Conceptualising poverty: How to achieve the \\\'big push\\\'

At first sight the problem of mass poverty appears to be a part of the general problem of underdevelopment. But the persistence of poverty on a large-scale even in the midst of development makes this perception untenable. It is then realised that not only the economic system but the political economy as a whole, with its local and international linkages, is responsible for the social phenomenon of mass poverty. The process of particular development promoted by the prevailing immature capitalist economic system backed by the network of political and other institutions is then seen as the major cause of impoverishment of the people.
Widespread mass poverty, as it prevails in Bangladesh, therefore, is not an aberration of the system but its essential adjunct, linked to it both as cause and effect. More specifically, it is a reflection of the malfunctioning of the system, a cause of market failure or a case of retarded growth of the market-economy. At the same time, it is also a failure of public policy because government played a dominant role in the past and continues to exert great influence over the market economy, and in that capacity could correct the market failure through various types of interventions, some direct (e.g., land reforms, wage employment, etc.) and others indirect (incentive and regulatory measures for the private sector).
In analysing the causes of poverty many variables are discussed. However much they are based on empirical studies, looking at them separately or even in conjunction, the inter-locking system in which they operate is not immediately visible and readily understood. Basically, these explanatory variables are the negative dimensions of the system (landlessness, low wage, lack of access to credit, etc.). For the small minority, who are the beneficiaries of the system, these are not obstacles to progress. In fact, for them the political economy functions satisfactorily. They are at the heart of the system or better still, at the helm of affairs controlling the invisible hand of the market. The overwhelming majority, the poor, are the outsiders alienated from the mainstream of production and distribution. They are not invisible but, as producers and consumers, they hover at the margin. Figure I shows the manner in which the poor are marginalised by the system.
The poor are marginalised through forces at work at two points in the cycle of the market economy, at B and C. Here the well-known explanatory variables can be pressed into service to relate them to the market economy's functioning. At point 'B' the poor are either wholly or largely excluded as investors, because they lack access to the means of production like land and capital. They or their predecessors lost control over the means of production because of the unequal exchange forced on them by market (lower price of goods/crops, higher price of wage goods). This is the origin of the decline of 'exchange entitlement' of the poor. Variables like demographic pressure and natural disasters exacerbate the unequal exchange, but do not give rise to it in the first place.
Facing an unequal exchange as investors/producers, the poor could fall back on wage employment for subsistence, if not a comfortable living (point C). But the slow rate of growth of the GNP (gross national product), the defining characteristics of underdevelopment, is not conducive to employment generation. Even for the employed and underemployed, the unequal exchange in the labour market leaves them no choice but to accept declining real wage. Lack of skill and education make their bargaining power weak or even absent. Deficiency in education and skill and morbidity in turn are the outcome of low income resulting from unemployment and underemployment, creating one of the many vicious circles in which the poor are enmeshed. This is also the second source of the origin of the decline of 'exchange entitlement' faced by the poor.
Propelled by self-interest, the invisible hand of the market not only perpetuates the present form of functioning with the consequence that the share of national income goes disproportionately to those who are guiding the hand by virtue of their command over resources, but also further tilts it in their favour. In developed market economies some investors may become bankrupt when they miscalculate the movement of the 'hand' or lose out in competition. In an underdeveloped market economy, with no or little intervention from the government as 'regulator' or as 'operator', the process of pauperisation shrivels the limited opportunities for the poor to retain their assets, not to speak of acquiring new ones.
But in a country like Bangladesh, the investors as rent seekers with assets rarely suffer any loss of income. Investible surplus are not recycled by them for expanded production because of the presence of alternative opportunities of earning higher profits. So, there is a leakage of savings at point 'A' (Fig. 1), effected by the rich leading to capital transfer not only out of the production cycle of the domestic market economy but across the border as well. This is a normal feature of a retarded capitalist market economy.
To complete the theoretical analysis, the government can modify the functioning of the market system through interventions at 'B' and 'C' i.e. through asset creation for the poor to make them small investors or creation of wage employment to pick up the slack. The higher the size of this intervention, the greater will be the chance of achieving, what has been called, the "critical minimum effort" or the "big push" which pulls the income curve above the poverty line yielding an accelerated and shorter 'U' curve manipulated by the government. The result will be fuller integration of the rural poor into the cycle of the market economy. Apart from the need to accelerate poverty alleviation, massive allocation of resources within a short to medium terms is necessary to avoid routinisation of the innovative and critical effort at the initial stages by the agencies involved. If massive investment in the form of 'big push' is made in terms of resources and efforts, the risk of routinisation of activities for poverty alleviation may be avoided. For those who will be unable to participate in productive activities promoted by government because of physical handicap - old age and illness - a safety net has to be put in place financed through taxation of the various actors in the system.
The long-term strategy should be to reduce the level of intervention at 'C' in Figure 1 of the market economy and increase investment in asset creation through credit and skill development at 'B' so that goods and services are produced to increase in a non-inflationary way and create demand for labour at a level where wages begin to rise both at 'B' and 'C'. At that point genuine development-oriented infrastructure projects will largely replace employment-oriented public rural works
programmes.
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