Growth – a developmental perspective
Working in ‘developing’ countries it is important to consider the practical applications and implications of growth. Theoretical discussions about which concept of growth would hypothetically lead to the greatest good, the greatest utility or the greatest profit become impossible without considering where they will be applied. Perhaps the greatest reason for this is the ambiguity of our end: do we aim for the greatest GDP, social justice, the greatest profit, or some other measure of development? Without a clear target, we’re shooting aimlessly – and something, or someone, is going to get hit by a stray bullet.
This is one area, then, where philosophy can direct economics. As Lord Robert Skidelsky argued in the previous issue of the Transatlantic, along with a growing number of other top economists, the subject has become too focussed on a certain kind of efficiency, on “inappropriate mathematical techniques” (Skidelsky, 2010), rather than finding a goal for efficiency and the methods. I remember attending a microeconomic lecture where the tutor had a slide about how free-market capitalism is more efficient; as in a supply and demand graph utility is maximised at the point where supply and demand intersect. Quotas, accordingly, were judged less allocatively efficient.
After the lecture I approached him and asked him about these passing remarks in a lecture otherwise dominated by mathematics and utility maximization. Asking about how many quotas are applied to the production of necessary goods ensuring everyone has access, including healthcare and foods, I argued that efficiency depends on the aim. As such, when a quota is enforced and supply is artificially increased to satisfy more demand, it is not to maximise overall utility but to ensure everyone has access to these necessary goods – the objective is not in profit but in people.
Indeed there is an argument to say that this is more than economically sound too. According to the law of diminishing marginal utility, investment in such areas as these necessary goods yields greater marginal social benefits and other benefits, which are often not always recognised in the purely mathematical formulae. He saw my point and agreed that in such cases the deadweight loss would represent those who cannot afford food or healthcare, and who would otherwise die. Indeed these people would be represented on the graph by the demand curve after the equilibrium point, the reason they cannot buy the good is that they do not have enough money. That nearly 30,000 people die every day due to this lack perhaps emphasises the importance of such concepts. The lecturer’s response, however, was to say that we didn’t study that kind of economics here.
The danger for concentrating on growth alone, then, is in forsaking and forgetting other conditions. Adamantly following one theory, such as free-market capitalism or theories on the opposite of the spectrum, often leaves the practical considerations unaccounted for. From what I know, this is a common criticism of the neoliberal economics dominating mainstream economic thought, whose focus is on overly macroeconomic statistics. Too often a country’s GDP has increased rapidly, alongside other macroeconomic indicators, while poverty for a majority has increased. In the Philippines this has also been the case, GDP and macroeconomic indicators have shown positive improvements, while many statistics regarding health, poverty and hunger have remained the same or worsened. Partly due to the stagnation of wages and the trends of globalised growth, the rich have often become richer while the poor have become poorer (Potter, 2000, Stiglitz 2002 & 2007, among others).
I’m currently working as a volunteer in the Philippines with a charity called ASCF. They have three main projects: a children’s home for neglected, orphaned, abandoned and abused children, a pre-school for children living at Payatas rubbish dump, and an education sponsorship programme. Our most recent project has been to work on a documentary about the charity and the projects. One girl helped by the charity is called Crystal; she was born in a cemetery and slept in empty graves. Many street children in the Philippines have runaway from abusive homes, but with nowhere else to go they end up wherever others are, wherever there’s shelter and the opportunity for food.
For the documentary we returned to the cemetery and filmed around the area, still heavily populated with people who had lived on the streets all their lives. One of the greatest problems affecting the development of such areas is the lack of political will. Many people see street children as trash, police frequently beating them for no reason, holding them in children’s prisons, while there are many reports of street children being systematically killed by police. While it is true that many children have stolen food and other items, and some have even killed others, the root cause is their situation and circumstance. To provide opportunities to those people would be to end the cycle of poverty in those areas, and is itself a condition for growth – the divisive inequalities between people will only exacerbate without providing such people opportunities. People working at Payatas dumpsite, where our Pre-School is, often work 16 hours for less than £2 a day, while those who have had the opportunity to go to school through our sponsorship programmes have graduated in the top five of their class, some as valedictorians.
I recently visited the home of one such family. Their entire house consisted of one room, made of scrap wood, recycled tyres, wire and old beds. Five people sleep in that room, and their walls are covered in the children’s educational achievements. The three children, all girls, are currently either attending ASCF’s pre-school, Cashew, or are sponsored in Elementary school. Devoting every moment to studying, one of the girls was ill and had stayed off school, but still had a textbook in her hand and studied all day. There are so many more examples of similar hardworking families, each making a mockery of the idea that if you work hard enough you will succeed.
While many countries have experienced great growth, and have historically experienced increases in life expectancy and reductions in poverty and infant mortality rates (Risse, 2005), growth has yet to help many people, directly hurting others. However a more equitable growth, including opportunities focussed directly on the poorest, perhaps have the most effect, at least according to the law of diminishing marginal utility again.
While walking through the cemeteries filming for the documentary, walking past the graves of infants who never got a chance at life, it becomes clear that official statistics are not complete. With many people too poor to register for birth certificates, their lives and deaths are forgotten. One girl we filmed about was born a street child, had no education, was not registered on any record, and died giving birth in her teens. Many children run away from homes after being raped, or from some other kind of abuse, and their lives are quickly forgotten when they disappear into the mass of other people there.
Growth is necessary for development, but until we learn to share the benefits of economic growth society as a whole will suffer. So we must ask the Elementary questions: what is the purpose of growth? What is the purpose of money? What should we be aiming towards? Failing to completely answer these questions has led us into the situation where the richest three individuals have more money than the poorest 48 countries and their 800 million people. These are the people we must remember. Standing at the funeral of a thirteen year old boy, watching a mother break down in tears, it is clear to me that such children do count for something, regardless of official statistics. Growth in our society, then, must finally account for such people and we must share in their experiences rather than continue to look the other way when we see it in our world; our sense of responsibility, of duty, and of justice must direct our economic drives. If we truly believe in those values and responsibilities enshrined in the human rights, then we still have a lot to learn and a lot to do. Together, though, we have the means to achieve it.
Follow my blog about my experiences in the Philippines at http://roymondous.wordpress.com/ or have a look at the documentary that was produced for the ASCF:
Email me at firstname.lastname@example.org for more information about the charity and its work or visit www.ascf.ph
By Roy Moore