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Making Poverty: A History

Making Poverty: A History

by Thomas Lines

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As rural incomes collapse and farming becomes commercialized, swallowed up by the global supply chains of giant food corporations and supermarkets, a desperate situation is emerging in which there could soon be little place left for the hundreds of millions of smallholders across the world. In this clear and intelligent book, Thomas Lines examines the role that


As rural incomes collapse and farming becomes commercialized, swallowed up by the global supply chains of giant food corporations and supermarkets, a desperate situation is emerging in which there could soon be little place left for the hundreds of millions of smallholders across the world. In this clear and intelligent book, Thomas Lines examines the role that global policies have played in creating the crisis of rural poverty. He explains the mechanisms of the markets and supply chains, charting their impact on agricultural trade in the world's poorest countries.

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Zed Books
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Making Poverty

A History

By Thomas Lines

Zed Books Ltd

Copyright © 2008 Thomas Lines
All rights reserved.
ISBN: 978-1-84813-360-0


Those who have fallen behind

It has been reported that the number of people living in absolute poverty is falling, and that the fight against poverty is therefore being won. This is at best a half-truth since it derives from the situation in two huge and quite atypical countries, India and China; even in those countries, poverty now appears to have been reduced far less than was previously thought, as we shall see at the end of this chapter. At the same time, many other developing countries have gone through a long period of economic stagnation or decline, and the rapid growth of urban economies in China, India and a few other countries must not be allowed to hide this bleak record. The lessons that other developing countries can draw directly from their economic success are limited.

This chapter will look at the facts of the case, first examining the question of what poverty is – not always as obvious as it might appear – and which groups of people are most affected by it, and then comparing data on the richest and poorest countries. After that, it will explain what economic characteristics are shared by the nations and people that have failed to benefit from globalization. The chapter concludes that there is a crisis facing rural economies worldwide; and the rest of this book will examine how that crisis affects those most vulnerable to it and what can be done to overcome it.

Just who is poor?

As the first task in our analysis, it is necessary to see just who are the poorest people, where in the world they live and how they derive their meagre livelihoods. Until recently, the common image of poverty in developing countries, as seen from the rich world, was of urban slums. As seen from many of the poor world's ministries, it often remains so: poor rural people are out of sight and therefore out of mind, just like their equivalents in many developed countries. Poverty in urban areas can be real and painful enough; but the overwhelming majority of the very poorest people are actually rural. A good guide to this is the Rural Poverty Report, published by the International Fund for Agricultural Development (IFAD) in 2001 and the most comprehensive survey there has been of rural poverty. According to it, three-quarters of the 1.2 billion people then living on less than US$1 a day lived and worked in rural areas.

Poor people's circumstances vary greatly, but several common factors can be found. According to IFAD, the poorest of the rural poor generally live in remote areas, with 634 million of them in marginal lands (of whom 375 million are in Asia). In Latin America poverty is highest in some of the more remote, less densely populated areas, and many of the poorest regions are at high altitudes or have low levels of rainfall. There are also poor smallholders in dryland areas in West and Central Africa, Asia and the Pacific, Latin America and the Caribbean. Poor farmers in East and Southern Africa may be found in areas of low agricultural potential as well as areas of moderate to high agricultural potential, which is often unrealized. Another author wrote that poor rural people

are isolated in every sense. They have meagre holdings or access to land, little or no capital and few opportunities for off-farm employment. Labour demand is often insecure and seasonal. Extension services [offering agricultural advice] are few and far between, and research aimed specifically at their needs is sparse.

The people described in these sources include large numbers of subsistence and near-subsistence farmers, who grow all the food that their households eat, or only purchase a limited amount in exchange for produce that they sell. Such people earn little monetary income, but they are not necessarily worse off than those who grow no food for themselves. However, it is estimated that about half of the world's hungry people are from smallholder farming communities (including subsistence farmers), while another 20 per cent are rural landless and about 10 per cent live in communities whose livelihoods depend on herding, fishing or forest resources; a very large proportion of the latter will also live at subsistence levels. The remaining 20 per cent of hungry people live in towns and cities. So hunger, like low incomes, is concentrated in rural areas and much of it lies outside the monetary economy.

Indeed, poverty is a complex and elusive concept, and specialists differ as to whether it mainly concerns monetary incomes or less tangible factors such as marginalization, vulnerability, insecurity and dependence on other people. This is IFAD's rather ambiguous summary:

Poverty has both physical and psychological dimensions. Poor people themselves strongly emphasize violence and crime, discrimination, insecurity and political repression, biased or brutal policing, and victimization by rude, neglectful or corrupt public agencies. ... Some may feel poor or be regarded as poor if they cannot afford the sorts of things available to other people in their community. ... [P]oor people report their condition largely in terms of material deprivation: not enough money, employment, food, clothing and housing, combined with inadequate access to health services and clean water; but they are also liable to give weight to such non-material factors as security, peace and power over decisions affecting their lives.

Correspondingly, there is no consensus on how poverty should be measured. The most common measures are of the numbers or percentages of people living on less than US$1 or US$2 per day. This measure may be crude but it is used by many international agencies and its clarity and simplicity lend it an obvious virtue. Other definitions are based on the numbers of people who are hungry or malnourished. However, all of these measurements can be disputed: there are various ways of defining hunger and malnutrition, while estimates of the number of people living on less than $1 a day have ranged from 353 million to 1.64 billion.

As an example of these problems, John Sender has pointed out that most information on rural poverty comes from sample surveys, which are often based on official registers and therefore exclude numerous categories of people, such as workers living in temporary accommodation on construction sites or farms, squatters, and those who are in illegal housing, sleeping rough or engaged in the sexual services industry. In such surveys, he wrote, the poorest people will be under-represented. However, the poorest households also frequently depend on women who perform manual agricultural wage labour. This narrows the field to the 450 million or so waged agricultural workers around the world and, more specifically among them, those women in poor countries who are in the most unskilled, precarious and irregular employment.

According to one author who knows about combating poverty in Bangladesh, 'The poorest are not just poorer than the poor. Extreme poverty is not a continuum of deprivation but a structural break.' Another author, Xavier Godinot, says that there is a close link between extreme poverty and the breakdown in an individual's relationship with their community. Godinot calls this social exclusion, but a more old-fashioned word might be destitution. It can reduce the chances of finding work and shelter, and it is what links poor people in the poorest countries with those who are poor, by local standards, in rich countries, even if their material standards and incomes are very different. As we shall see, a similar distinction can be made between developing countries in general and the very poorest group of them.

Poor people are vulnerable to risk. Farmers and agricultural workers face many kinds of risk to their livelihoods. Among these can be sudden price falls, an unexpected drop in the harvest, natural disasters, incidental events such as higher transport costs, the destruction of roads or other infrastructure, civil unrest or war, as well as illness, epidemics and other health hazards, and the death of a breadwinner. Low incomes and sudden, unexpected changes in income can expose people to food shortages and deprive them of basic health services and their children of education. Insufficient family income, indeed, is the main reason why children are sometimes pressed into labour.

People's responses to risk and vulnerability must be taken into account in the approach to fighting poverty. The World Bank has argued that poor farmers will often specialize in activities in which both risks and economic returns are low, even though it says this makes it hard for them to escape from poverty. For example, in Tanzania those farmers who have no livestock are more inclined to grow sweet potatoes (a low-risk, low-return crop) than farmers who do own livestock. It should hardly be necessary to spell out why such caution prevails: a poor farmer or landless labourer will not willingly undertake any activity that incurs a risk of losing whatever little they actually have. It is important not to scorn such behaviour, for example by representing sweet potatoes and other root crops as in some way inferior. Such crops, including cassava, and some cereals such as sorghum and millet, can be important for food security, especially in parts of Africa where they will grow on thin soils and resist drought better than other staple crops do. Rather than suggesting that these low-risk crops are to be avoided, a sensible approach to reducing poverty would accept that they are what many poor people grow, with good reason, and build on that. I shall have more to say on this in Chapter 5, in particular when I discuss a successful programme of cassava promotion that the World Bank has been criticized for ignoring.

There are broadly three kinds of agricultural activity in developing countries: large farms and plantations, which employ many workers; small farms (of a few acres or hectares at most), which are generally based on the household and family but may employ a handful of workers, at least at peak times such as the harvest; and people who have no land and earn a living from working on large or small farms or in non-agricultural occupations. There are many crossovers between these categories; for example, members of smallholding households often work on other people's farms or outside agriculture, at least at certain times of the year. But these categories are useful in helping us to organize our thoughts.

However, there are problems in defining which countries are the poorest. Development institutions classify them in three main ways. The World Bank divides all countries into three income categories, according to their GDP per capita, expressed in US dollars: high-, middle- and low-income, the middle-income category being further divided between 'upper middle-income' and 'lower middle-income'. In 2004 there were 59 countries in the low-income category. This classification is relatively easy to measure but subject to the same criticism of over-simplicity as a monetary definition of personal poverty. So two other classifications, originated at the United Nations, use greater numbers of indicators. The UN Development Programme classifies countries as of 'high', 'medium' and 'low' human development (HD) according to their people's average life expectancy at birth and standards of education in addition to GDP per capita (which itself is adjusted for the local cost of living). In the latest year for which the UNDP gives figures (2004), there were 31 countries in the low-HD category. Finally, a still more complex set of development indicators is used to define the Least Developed Countries (LDCs), of which there are now 50 (compared with just 24 when the UN introduced the category in 1971). This book makes use of the Human Development Index (HDI) and LDC categories: the former for its simplicity and accessibility (the figures are updated every year and available in the annual Human Development Report on the UNDP's website); and LDCs at times for the greater sophistication of the concept.

Not keeping pace

According to their advocates, global free markets enable total wealth to increase, creating a rising tide that will bring up the livelihoods of all the world's people. And indeed, in recent times the richest countries have all enjoyed sustained economic growth and prosperity. As can be seen in Table 1, GDP per capita, on a purchasing power parity (PPP) basis, reached its highest-ever level in 2004 (the latest year shown) in all but two of the 30 countries with the highest human development indicators. Traditionally reliant on industry, these countries' economies are increasingly dominated by finance and other services and the so-called 'knowledge economy'. This means the command of research and development as well as the ownership of international brands, patents, copyrights and other forms of 'intellectual property', which enable the countries' corporations to exert international economic control via the command of worldwide supply chains.

The evidence of their sustained economic success is likely to surprise few people. However, even to those given to pessimism about world poverty, the pattern at the other end of the scale can come as quite a shock. A large group of countries has continuously failed to share in economic advance. Table 2 shows that real GDP per capita reached its peak in 2004 in only eight of the 31 countries defined as of low human development, while twelve of them remained poorer than they were before 1985. That was before the international policies of structural adjustment and trade liberalization took hold; we will consider these in Chapter 2. In three countries (the Democratic Republic of the Congo, Senegal and Zambia) the most prosperous year was more than 30 years ago – either the very first or the second year in the UNDP's series. The Congo's real income per person is estimated to have fallen by 71 per cent over the 29 years from 1975 to 2004.

Putting these figures together, we find that in 2004 the countries with high human development had some 67 times the average dollar income per person of those at the bottom: their GDP per capita was US$26,999, while that of countries with low HD was just $402. Even when the figures are adjusted for differences in purchasing power (as they are in Tables 1 and 2), the high-HD countries remained some 24 times as well off. And this is not a contrast of the extremes: there are 63 countries with high HD and they count between them 20 per cent of the world's people; while 31 countries are of low HD, with 9 per cent of the world's population.

The latter countries rely on the production and export of primary commodities – agriculture and minerals – to make their way in the world, and that will form much of the subject matter of this book. Wealth in the modern world evidently derives from manufactures and services, and perhaps the control of commodity supplies, but not from the production of most commodities themselves. The progressive diversification of economic activity, moving from the primary sector (food and raw materials) into the industrial and service sectors, almost amounts to a definition of economic development as traditionally understood. This is the bridge that China and India are crossing as they develop the production of manufactured goods and some globally traded services (such as call centres and financial businesses' 'back offices').

This stark contrast between the richest and poorest countries creates a problem for the process of development itself. For it is accompanied by a huge gap not only in purchasing power and technological capability but in the understanding that people have of what are 'normal' standards, even in apparently simple matters such as food. As a result of the rapid increase in their means, rich countries' citizens have become very demanding about their food and other purchases; but it is often very onerous for farmers in developed countries to meet those requirements, let alone those in the developing world. We will examine this question in Chapter 4.

Poverty under globalization

It could be said that the set of problems discussed in this book is typically African. The biggest geographical concentration of poverty is in Africa and every one of the 23 countries with the lowest human development is on that continent. However, it is not our task to look for specifically 'African' explanations. Many people try to do that but, in my view, doing so only obscures deeper issues. After all, there is severe poverty on every continent. In a similar list to the UNDP's but on the basis of GDP per capita alone, the 30 most disadvantaged countries would come from a wider geographical range than do the 30 lowest on the HDI. They would include East Timor and Kyrgyzstan (if GDP was measured in unadjusted US dollars), or Moldova and the Solomon Islands (if the valuations were adjusted for PPP). That spreads the net across five continents, including Europe.


Excerpted from Making Poverty by Thomas Lines. Copyright © 2008 Thomas Lines. Excerpted by permission of Zed Books Ltd.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Meet the Author

Thomas Lines is a freelance consultant specializing in international agricultural markets. He started his working life as a journalist reporting on the commodity and financial markets in London and Paris, and later became a lecturer in international business at Edinburgh University. He has worked as a team leader of agricultural aid projects and a policy advisor for U.N. agencies, leading NGOs, fair-trade and trade union organizations.

The author has worked in more than 40 countries and speaks fluent French and Russian. He was a candidate for the Green Party in the 2005 general election.

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