Redefining Poverty as Risk and Vulnerability: shifting strategies of liberal economic governance

Abstract

The existence of global poverty poses a dilemma for liberal economic governance. Its persistence is an irritant to expert assertions that things will get better soon, making it necessary to develop new theories about the causes and nature of poverty and new strategies for managing and reducing it. This paper examines the most recent shift in how the World Bank and other organisations conceptualise and manage poverty, by beginning to view it through the lenses of social risk and vulnerability. The paper examines the evolution in how the Bank has historically sought to contend with the problem of poverty, and then considers the various expert debates and bureaucratic negotiations that shaped how this new conception of poverty as risk and vulnerability came to be institutionalised. Finally, I consider the implications of this shift for how the problem of poverty is governed, suggesting that it involves a much more dynamic ontology of poverty and requires the use of a more proactive set of techniques. While this more active intervention requires a more present and engaged state than was evident in the structural adjustment era, its role nonetheless remains constrained by the liberal preoccupation with limiting governmental power.

Notes

1. his article is part of a larger book project on the transformation of global economic governance, entitled The Rise of Provisional Governance? The Politics of Failure and the Transformation of Global Development Finance, forthcoming with Cambridge University Press in 2013. An earlier version of the article was presented at the workshop on ‘Public/Private Interaction and the Transformation of Global Governance’, held at the University of Ottawa in May 2009. I would like to thank the participants in that workshop for their feedback on the earlier draft, particularly Alexandra Gheciu. I also benefited from some excellent research assistance from Marie Langevin and Kailey Cannon in writing this article. The article was researched and written with the financial support of the Social Sciences and Humanities Research Council of Canada. DL Blaney, Savage Economics: Wealth, Poverty, and the Temporal Walls of Capitalism, London: Routledge, 2010.

2. A Escobar, Encountering Development: The Making and Unmaking of the Third World, Princeton, NJ: Princeton University Press, 1995, p 23; and W Sachs, ‘The archaeology of the development idea’, Intraculture, 23(4), 1990, p 9.

3. M Foucault, Résumés des Cours, Paris: Collège de France, 1989, p 111; and Foucault, Naissance de la Biopolitique: Cours au Collège de France, 1978–79, Paris: Seuil, 2004, pp 10–14 [author’s translation].

4. Foucault, Naissance de la Biopolitique, p 13. I provide a fuller examination of the peculiar role of political economy in creating exceptions to the exercise of sovereign power in J Best, ‘Why the economy is often an exception to politics as usual’, Theory, Culture & Society, 24(4), 2007, pp 83–105.

5. F Bourguignon, The Growth Elasticity of Poverty Reduction: Explaining Heterogeneity across Countries and Time Periods, Delta Working Paper, 2002–2003, Paris: 2002; and M Ravallion, Pro-Poor Growth: A Primer, World Bank Policy Research Working Paper 3242, Washington, DC: World Bank, 2004.

6. World Bank, Social Protection Sector Strategy: From Safety Net to Springboard, Washington, DC: World Bank, 2001; Department for International Development (dfid), Pro-Poor Growth Briefing Note 2, London: dfid 2004; oecd Promoting Pro-Poor Growth: Policy Statement, Paris: oecd 2006; and RS Wheeler & L Haddad, Reconciling Different Concepts of Risk and Vulnerability: A Review of Donor Documents, Brighton: Institute of Development Studies, 2005.

7. World Bank, Social Protection Sector Strategy.

8. S Collier, ‘Topologies of power: Foucault’s analysis of political government beyond “governmentality”’, Theory, Culture & Society, 26(6), 2009, pp 78–108.

9. D Kapur, JP Lewis & R Webb, The World Bank: Its First Half Century, Vol 1, Washington, DC: Brookings Institution Press, 1997, p 148.

10. M Finnemore, National Interests in International Society, Ithaca, NY: Cornell University Press, 1996; Kapur et al, The World Bank, pp 148, 217; and R McNamara, The Assault on World Poverty: Problems of Rural Development, Education and Health, Washington, DC: World Bank, 1975.

11. Moving funds out the door is the single most important objective at the World Bank, one that can easily distort other goals.

12. R Ayers, Banking on the Poor: The World Bank and World Poverty, Cambridge, MA: Mit Press.

13. Ibid; and Kapur et al, The World Bank, pp 265–267.

14. Kapur et al, The World Bank, p 23. There nonetheless remained a core group of Bank staff committed to advancing the social policy agenda, although it did not have the opportunity to exercise much influence again until the late 1990s. See A Vetterlein, ‘Economic growth, poverty reduction, and the role of social policies: the evolution of the World Bank’s social development approach’, Global Governance, 13, 2007, pp 513–533; and C Weaver, Hypocrisy Trap: The World Bank and the Poverty of Reform, Princeton, NJ: Princeton University Press, 2008.

15. J Williamson, ‘What Washington means by policy reform’, in Williamson (ed), Latin American Adjustment: How Much has Happened?, Washington, DC: Institute for International Economics, 1990, pp 5–20.

16. Structural adjustment policies typically sought to open countries up to international trade and investment, liberalise financial flows, reduce inflation, make labour markets more flexible, reduce the size of the public sector, privatise government-owned companies and remove government subsidies.

17. Kapur et al, The World Bank, p 356.

18. World Bank, World Development Report 1990/91: Poverty, Washington, DC: World Bank, 1990, p 3.

19. unicef Adjustment with a Human Face, New York: United Nations, 1987.

20. Phone interview with former senior World Bank staff member, February 2012.

21. World Bank, Poverty, p 3.

22. Ibid, pp 56–57, 62, 63–64, 90, 100–101.

23. Vetterlein, ‘Economic growth, poverty reduction, and the role of social policies’.

24. United Nations Development Programme (undp), Human Development Report, New York: undp, 1999, p 99.

25. J Best, ‘Legitimacy dilemmas: the IMF’s pursuit of country ownership’, Third World Quarterly, 28(3), 2007, pp 469–488.

26. Although, as James Ferguson and Timothy Mitchell have convincingly argued, the ‘success’ of liberal economic theory can often coexist quite happily with what appear to be abject failures in practice, there are also cases in which these problems become defined as a particular kind of failure—thus precipitating new debates on theory and policy. See J Ferguson, The Anti-politics Machine: ‘Development’, Depoliticization, and Bureaucratic Power in Lesotho, Cambridge: Cambridge University Press, 1990; and T Mitchell, ‘The properties of the markets’, in D MacKenzie, F Muniesa & L Siu (eds), Do Economists make Markets? On the Performativity of Economics, Princeton, NJ: Princeton University Press, 2007, pp 244–275.

27. World Bank, Social Risk Management: The World Bank’s Approach to Social Protection in a Globalizing World, Washington, DC: World Bank, 2003, p 2; and World Bank, Social Protection and Labor at the World Bank, 2000–2008, Washington, DC: World Bank, 2009, pp 1, 12.

28. A Barry, ‘The anti-politics economy’, Economy and Society, 31(2), 2002, pp 268–284; and M Callon, ‘Introduction: the embeddedness of economic markets in economics’, in Callon (ed), The Law of the Markets, Oxford: Blackwell, 1998, pp 1–57.

29. Phone interview with former senior World Bank staff member, February 2012. See also Bourguignon, The Growth Elasticity of Poverty Reduction; D Rodrik, ‘Growth versus poverty reduction: a hollow debate’, Finance and Development, 37(4), 2000; and J Stiglitz, ‘Towards a new paradigm for development: strategies, policies and processes’, Prebisch Lecture, Geneva, 1998.

30. Bourgignon, The Growth Elasticity of Poverty Reduction. It is worth noting that, while Bourgignon was well respected within the Bank well before his term as head of the Research Department, his emphasis on equality only came to be widely accepted in the mid- to late 2000s.

31. D Dollar & A Kraay, Growth is Good for the Poor, Working Paper 2587, Washington, DC: World Bank, 2001.

32. P Masson, Globalization: Facts and Figures, Policy Discussion Paper 01/04, Washington, DC: IMF, 2001; and R Wade, ‘Showdown at the World Bank’, New Left Review, 7, 2001, pp 124–137.

33. Ravallion, Pro-Poor Growth.

34. A Sen, Poverty and Famines: An Essay on Entitlement and Deprivation, Oxford: Clarendon, 1983.

35. M Prowse, Towards a Clearer Understanding of ‘Vulnerability’ in Relation to Chronic Poverty, Chronic Poverty Research Centre (cprc) Working Paper 24, Manchester: cprc, 2003.

36. J Dreze & A Sen, Hunger and Public Action, Oxford: Oxford University Press, 1991.

37. F Ellis, P White, P Lloyd-Sherlock, V Chhotray & J Seeley, Social Protection Research Scoping Study, East Anglia, UK: Governance and Social Development Resource Centre, 2008; and N Kabeer, Scoping Study on Social Protection: Evidence on Impacts and Future Research Directions, London: dfid, 2009.

38. R Coase, ‘The nature of the firm’, Economica, 4(16), 1937, pp 386–405; and Coase, ‘The problem of social cost’, Journal of Law and Economics, 3, 1960, pp 1–44.

39. Classic institutionalist texts include D North, Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press, 1990; and O Williamson, The Economic Institutions of Capitalism, New York: Free Press, 1985. North, in particular, is cited in a number of Bank documents as an inspiration for governance policy, particularly from the 2002 wdr on institutions onwards, in which the first footnote cites North, Williamson and Coase on institutions. See World Bank, World Development Report 2002: Building Institutions for Markets, Washington, DC: World Bank, 2002, p 5. Joseph Stiglitz’s Nobel Prize winning work on asymmetric information is also linked to the insights of institutionalist economics. J Stiglitz, ‘Monopoly, nonlinear pricing, and imperfect information: the insurance market’, Review of Economic Studies, 44, 1977, pp 407–430.

40. The term ‘stakeholder’ refers to the countries that are members in the World Bank and which influence its policies through their directors (who meet twice a year) and, more importantly, their executive directors (a much smaller group of representatives who meet throughout the year to decide on Bank affairs). Not surprisingly some stakeholders, particularly the USA and the European countries, are more influential than others.

41. Interviews with senior World Bank staff, June 2010 and May 2011; and World Bank, Social Risk Management, p 4.

42. R Holzmann, L Sherburne-Benz & E Tesliuc, Social Risk Management: The World Bank’s Approach to Social Protection in a Globalizing World, Washington, DC: World Bank, 2003, p 1.

43. Interviews with senior World Bank staff, June 2010, May 2011 and February 2012.

44. Phone interview with Robert Holzmann, former Director of Social Protection, 15 June 2010.

45. Ibid; and interview with former senior World Bank staff member, February 2012. As Holzmann himself noted, the attitude to inequality has shifted since then, and ‘now you can openly talk about equity’ at the Bank.

46. Phone interview with former senior World Bank staff member, February 2012.

47. Phone interview with Holzmann, 15 June 2010.

48. The prem and Research Departments tended to support one another in their scepticism about the social risk framework, in opposition to the Social Protection unit. Interviews with senior World Bank staff members, June 2010 and May 2011.

49. Wade, ‘Showdown at the World Bank’; and Wade, ‘US hegemony and the World Bank: the fight over people and ideas’, Review of International Political Economy, 9(2), 2002, pp 215–243.

50. Wade, ‘Showdown at the World Bank’, pp 133–134.

51. Ibid, p 132.

52. Interview with Holzmann, 15 June 2010; and phone interview with former senior World Bank staff member, February 2012.

53. Interview with Gordon Betcherman, former lead economist in the Social Protection Unit, World Bank, February 2012.

54. World Bank, World Development Report 2000/01: Attacking Poverty, Washington, DC; World Bank, 2001, ch 4. This section was moved to the beginning in later drafts of the report after pressure from conservative economists within the Bank, as well as from the US Treasury. See Wade, ‘Showdown at the World Bank’.

55. World Bank, Social Protection Sector Strategy.

56. World Bank, Attacking Poverty, p 19.

57. Ibid, pp 136–141, 12, 23.

58. World Bank, Social Protection Sector Strategy, ch 2; and World Bank, Attacking Poverty, pp 141–159.

59. World Bank, Poverty, pp 34–35.

60. Ibid, p 26.

61. World Bank, Attacking Poverty, pp 148–150.

62. World Bank, Social Protection and Labor at the World Bank, pp 45–46.

63. Ibid, p 46.

64. World Bank, ‘Building resilience and opportunity: better livelihoods for the 21st century—emerging ideas from the World Bank’s 2012–2022 Social Protection and Labor Strategy’, powerpoint presentation, Washington, DC, 2011; and A Fiszbein & N Schady, Conditional Cash Transfers: Reducing Present and Future Poverty, Washington, DC: World Bank, 2009.

65. World Bank, Attacking Poverty, p 142.

66. Holzmann et al, Social Risk Management, p 9.

67. World Bank, Attacking Poverty, p 139.

68. A special issue of the Journal of Development Studies on ‘Economic Mobility and Poverty Dynamics in Developing Countries’, which has been particularly influential in shaping the thinking of those at the World Bank working on social risk and vulnerability, outlines the main reasons for this shift in measuring poverty. See B Baulch & J Hoddinott, ‘Economic mobility and poverty dynamics in developing countries’, Journal of Development Studies, 36(6), 2000, pp 1–24; and Holzmann et al, Social Risk Management.

69. Holzmann et al, Social Risk Management, p 4.

70. There are clear parallels here with the kinds of processes of active economic citizenship described by Ruth Lister and Nikolas Rose. R Lister, ‘Towards a citizens’ welfare state: the 3 + 2 “R”s of welfare’, Theory, Culture & Society, 18(2–3), 2001, pp 91–111; and N Rose, ‘The death of the social? Re-figuring the territory of government’, Economy & Society, 25(3), 1996, pp 327–356.

71. Fiszbein & Schady, Conditional Cash Transfers, p 10.

72. I Hacking, Historical Ontology, Cambridge, MA: Harvard University Press, 2002, pp 99–114.

73. For a very interesting discussion of this kind of re-articulation of public and private, state and international, in the context of security and development, see R Abrahamsen & M Williams, ‘Security beyond the state: global security assemblages in international politics’, International Political Sociology, 3, 2009, pp 1–17.

74. World Bank, Attacking Poverty, p 86.

75. Holzmann et al, Social Risk Management, p 9.

76. I have provided a much more thorough analysis of the ‘demand side’ of good governance in J Best, ‘The “demand side” of governance: the return of the public in World Bank policy’, in J Best & A Gheciu (eds), The Return of the Public (but Not As We Knew It): Changing Practices of Global Governance, Cambridge: Cambridge University Press, forthcoming, 2013.

77. In using the term ‘productive’, I am borrowing Barnett and Duvall’s very useful term, while at the same time defining it more broadly than they do, including practices as well as discourse. In many ways this is a return to the richer conception of discourse that Foucault himself used—although with more attention to its concrete manifestations. See M Barnett & R Duvall, ‘Power in global governance’, in Barnett & Duvall (eds), Power in Global Governance, Cambridge: Cambridge University Press, 2005; M Foucault, The Order of Things: An Archaeology of the Human Sciences, New York: Vintage Books, 1970; and Foucault, ‘Two lectures’, in C Gordon (ed), Power/Knowledge: Selected Interviews and Other Writings, 1972–1977, Brighton: Harvester Press, 1980.

78. M Dean, Governmentality: Power and Rule in Modern Society, Thousand Oaks, CA: Sage, 1999.

79. Interviews with senior World Bank staff, 10 and 15 June 2010, and 17 May 2011.

80. World Bank, Social Protection and Labor, p 138.

81. World Bank, Building Resilience and Opportunity: The World Bank’s Social Protection and Labor Strategy 2012–2022—Concept Note, Washington, DC: World Bank, 2011.

82. I thus follow Mitchell Dean’s conception of risk here, rather than the somewhat more realist conception that one finds in Ulrich Beck’s work. See U Beck, Risk Society: Towards a New Modernity, London: Sage, 1992; Beck, ‘Living in the world risk society’, A Hobhouse Memorial Public Lecture, 15 February 2006, London School of Economics, published in Economy and Society, 35(3), 2006, pp 329–345; and M Dean, ‘Risk, calculable and incalculable’, in D Lupton (ed), Risk and Socioculture Theory: New Directions and Perspectives, Cambridge: Cambridge University Press, 1999.

83. For a discussion of the differences among these kinds of indeterminacy, see J Best, ‘Ambiguity, uncertainty and risk: rethinking indeterminacy’, International Political Sociology, 2(4), 2008, pp 355–374.

84. This is, of course, a particular financial conception of risk and reward, in which greater risks can be accurately measured, priced and rewarded with greater returns. This kind of conception of risk was at the heart of the current financial crisis. See J Best, ‘The limits of financial risk management: or, what we didn’t learn from the Asian financial crisis’, New Political Economy, 15(1), 2010, pp 29–49.

85. I have provided a much more comprehensive discussion of the complex relationship between productive or bio-power and exclusionary or exceptionalist power in Best, ‘Why the economy is often an exception to politics as usual’.

86. A Shepherd, General Review of Current Social Protection Policies and Programmes, London: dfid, 2004.

87. J Farrington, Social Protection and Livelihood Promotion in Agriculture: Towards Operational Guidelines, Paris: oecd–Povnet, 2005; and N Kabeer, K Mumtaz & A Sayeed, ‘Beyond risk management: vulnerability, social protection and citizenship’, Journal of International Development, 22, 2010, pp 1–19.

88. Phone interview with former senior World Bank staff member, February 2012.

89. World Bank, Building Resilience and Opportunity. Similar themes were also addressed at a World Bank consultation session on the concept note for the Social Protection and Labor Strategy, Ottawa, 1 June 2011.