Milanovic, 2003: 675–676); and incomes diverge, not converge, in both the period 1870–1913 and from the 1980s to today, the two periods of rapid globalisation historically (Milanovic, 2003: 671). While Dollar and Kraay counter this latter evidence by removing ‘bad’ policy countries from the sample, and leaving ‘good’ liberalisers in, the methodological problems of their selection criteria are manifold. Centrally, they use trade ratios to gdp as the measure of ‘openness’, but this is not in the control of policy makers (Rodrik, 2000). Relatedly, non‐globalisers did not have any choice (Birdsall & Hamoudi, 2002). In an interesting irony for structuralists, Birdsall and Hamoudi argue that ‘Dollar and Kraay have not isolated the benefits of “participating in the global trading system”, but rather the “curse” of primary commodity dependence’ (2002: 5).

Patrimonialism has merits as a theory of state–society relations but, when essentialised, and used badly, it is a pathologising, derogatory, post‐colonial methodology, referring as it does to divergences from Weber's ideal‐type of rational–bureaucratic use of public power, position and resources.

Additional information

Notes on contributors

Sarah Bracking

Sarah Bracking is in the Institute for Development Policy and Management, University of Manchester, Harold Hankins Building, Booth Street, West Manchester M13 9QH, UK. Email: [email protected].