Being for poverty reduction is not exactly a controversial position, though intelligent people can disagree about the best method for accomplishing it, as discussion of the Millennium Development Goals at the United Nations showed last week.
Actually, the idea that poverty should be eliminated is a relatively new one, according to recent article at the National Bureau of Economic Research by Georgetown economist Martin Ravallion. As the Economist puts it in its write-up of the paper, “According to the mercantilist thinking that dominated European thought between the 16th and 18th centuries, poverty was socially useful.”
Specifically, Ravallion writes that it was commonly believed by scholars during this period that the quality of workers’ output would decline if they were better off:
The idea of a negatively sloped labor supply curve is what Edgar Furniss (1920, p. 117) dubbed “the utility of poverty.” The basis for this idea appears to have been little more than casual anecdotes; Furniss (1920, Ch.6) provides many examples from writings of the time, often with references to the attractions of the alehouse when workers got a wage increase. It was not the last time in the history of thought about poverty that casual incentive arguments resting on little or no good evidence would buttress strong policy positions.
A continuing future supply of cheap labor was also seen to be crucial. Large families were encouraged and good work habits were to be instilled from an early age. Like higher current wages, too much schooling would discourage both current and future work effort. Consistently with this model, few sustainable opportunities were expected to be available to any educated children from poor families. In de Mandeville’s (1732, p.288-311) mind, the only realistic future prospect for the children of laboring (and hence poor) parents was to be laboring and poor.
“Everyone but an idiot knows that the lower classes must be kept poor or they will never be industrious,” the English writer Arthur Young argued in 1771.
Ravallion argues that this worldview began to change with the enlightenment, citing Immanuel Kant’s views on human dignity, Adam Smith’s support for anti-poverty programs, and Jean-Jacques Rousseau’s argument that poverty and inequality are symptoms of bad institutions. Still, it took longer for the idea of a world free of poverty to take root:
The late 19th century saw new questioning of the longstanding idea that poverty was inevitable in any capitalist economy and the emergence of prominent arguments for promotional antipoverty policies in such an economy. The historian Robert Webb (1974, p.384) argues that, in England, it was the late 19th century when it came to be recognized that poverty “could and must be eliminated. … After the First World War, there was a mounting enthusiasm for policy intervention in the West, and there appears to have been broad agreement that greatly reducing, if not eliminating, poverty was a legitimate role for government”
Again, it’s not unreasonable to believe that some form of relative poverty will always exist. But Ravallion’s argument is that the idea that reducing poverty is even a worthy goal of public policy is a relatively recent one.
Via OECD Insights
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