Poverty and Development: Economics and Reality

Sixty years ago, Lionel Robbins wrote that economics studies human behavior as a relationship between ends and scarce means. According to Robbins, economics is concerned with the way resources are allocated among alternative uses to satisfy human wants. At least since 1932 when Robbins wrote, economists have distinguished positive economic analyses from normative judgments, and mainstream economists have aspired to positive and value-free, hence objective, economic analysis. Robbins spared no effort to explain clearly that, in his view, economic theory was neutral between ends. Fifty years ago, Thomas F. Divine, the first president of this association wrote: ... neither can one trust the economic forces, if left to themselves, necessarily to work for the best interests of society. Those forces are indifferent to all purposes. They may work for the weal or the woe of society according to the direction which they take, or are given. It is the practical contribution of the economist to point out how these forces may be yoked to the social car, and where they must be restrained lest they work social havoc. Herein lies the contribution of the economist to the advancement of society (Divine, 1942, p. 11). In the midst of the war effort under way in 1942, few people were aware of or gave any thought to the poverty of masses in what we came to know later as the Third World. The terms economic growth and economic development have often been used interchangeably.(1) Growth implying an increase in national income, regular progress and rising prosperity was a preoccupation of classical economists. The economic misery of masses in the newly sovereign, economically less developed countries born in the aftermath of the dissolution of the colonial power structure following World War II became a fashionable field of study during the 1950s. In 1967, twenty-five years after the birth of this association, Divine wrote: ... I believe that it |our association~ faces an even greater challenge in the future. There are three areas in which our Association, is in my opinion, particularly well-qualified to make an important contribution to economic and social policy. These are: 1) economic development, particularly in the cases of backward nations that are still struggling through the lower phases of economic growth; 2) the cure of poverty, by which I mean not only the short-run alleviation of its incidence, but the removal in the long-run of the causes of poverty -- which is even more important; 3) the solution of the problems in the field of economic and business ethics (Divine, 1967, pp. 5-6). In the light of these observations by the chief architect and a co-founder of this association, it is surprising and disheartening to note that a recent survey, by William R. Waters, of the published research of the members of this association contained no references, certainly no significant citations, on the subject of poverty or of economic development. Human beings are central in development. Indeed, they provide the natural dynamic of economic and social processes. Members of this Association, which for many years was called the Catholic Economic Association, are probably familiar with the following two quotations, one from each of two recent Encyclical Letters: |1~ One must denounce the existence of economic, financial and social mechanisms which, although they are manipulated by people, often function almost automatically, thus accentuating the situation of wealth for some and poverty for the rest. These mechanisms, which are maneuvered directly or indirectly by the more developed countries, by their very functioning favor the interests of the people manipulating them. But in the end they suffocate or condition the economies of the less developed countries (John Paul II, 1988, pp. 26-27). |2~ Justice will never be fully attained unless people see in the poor person, who is asking for help in order to survive, not an annoyance or a burden, but an opportunity for showing kindness and a chance for greater enrichment . …