powerand progress (2)
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Power and Progress: The Swing of thePendulumFrances Stewart aa University of Oxford, UK
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To cite this article: Frances Stewart (2010): Power and Progress: The Swing of the Pendulum,Journal of Human Development and Capabilities: A Multi-Disciplinary Journal for People-CenteredDevelopment, 11:3, 371-395
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Journal of Human Development and CapabilitiesVol. 11, No. 3, August 2010
ISSN 1945-2829 print/ISSN 1945-2837 online/10/030371-25 © 2010 United Nations Development ProgrammeDOI: 10.1080/19452829.2010.495501
Power and Progress: The Swing of the Pendulum
FRANCES STEWARTFrances Stewart is Director of the Centre for Research on Inequality, Human Security and Ethnicity, and Fellow Emeritus of Somerville College, University of Oxford, UKTaylor and FrancisCJHD_A_495501.sgm10.1080/19452829.2010.495501Journal of Human Development and Capabilities1945-2829 (print)/1945-2837 (online)Original Article2010Taylor & Francis113000000August [email protected]; [email protected]
Abstract This paper uses Polanyi’s 1944 analysis of policy change—inwhich there are long-term swings from state regulation to markets and backagain, as the consequences of one regime lead to political reactions that inturn reverse the policies. It shows how the Polanyi analysis continued toapply throughout the twentieth and early-twenty-first century, well beyondwhen he wrote, and that the swings also apply to developing country policy-making. It argues that there are new signs of policy change—this time againstmarket domination—in a number of developing countries. The paperconcludes that Polanyi’s view of the conditions behind policy change—notably long-term political movements, political struggle and politicalconflict—needs to be introduced into the analysis of policy change for thepromotion of human development and the expansion of capabilities.
Key words: Human development, Political economy, Policy swings, Polanyi
Introduction
The aim of this paper is to explore the ‘long swings’ in policy-making.Taking a long-term historical view, fluctuations in policy-making can beobserved, with periods when policy regimes favour statist models of devel-opment, and periods when policies favour market domination and marketregulation is minimized: the first type tend to involve more direct attentionto expanding basic capabilities and more egalitarian income distribution,while the market model is normally associated with less direct focus ondeveloping basic capabilities policies together with a rise in inequality,although human development (HD) and capabilities may nonetheless benefitfrom market success.
This periodicity was powerfully illustrated for Europe, focusing on theperiod from the eighteenth century to the mid-twentieth century, by Karl
Address to the 2009 meeting of the Human Development and Capability Association, Lima, 10–11 September 2009.
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Polanyi, whose analysis I shall draw on heavily (Polanyi, 1944). He showedhow the regulatory and interventionist stance that had governed economiesfrom medieval times gave way to market forces in the nineteenth century,and then, as a reaction to the harsh human consequences of this change, therole of the market was curtailed and that of the state increased in a series ofsteps—whose timing and nature differed among countries—culminating inthe mid-twentieth century, in the introduction of the welfare state andKeynesian macro-economic management in Western Europe and the commu-nist state in Eastern Europe. The Polanyi pendulum—as this is sometimestermed (for example, Mitchell, 2006)— swung slowly over this period, eachswing taking 100 years or so. But since Polanyi published his book in 1944,the pendulum seems to have speeded up. From the late 1970s the pendulumswung back again, away from a welfare state and a regulated market towardsa free market. This in turn had many of the consequences analysed by Polanyifor earlier periods—including harsh human effects. The main question I wantto investigate here is whether this is causing a new reverse swing towards astatist policy regime, especially within developing countries. A second aim ofthe paper is to explore the implications of the Polanyi analysis of policychanges for the human development and capabilities approaches.
Although Polanyi himself was not writing about developing countries—which at the time he wrote were mainly colonies, and their policy regimesprimarily reflected colonial priorities—my prime concern in this paper is toexplore the current position of developing countries in the light of the Pola-nyi analysis of policy swings. In this context, we need to consider two layersof Polanyi-type influences over policy-making and consequent policy swings.First, there are the swings in the developed countries. These obviously influ-ence (and, indeed, often determine) what happens in developing countries;and secondly, there are developments within developing countries them-selves, which potentially might lead to ‘domestic’ Polanyi swings.
My hypothesis is that in the first decade of the twenty-first century wecan observe the beginning of a new swing against the market and in favourof the state in some developing countries. But the situation today iscomplicated by countries’ global connections and constraints that limitindependent policy change. Some Polanyi-type swing also appears to beoccurring in some developed countries following the financial crash of2008 and the subsequent recession, with state intervention in the econ-omy, the takeover of banks, and the subsidizing of some industries, as wellas the adoption of Keynesian fiscal and monetary policies. But my explora-tion of developing country swings relates to impulses and changes thatpredate this development.
The discussion has implications for HD and capabilities (CA) from twoperspectives. First, because the policy regime affects the extent to whichpro-HD policies are adopted: in particular, it seems that the pro-state phaseof the Polanyi pendulum tends to be more effective in promoting HD and CAthan the pro-market phase. And secondly, because the Polanyi analysisfocuses on the type of political struggle needed to bring about policy change,
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which seems to me is an area that has been neglected, or skated over, inmuch of the analysis of HD and CA. Polanyi’s analysis is not just about thesocio-economic consequences of different policy regimes, but rather abouthow economic and social consequences have political effects that in turninfluence policy regimes.
To explore this difficult and ambitious agenda, my paper will be orga-nized as follows: the next section will summarize Polanyi’s approach toprovide the basic structure for further analysis. The third section will thenconsider whether this structure needs to be amended to include developingcountries. The fourth section will then update the Polanyi analysis in threesubsections—firstly, the 1945–1975 period of sustained and expandedKeynesianism and the welfare state; secondly, the period of increasingmarket domination in the following 30 years; and finally, more tentatively,recent years with the ‘green shoots’ of a new swing towards state interven-tions and social support systems. The fifth section will elaborate on politicaland policy changes in a few countries. The final section will conclude byconsidering implications of the analysis for HD and CA outcomes and forwhat an understanding of the determinants of policy change suggests for theHD and CA approach.
Polanyi’s pendulum
Polanyi’s main thesis is that each system, whether dominated by the marketor by the state, has consequences that provoke intellectual, political andpolicy reactions which, in turn, lead to a reaction against the ruling modeland a return to its opposite. For example, interventionist strategies lead toinefficiencies and severe constraints on entrepreneurial activities, whicheventually result in an abandonment of the model, to deregulation and theestablishment of a market-driven model; but this in turn has harsh conse-quences for human conditions and for economic equilibrium, which leads topolitical pressures for renewed state interventions and eventually a policychange in this direction. This is the pendulum that Polanyi analyses:
Our thesis is that the idea of a self-adjusting market implied a starkutopia. Such an institution could not exist for any length of timewithout annihilating the human and natural substance of society …Inevitably, society took measures to protect itself, but whatevermeasures it took impaired the self-regulation of the market, disorga-nised industrial life, and thus endangered society in yet anotherway. (Polanyi, 1944, p. 3)
Polanyi draws on the experience of Europe, and especially England, in theyears between about 1700 and the time of his writing (1944) to illustrate this.
Market transactions of some kind are pervasive throughout humanhistory. Yet according to Polanyi—drawing on anthropological and historical
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research—in all economic systems prior to nineteenth-century Europe, themarket played a subordinate role. “Though the institution of the market wasfairly common since the later Stone Age, its role was no more than incidentalto economic life” (Polanyi, 1944, p. 45). In a truly self-regulating marketsystem, according to Polanyi, all transactions are “directed by market pricesand nothing but market prices” (1944, p. 45): “the control of the economicsystem by the market … means no less than the running of society as anadjunct to the market. Instead of economy being embedded in socialrelations, social relations are embedded in the market” (1944, p. 60).
This situation did not occur in Europe up to the nineteenth century.From medieval times, trade within and between countries was subject tostrict regulations, much of it administered by guilds. Tolls and prohibitionsrestricted trade between towns. Although many of these were abolished as aresult of mercantilist pressures in the sixteenth and seventeenth centuries,they were replaced by extensive government regulation. Equally, land wasembedded in social relations and controlled politically and socially, ratherthan through the market. Labour was subject to numerous regulations andcontrols, including those governing the relations of master, journeyman andapprentice, by guild, custom and statute, while there were severe restrictionson labour mobility, since each parish had the duty to providing for their owndestitutes. In general, “The economic system was submerged in generalsocial relations; markets were merely an accessory feature of an institutionalsetting controlled and regulated more than ever by social authority” (Polanyi,1944, p. 70).
The intellectual justification for removing market restrictions wasprovided most prominently by Adam Smith, who argued against the manyrestrictions on trade, and that a laissez-faire market would promote effi-ciency and growth; while Bentham, among others, supported a free marketin land: “The condition most favourable to the prosperity of agriculture existswhen there are no entails, no inalienable endowments, no common lands, norights or redemptions, no tithes” (quoted in Polanyi, 1944, p. 189). The polit-ical impetus for reform came from an emerging entrepreneurial class, firstmaking money by using the ‘enclosed’ (or appropriated) lands to keep sheepand sell wool, and then moving into manufacturing and exporting.1 But theactivities of the new entrepreneurs were constrained by the heavy regula-tions in being, and they used their growing power to oppose them. Politicalreforms reflected the growth of this class, as the 1832 Reform Act enlargedthe franchise, so that members of the emerging industrial entrepreneurialclass gained representation in the reformed House of Commons.
Land was the first factor of production to be ‘freed’ with the enclosuremovement of the late-eighteenth century. Restrictions on land transfers inEngland were formally abolished in 1801.2 The restrictions on labour mobil-ity were loosened in 1795, and replaced temporarily by the unworkableSpeenhamland system.3 This was abolished in 1834 by the reformed Houseof Commons, leaving only minimal and demeaning support for the destitutevia Workhouses. Combined with the Combination Laws of 1799 and 1800
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that banned workers’ combinations, this marked the beginning of a compet-itive labour market.4 With the repeal of the Corn Laws in 1846, England cameclose to a purely market economy.
These reforms—which allowed the rapid of growth of industry andindeed what came to be known as the industrial revolution—had their ownconsequences, which then provoked an intellectual, political and policy reac-tion. The social consequences of the unregulated industrialization, in partic-ular, were appalling, in terms of poverty, squalor and indignities. Workerswere forced to work very lengthy days in dangerous conditions; child labourabounded; and health, sanitation, and housing were all of abysmal standards.5
Moreover, there were also economic problems: unhealthy and uneducatedworkers had low productivity; and the unregulated market was subject toacute fluctuations—the so-called ‘business cycle’—with adverse conse-quence for the owners of capital as well as for workers.
These extreme consequences led to reactions that again limited marketfreedoms. The intellectual reaction came from many critiques, both liberaland socialist. These included Robert Owen who initiated the cooperativemovement; the writings of Marx and Engels, as well as more moderate social-ists such as Shaw, Tawney and Cole; and, later, Keynes’ powerful critique ofthe economic model. Political movements emerged in reaction to the situa-tion, reflecting the new ideas. Such movements included the Chartists, thetrade unions, the Reform league, the Socialist League, the Fabian Movementand the Labour Party—which brought together socialists and the trade unionmovement, whose constitution required that the state take over the‘commanding heights of the economy’—while Communist movements (andin a few countries Fascist ones) also played a role. Ultimately, the outcome ofthese political movements was policy reform that took two forms: on the onehand, piecemeal progressive regulation of markets and provision of socialprotection in Britain and other countries in Western Europe; and, on theother, massive changes in the whole organization of society and the economyfollowing the Marxist and Fascist revolutions.
Focusing on Britain, the reforms that were gradually introduced inresponse to these critiques and political pressures included a succession ofFactory Acts that regulated hours and conditions and banned child labour;the extension of the franchise to the (male) urban, skilled, working class in1867; and to skilled and semi-skilled agricultural labourers and miners in1884, which increased political pressure to improve working conditions.These reforms were soon followed by the expansion of education to muchof the working class and by further acts improving factory conditions. Unem-ployment insurance and pensions were introduced in the first decade of thetwentieth century. The contributions of many of the still disenfranchisedmen and of working women in the First World War convinced the govern-ment to agree to a further extension of the male franchise, and to introducefemale enfranchisement, in 1918. The reintroduction of tariffs in reaction tothe massive unemployment of the 1920s and 1930s represented a furthermove away from the self-regulating market. Then, during the Second World
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War, planning and controls basically replaced the market. This was whenPolanyi was writing.
This did indeed represent a ‘Great Transformation’—from an almostunadulterated market system to a strongly controlled one. Similar develop-ments occurred elsewhere in Europe, but in Russia there was a more abruptand extreme reaction with the communist revolution that led to total statecontrol over the economy; and in Germany, Spain and Italy, Fascist statestook over, again involving extensive state controls.
The pendulum and developing countries
My interest here is how developing countries fit into the schema, which wasnot a major concern of Polanyi’s. The most important difference from theEuropean situation is the much lesser degree of economic and policy auton-omy. Of course, under colonialism there was very little autonomy. And thissituation continued, to varying extents, in the post-colonial era. Policy auton-omy has been subject to several severe constraints: first, heavy dependenceon international markets; second, aid dependence; third, dependence on theInternational Monetary Fund (IMF) for financial support in times of crisis; andfourth, a pervasive intellectual dependence, arising from the fact that most ofthe leaders and many of the civil servants were educated in the West,imbibed their ideas and formed part of a single ‘epistemic community’. LatinAmerican countries were to some extent an exception here, mostly gainingpolitical independence in the early-nineteenth century; with their gover-nance dominated by former colonial settlers, they appear to have had morepolicy autonomy at least until the debt crisis of the 1980s when they becameheavily dependent on the IMF. Yet they too were heavily constrained by thenature of their markets (dominated by primary commodities, the productionof which was largely controlled by western companies) and by their proxim-ity to Uncle Sam, always ready to intervene if a country adopted too radical apath.
In addition to dependence on the West, from the 1950s to the 1980smost governments were partially insulated from internal political pressuresby their non-democratic nature and by government controls over politicalfreedoms that repressed most popular protest. Over this period, for the mostpart, governments in developing countries tended to be overturned bymilitary coups rather than popular protest, and day-to-day policy was alsorelatively free of mass pressures—although, of course, there were some localgroups with significant influence.
These two factors—dependence on the West and insulation fromdomestic political pressures—both weaken the domestic Polanyi pendulum.Consequently, developing countries were affected more by the ongoingmovement of the pendulum in the advanced countries, which then alteredviews of appropriate policies in developing countries, than by economic,social and political developments in the countries themselves. In so far as the
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latter had an influence, to a large extent it was because they affectedadvanced countries’ perceptions of and policies towards developing coun-tries rather than in a more direct way, through their own Polanyi pendulum.Yet this is an oversimplification—the larger countries, the more developedcountries, those with more educated people and with strong ideologies,always had more policy autonomy than small highly dependent countries,and consequently were more affected by their own cycles. Moreover, I shallargue later that important changes have occurred that have extended domes-tic policy autonomy more widely. But for much of the twentieth century, thedeveloping countries were subject to a Polanyi pendulum, but one filteredthrough the politics and perceptions of the developed countries.
The post-Polanyi pendulum
From the 1950s to the 1980s
During this period, the advanced countries saw a continuation of the swingof the pendulum towards the state. Political change underlay this, with amassive victory for the Labour Party in Britain in 1945 representing a rejec-tion of the market policies that had been responsible for unemployment andrecession and limited and unequal social services; progressive governmentswere likewise elected in other European countries. In the USA, the Polanyiupswing began with Roosevelt and the New Deal, and these policies werecontinued post-Second World War by President Truman. Keynesian macro-policies were widely adopted to counter the business cycle, while in Britaina comprehensive welfare state was established, following the recommenda-tions of the Beveridge Report. Similar changes happened elsewhere inEurope, and to a lesser extent the USA (Lindert, 2004). Other features thatconstrained the market in the UK included the nationalization of a number ofmajor industries (including energy, transport and steel), a strong role fortrade unions, national wage bargaining, industrial and agricultural subsidies,a large state sector, tariffs on imports (gradually reduced with a succession oftrade rounds) and limitations on currency convertibility (also graduallyremoved).
At the time Polanyi was writing, neither Keynesian macro-policy, nornationalization of major industries, nor the comprehensive welfare state hadbeen introduced. Yet all fit so well into his Great Transformation that theyonly serve to strengthen the case he was making—that this transformationwas the inevitable consequence of adopting a pure market economy becauseof its harsh and unacceptable human and environmental consequences.
The newly independent developing countries also experienced a GreatTransformation. Development planning was seen as desirable by developedcountry observers and policy advisers as well as by local theorists and practi-tioners.6 Plans were drawn up, with heavy western inputs, to promote indus-trialization. Major industries were taken into public ownership. Investmentsubsidies were offered to private-sector investors as well as subsidized credit.
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The newly developing industries were provided with heavy import protec-tion. Legal minimum wages were established and trade unions were encour-aged. Public provision of health and education services was increased.7
The strategy was endorsed by western aid-givers at the highest levels,with support from World Bank assistance programmes.8 There was alsostrong local political support for the strategy. The independence movementsand the national political parties that they developed into were fully commit-ted to ‘catching up’ the advanced countries, which was interpreted as requir-ing policies to promote industrialization. They also wished to reduce foreigncontrol over the economy, and nationalizing major industries provided auseful mechanism for this. The pervasive controls also generated economicpower and a useful source of patronage for the new political leaders.
The 1980s to the 2000s
According to the basic Polanyi logic, this swing back to heavy state controlover the market should itself eventually provoke a reverse swing, and areturn to the market model, as a result of the consequences of state interven-tions in generating inefficiencies, and reducing opportunities for profit-making. That is, as Polanyi put it in the quotation already cited, because it“disorganised industrial life and thus endangered society in yet another way”.This indeed occurred, initiated in developed countries but soon followed indeveloping countries.
In the developed countries, the intellectual critique of the Keynesianapproach was famously associated with the writings of Milton Friedman, whopointed to the inflationary consequences of a Keynesian approach, whileFrederich Hayek had long criticized planning for its inefficiencies; otherssuch as Alan Walters and Arthur Laffer argued that public-sector industrieswere inefficient, and high levels of taxation were a disincentive to entrepre-neurial activity. On the ground, rising inflation, associated with high levels ofworld demand and the oil price hikes of OPEC, as well as the increasingpower of the trade unions, provoked a strong political reaction, and leaderswere elected who preached the monetary message—notably MargaretThatcher and Ronald Reagan. They soon reversed many of the policies of theGreat Transformation. Keynesian macro-policies were generally discredited.Britain led the way in privatizing previously nationalized industries. Marginaltax rates were reduced and expenditure on social services and social protec-tion kept down. The powers of the trade unions were severely reduced. Theprivate sector began to make headway even in the provision of publicservices. Financial services were deregulated in what in Britain was describedas the ‘big bang’ in 1986; similar reforms were adopted in the USA and inJapan. The market once again dominated society, albeit a much regulatedmarket, constrained on most fronts by numerous regulations relating toemployment conditions, market structure, trading conditions, and so forth.Moreover, in most developed countries, extensive measures of social protec-tion were maintained.
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Similar critiques were made of developing country interventionist poli-cies, by western or western-educated economists—for example, Little et al.(1970), Balassa (1965), Krueger (1974)—and later by Little (1982), Bhagwati(1982) and by Lal (1983); the main brunt of the critique was that the inter-ventionist policies had led to inefficiencies, had reduced growth below itspotential, and had not improved the position of the poor. However, therewas no political support in developing countries for a change in strategy atthis stage.9 The change occurred because of the debt crisis, which forcedcountries—notably in sub-Saharan Africa and Latin America—to turn to theIMF and World Bank for financial support. Monetarist and pro-market policieswere demanded by these institutions in the successive stabilization andadjustment loans that dominated policy-making in the 1980s. Thus, fordeveloping countries in the 1980s, this was not a true Polanyi pendulumswing, since it resulted from outside insistence and not from domesticpolitical reactions.
The reforms were correctly described as the ‘Washington consensus’(Williamson, 1989). They included elimination of price controls and subsi-dies; privatization; abolition of import quotas and reduction of tariffs; a risein interest rates; abolition of restrictions on private foreign investment;reduced tax rates and a switch away from direct towards indirect taxes; and,often, reduced public expenditure on the social sector; and a reduced rolefor trade unions, elimination of minimum wage laws and reduced labourregulations.
Later, in the 1990s, reforms were also introduced by India and China, ontheir own volition. However, these reforms—which stemmed from domesticdecisions if not from major domestic political movements—were much morecarefully controlled, more limited in extent and more protective of socialexpenditures. In these two countries, the role of the market increased, butthe state remained a very important economic actor.
2000 and beyond: a new swing of the pendulum?
Already in the 1990s there was some reaction to the consequences of pro-market reforms in the developed countries—progressive governments wereelected that reversed the tax cuts and the decline in public services. But thecentral economic pro-market reforms continued unabated, the harsherconsequences of which were moderated by low unemployment, associatedwith a prolonged boom, and state support for the unemployed. Only after the2008 financial crash and subsequent world recession did the developedcountries seriously question some aspects of the market model and takeaction, including taking some banks into (temporary) public ownership,subsidizing some industries that were threatened with bankruptcy, tempo-rarily adopting Keynesian fiscal and monetary policies.
In developing countries, the 1990s also saw much more attention topoverty—which had risen sharply with the market reforms of the 1980s—and some modest forms of social protection were introduced, but here too
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the market model remained dominant, and pro-market reforms continued(e.g. with further privatizations; tariff reform, etc.; and capital market liberal-izations). Thus while there was some small adjustments to the model, theywere certainly not such as to be described as a swing back in the pendulum.
Deficiencies in the model were, however, becoming apparent, particu-larly in developing countries. While growth occurred in many countries asworld markets expanded, inequality was rising almost everywhere (Cornia,2004), employment expansion was generally sluggish (Ghose et al., 2008;Stallings and Wilson, 2000), and poverty reduction was very slow and insome countries non-existent (Berry, 1998; Bhalla and Lapeyre, 1997). In theUSA, two decades of growth brought virtually no change in the real wages ofthe unskilled. In China, dramatically high growth was associated with only asmall reduction in poverty; and similarly in India, where some questionedwhether poverty was falling at all. In most Latin American countries, povertywas virtually unchanged. In China, the reforms led to a dramatic deteriorationin the health services. In India, removal of agricultural subsidies was associ-ated with a spate of suicides. In addition, where capital markets had beenliberalized, countries were subject to acute fluctuations—for example, inChile in 1982, in Mexico in 1994 and 1998, and in South East Asia in 1997. Ineach case, a sudden capital outflow led to sharply rising unemployment, andthen further cutbacks in government expenditure were insisted on by theinternational financial institutions (IFIs).
The conditions were thus ripe for a new swing of the pendulum indeveloping countries. Such a swing, however, would not be sponsored bythe advanced countries who continued to preach further market reforms,although they increasingly recognized the need to support the social sectors(as a necessary investment) and to improve social protection, generally on alimited scale, so as to make the reforms more palatable. If a swing was to takeplace, it would need to be the consequence of domestic political pressure—and such political pressure would have to be strong enough to enable thegovernments to introduce reforms opposed by the international donors.
This is where the political reforms of the 1980s and 1990s become rele-vant. Along with economic reforms, this era had also seen political reformsin many countries in Latin America and sub-Saharan Africa (Whitehead, 2002;United Nations Development Programme [UNDP], 2002). In Latin America,the military rulers withdrew almost everywhere and ceded to democraticinstitutions—including voting rights, freedoms of association and of the press(Garreton Merino and Newman, 2001; UNDP, 2002). By 1999, 25 out of 26countries in Latin America and the Caribbean had multiparty electoralsystems. In Africa, long-term presidents (in some cases, the same people whohad headed the independence movements; in others, rulers who had gainedpower through war or coups) agreed to allow elections to determine whowould govern. In sub-Saharan Africa, 29 out of 42 countries had multipartyelectoral systems by 1999 (UNDP, 2002).
These political reforms enhanced local participation in decision-makingand, although flawed and fragile, allowed political pressures to play a greater
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role in policy-making. Initially the democratic governments did not seem verydifferent from the military rulers they replaced—and indeed often promotedmarket reforms. But over time the political reforms have generated space inwhich local political movements can develop and potentially contribute tothe sort of domestic political struggle that underlay the movements of thePolanyi pendulum in Europe (Avritzer, 2002). Developing countries,however, remain constrained in their policy decisions by three factors. First,their heavy financial dependence on developed countries, and especially theIFIs and consequently their need to adapt policy to IFI requirements—although as a consequence of the experience of the 1980s and 1990s, manycountries decided to lessen their dependence on the IMF and World Bankand reduced their balance of payments imbalances. Secondly, politicalconditions for policy change were constrained by the common weakness ofpolitical institutions, particularly as a result of the dominant role played byfinancial interests (often foreign interests) in government, parliament andpolitical parties. Thirdly, cultural and occupational diversity in most develop-ing countries increased the difficulty of developing strong and united politi-cal movements, in contrast to the more homogeneous societies of Europe inthe nineteenth and twentieth centuries.
We need here to differentiate the African and Latin American situations.In Latin America, the political reforms seem to have been more ‘real’: widelyaccepted with a number of elections in which power has been transferredpeacefully and without strong dispute; and genuine press freedoms and somespace for political movements seem to have emerged in a number ofcountries. Moreover, in general, Latin American societies are less diverse thanAfrican ones, and their particular diversity (ladinos, blacks and indigenouspeoples) has given rise to increasingly influential political movements,notably indigenous movements; Latin American countries are also moreurbanized with larger formal sectors, which make it easier for social move-ments to develop. In Africa, in contrast, democratic change has on the wholebeen more formal than real; the validity of the elections are questioned, andvery rarely (Ghana is an honourable exception) is transfer of power throughthe ballot box agreed. Moreover, Africa remains much more dependent onaid than Latin America—indeed, all of the capital budget and much of thecurrent budget is supported by aid in many African countries. Some freedomfrom IFI policies is conferred by access to finance from China. But for themost part African countries have little policy freedom. In addition, societaldiversity and economic conditions make it more difficult for strong politicalmovements to emerge. Thus, neither from the perspective of domestic poli-tics, nor from that of policy autonomy, are African countries in a position toexperience a domestic Polanyi swing. Therefore it is to Latin American coun-tries—and some Asian ones, which also have sufficient political freedoms andpolicy autonomy—to which we must turn to observe whether there are signsof a new swing of the pendulum.
In-depth knowledge of the many Latin American and Asian political,economic and policy developments would be needed to answer this question
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fully—a knowledge I do not possess. But I would argue that there are impor-tant signs of some political changes, of policy debate, and some actual policychanges to suggest that such a swing may be beginning in some countries.But to date, in each case, changes are largely limited to the social sectors anddo not challenge the underlying economic model. This may be becausedomestic politics do not support such a radical change; but it is also becauseinternational constraints are such that no developing country can by itselfchallenge the model.
Some such changes can be observed in Brazil, Bolivia, Ecuador andVenezuela in Latin America. In each country, the market reforms that led toland expropriation, unemployment, and rising poverty have generated move-ments of protest, among workers and indigenous peoples (Gott, 2006). InIndia, mass movements have given rise to the extension of the EmploymentGuarantee Scheme and greatly improved terms for food distribution. In thenext section of the paper, I will give examples—not a full account—fromsome of these countries. My aim is to illustrate the role of political move-ments—provoked by particular policies and events—in bringing about policychange.
Small signs of a new swing: country examples
Bolivia
In Bolivia, military governments were replaced by elected ones in 1982.Suffering from the debt crisis, and from acute problems because of the fall inthe price of tin, Bolivia was subject to an exceptionally drastic adjustmentpolicy in the early 1980s. This effectively reduced inflation, but at the cost ofloss of output, high unemployment and worsening poverty and income distri-bution. This, together with the US-cum-government policy of trying to elimi-nate coca production, radicalized the population, especially indigenous cocafarmers. Evo Morales, himself indigenous who had been general secretary ofthe cocaleros union (the coca-cultivating peasants) and subsequently leaderof the federation of unions, was elected President in 2005, with the supportof the unions and indigenous peasants. A series of social movements wasbehind this election, including the Peasant confederation (ConfederacionSindical Unica de Trabajadores Campesinas de Bolivia and the Asambleade la Soberania de los Pueblos), which together formed the Moviemento alSocialism-Unzaguista, bringing together indigenous peasants and workers(Stefanoni and Alto 2006).
Morales’ main policy objectives in the years 2006–2009 were, first, tonationalize hydrocarbons and retain a greater proportion of the revenue forthe state; and secondly, to introduce a new constitution. He achieved boththese objectives. He nationalized hydrocarbons, while a new constitutiongiving more power to indigenous people, more state control over naturalresources, more decentralization, and abolition of limits on how often thepresident can be re-elected was endorsed by over 60% of the electorate in
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January 2009. On the social side, a small universal pension was introducedfor everyone over 60 years old; and education programmes have beenexpanded, including policies to eliminate illiteracy. The constitution votealso included agreement to impose (non-retroactive) limits on landownershipof 5000 hectares (Crabtree, 2009).
At a more micro level, the example of the water rights movement inCochabamba illustrates the relationship between politics and policy inBolivia. In 2000, there was a:
Water War, a popular uprising that kicked out Bechtel, a multina-tional company that had privatized the water in everything fromcommunally built wells to rain cisterns. Many citizens from acrossthe economic spectrum couldn’t afford the exorbitant rates set bythe company, so they joined together in protests and road block-ades, sending Bechtel packing and putting the water back intopublic hands. (Dangl-Znet 2009)
In summary, the (fairly modest) reforms in Bolivia towards the advance-ment of HD reflect long-term political struggle at both micro and macrolevels, culminating in the united support of rural indigenous peasants andurban workers.
Venezuela10
Chavez’ assumption of power in 1998, and his subsequent reforms, is themost far-reaching example of a political reaction to the neo-liberal agenda.These events have resulted in some important reforms towards reinstatingthe economic and social role of the state.
Although initially Chavez tried to gain power by military means, ulti-mately he did so through democratic election. This election was not anisolated one-off event, but followed and was supported by growing politicalmovements in favour of change: as early as the 1950s there was aMovimiento Izquierda Revolucionaria; other more recent movementsincluded the Moviemento al socialismo, the Patria para todos, the PartidoComunista de Venezuela, but above all the Moviemento Quinta Republicathat itself was supported by La Causa R (Radical Cause), a mass movementthat started in 1970.
Venezuela had long been a highly unequal society: but it was the neo-liberal agenda that Perez introduced in 1989 that triggered the attemptedcoups and the subsequent democratic take-over of power. The reformprogramme of Perez was a radical one, entitled El Gran Viraje (The BigTurn Round). It was agreed with the IMF, intended among other things toinclude the “elimination of all trade restrictions, and reduction of tariffs to anarrow band; … the restructuring of the public sector with widespreaddecentralisation and privatisation of parastatal enterprises … eliminate thesystem of massive subsidies” (Rodriguez, Minister of Planning, quoted by
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Gott, 2005, p. 54). The immediate impact was an acceleration in inflationand a huge rise in unemployment as many public-sector workers lost theirjobs; there was a fall in Gross Domestic Product and a rise in inequality.
On the economy, Chavez stated that his “project is neither statist norneo-liberal; we are exploring the middle ground, where the invisible hand ofthe market joins up with the visible hand of the state” (Chavez 1999 speech,quoted by Gott, 2005, p. 175). In practice, many of the policies consisted instopping planned privatizations (notably of the oil industry; and of the coun-try’s social security system). In addition, land reforms were introduced thatput a ceiling on land holdings and gave the state the right to redistribute landsthat were “idle or unproductive” (Gott, 2005, p. 220). The HydrocarbonsLaw increased state revenue from oil. There was major expansion of socialservices and of food deliveries to the poor. Evidence suggests (althoughmuch depends on the source of data, dates used, etc.) that these changeshave been accompanied by reduced poverty, and, probably, improvementsin income distribution (Beezy, 2008; Brouwer, 2007).
Brazil
Brazil notoriously has had one of the most unequal income distributions inthe world. Like many other Latin America countries, Brazil adopted demo-cratic institutions in the early 1980s, and undertook drastic stabilization andadjustment policies, supported by the IMF. Lula da Silva came to power in2002 with the support of the Workers Party as well as the Moviemento SemTerra (MST) (the movement of landless workers) after standing as a candi-date for over a decade, partly because of the unpopularity of the adjustmentmeasures. Yet, Lula continued to follow orthodox economic policy, and in noway challenged the neo-liberal model. Moreover, he did little for land reformand continued to support agro-business. But he did greatly increase expendi-ture on basic services and introduced large scale cash transfer programmesto reduce poverty (Bolsa Familia). During his presidency the Gini coeffi-cient measure of inequality fell quite sharply, from 0.59 in 2001 to 0.53 in2007; it is estimated that 0.2 of this is accounted for by expanded access toeducation and the cash transfers accounted for another 0.2. For the period2001–2007, ‘the bottom six deciles, which account for only 18% of income,accounted for 40% of total income growth’. (UNDP-IPC 2009)
In Brazil, too, a micro example illustrates the way policy is formed bypolitical struggle, with the case of Brazil’s Landless Workers Movement(MST):
Over the course of the MST’s twenty-five years of work, it hasexpropriated some 35 million acres, land that is now occupied byroughly a million families. The settlements, which are cooperativelyorganized, are home to hundreds of MST-built schools, which haveenabled tens of thousands of people to read and write. (Dangl-Znet2009)
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In Brazil, the Lula regime made considerable advances in terms ofpoverty reduction and social entitlements, without seriously changing theunderlying economic model. Like the other countries cited, this was madepossible by collective mobilization in both rural and urban areas.
India and the National Rural Employment Guarantee Act
In India, market deregulation has progressed—in a Polanyist way, throughdomestic reactions to the inefficiencies of state interventions. The reformsdid nothing for rural poverty, and high levels of rural underemployment andopen unemployment (much seasonal) among landless labourers and povertypersisted. A mass movement developed, based on a coalition of left-wingparties and including huge popular marches, to secure a National RuralEmployment Guarantee scheme. The Act introducing this was passed in2005. It potentially revolutionizes opportunities for work and income in ruralIndia, as it guarantees 100 days of work per household at minimum wages.The Act:
provides an indispensable lifeline to the millions of poors in therural areas of the country. This social security measure, for the firsttime makes the right to work a fundamental legal right—a new radi-cal deal for India’s poor. (Pandey, 2005, pp. 7–8)
This Act was introduced as a result of huge popular mobilizations, themselvesa reaction to the abysmal conditions many rural poor face (Dreze, 2008).
What we learn from the examples
In summary, what we observe—in an increasing range of countries—is thatprotests and social movements, provoked by the economic and social conse-quences of the pure market model, are leading to the election of leaders whooppose the pure model, and promise to introduce alternatives. Even whereorganized social movements have not developed, protests against the model,and particularly the deep inequalities and poverty it is associated with, areevident, as in South Africa and Nigeria. In practice, to date, the new leaders,representing these movements, have introduced only modest changes, withsome important social reforms and some controls (including state owner-ship) over natural resource production but few other market interventions.This rather limited change is probably a result of both external and domesticpressures. Domestically, elected leaders and parliamentarians are subject tostrong pressure from capitalist interests, while they and their technocratshave mostly learnt the virtues of the market model in their western-dominated education. In addition, there are also strong economic constraintsimposed by the heavy dependence of developing economies on finance,technology and markets from advanced countries that consequently still haveconsiderable power over developing country policies. We should also note
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that a gradual change is just what Polanyi observed in his account of theEuropean pendulum: the pendulum swing both ways took many decades ofpiecemeal reforms.
Implications for human development and capabilities and for the analysis of the HDCA approach
The analysis of Polanyi swings has important implications for the HD and CAapproach. On the one hand, the swings have implications for achievementson HD, as, in general, state-promoted social-sector expenditure and anti-poverty policies are greater in the pro-state element of the swing and less inthe pro-market element, although market entitlements may grow faster in themarket phases. Moreover, in extreme versions of statism—as represented bycommunist states—there is sharp curtailment of other freedoms that mayoffset achievements on other dimensions. This is not the case in the ‘socialdemocratic’ versions of the Polanyi upswing.
The second implication is for the appropriate approach to the analysisof conditions for promoting HD and CA. For the most part, research into theHDCA approach has tended to neglect the political struggles underlyingmuch progress. The argument of this paper is that we cannot understandwhat determines the change in policy regimes in a way that favours (ordisfavours) HD and CA without understanding the role played by politicalmovements, or ‘voice’ and ‘power’.
HD achievements
Can we say which of Polanyi’s swings is best for human development? Thepure market model will tend to involve less resources devoted to social secu-rity and to investment in human resources, and it is likely to increase humaninsecurity generally, through increased market fluctuations;11 on the otherhand, it may involve a faster growth of market entitlements and of technol-ogy that enhances HD.
A rapid review of HD outcomes associated with different phases of thependulum swing broadly suggests that HD progress in fact has tended to begreater during the pro-state phase of the pendulum.
However, the HD achievements of the pre-industrial revolution model,of regulation and intervention were extremely poor in terms of life expect-ancy and of education, although data are deficient.
In Europe’s preindustrial and overwhelmingly agricultural society,people did not in general live long lives. While there were excep-tions, by our standards, life expectancy was appallingly low formost … Europe, as a whole, was plagued by a very high rate ofinfant mortality that significantly reduced, statistically, overall lifeexpectancy. (Knapp, 1998)
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Despite this situation, there was a slow growth in population in Englandfrom the mid-eighteenth century, and some have suggested that this was dueto an improvement in living conditions (McKeown and Brown, 1955). Datafrom 1841 (the first date for which there are statistics) to 1861 show nodecline in death rates, and indeed rises for some of the main cities (Szreter,1997; McKeown and Record, 1962)—a period at the height of the unregu-lated market. There was a definite decline in mortality rates from 1861 to1900, although there was no change in the infant mortality rate throughoutthe nineteenth century, which remained at around 150/1000 live births(McKeown and Record 1962). The improvement in death rates in the lastdecades of the nineteenth century has been attributed to improved diet(leading to a decline in tuberculosis and typhus) and changes in sanitation(associated with public investment and public health measures), which ledto a reduction in typhus and cholera (McKeown and Record 1962; Szreter1997). Szreter has argued that public health measures were critical and atleast in part were due to “political organisation, particularly the extent towhich poorer sections of the community have an effective voice” (Szreter,1997, p. 717).
The extreme poverty associated with the demolition of effective poorrelief is likely to have been one cause of these dire outcomes. In Englandbefore the nineteenth century there was extensive and seemingly effectiverelief of destitution through the Act of Settlement of 1662, which essentiallymade it the duty of each parish to look after its own poor. As labour mobilitythreatened this system, the Speenhamland system was introduced in 1795,which guaranteed to everyone a minimum income (in real terms). This gener-ously protected the poor, but raised huge opposition from rate payersbecause of its high costs, and from employers because of the disincentives towork, especially at low wages.12 The Poor Law reform of 1834 then madepoor relief minimal and degrading, which allowed employers to pay very lowwages. Hence, for much of the nineteenth century, for many there wasappalling poverty.
In the USA, “Life expectancy likely reached a high point in the late eigh-teenth century and the declined until the later nineteenth century” (Boyer,2001) (from 57 years for white males in 1790–1794, at age 10 to 48 years in1855–1859), again a period of market supremacy. Similarly, evidence ofworsening conditions in the mid-nineteenth century is shown by the declin-ing heights of recruits to the West from the 1830s to the 1870s (Boyer, 2001).
The experience of the seventeenth to nineteenth centuries thus suggeststhat, over this period, HD achievements tended to be worst when the marketwas supreme. A similar story emerges for twentieth-century USA and LatinAmerica, as shown in Figures 1a–c. There was some progress in everydecade, but the marked acceleration occurred in the ‘Great Transformation’years and there was marked a slowdown in the pro-market years from 1980in the Latin American cases. For the USA similar developments are observedexcept for literacy, where very high rates had already been achieved by thebeginning of the twentieth century.FIGURE 1. (a) Life expectancy and (b) literacy rates in twentieth-century Latin America and the USA. (c) Historical living standards index in Latin America and the USA.Note: LA 6 consists of the major Latin American economies—Argentina, Brazil, Chile, Colombia, Mexico and Venezuela—for which data are more reliable, while LA 13 includes the remaining 13 countries. The historical living standards index is essentially an estimated Human Development Index, using literacy as the education indicator and 1950 as the base year (Astorga et al., 2005).
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FIGURE 1. (a) Life expectancy and (b) literacy rates in twentieth-century Latin America and the USA. (c) Historical living standards index in Latin America and the USA.
Note: LA 6 consists of the major Latin American economies—Argentina, Brazil, Chile, Colombia, Mexico and Venezuela—for which data are more reliable, while LA 13 includes the remaining 13 countries. The historical living standards index is essentially an estimated Human Development Index, using literacy as
the education indicator and 1950 as the base year (Astorga et al., 2005).
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Looking at all developing country regions from 1960 to 1980 (Figure2a,b), we observe that there is a general slowdown in the improvement inlife expectancy from 1980, even in the fast-growing regions in Asia. (Theworsening in sub-Saharan Africa in the 1990s is partly due to AIDS.) Per-capita income increases decade by decade in East Asia, and also improves inthe ‘market’ era in South Asia, both regions where there is strong state thatcontinues to intervene economically; but it slows down in the regions thatcome closest to the pure market model—Africa and Latin America.FIGURE 2. Decadal change in (a) life expectancy by region and (b) per-capita income.
In general, this quick review supports the conclusion that the puremarket model is less good for progress on HD than the more state-orientedstrategies. This is because state action is needed to advance HD and CA. Thisdoes not of course mean that the market should or need play no role, butrather that it needs to be ‘governed’, to use Robert Wade’s term (Wade,1990), and to be supplemented by public action for promoting HD. Broadly,this is what Drèze and Sen concluded, when they argued that one canpromote capabilities through ‘growth-mediated security’, in which the state
FIGURE 2. Decadal change in (a) life expectancy by region and (b) per-capita income.
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supplements market-generated entitlements, or through ‘support-led secu-rity’, in which the state takes the lead (Drèze and Sen, 1989).13
The implications for understanding change in policy regimes
From the point of view of analysis of the HD or CA approaches, the importantconclusion from a reading of Polanyi-type movements is that politics have tobe incorporated into the analysis. By this I mean the political movements thatemerge, in response to economic and social developments. Taking a broadhistorical sweep, the major changes in policy regimes did not come out ofthe blue, but were generally the outcome of a long history of political move-ments and struggle. Yet analyses of both CA and HD approaches have tendedto be ‘politics light’.
The two leading proponents of the CA approach, Amartya Sen and MarthaNussbaum, have been concerned primarily with defining the approach—bothpoint to the need for a ‘consensus’ to determine the valuable capabilities thata society should seek—in the case of Sen, it is a ‘reasoned consensus’ basedon deliberative democracy, an informed discussion among citizens, aimed atachieving a consensus about the way to go forward (Deneulin, 2006). In Nuss-baum’s analysis it is a matter of an ‘overlapping consensus’, which has someof the characteristics of Sen’s democratic consensus, but the process is lesswell defined in space and time, and is not society specific, so it is lessgrounded in actual political discussions. In both cases, the consensus seemsto be more about defining where the society should go in broad terms, ratherthan about the specific policy changes needed—it is generally easier to getbroad agreement on the former than the latter. As Deneulin showed, it is possi-ble to reach an apparent consensus by inclusive discussions, but yet notachieve any significant change, as occurred in the Dominican Republic; whilein Costa Rica there was not much consensus (or discussion) but there wereimportant changes in actual policies (Deneulin, 2006).
Yet, what we have seen in the Polanyi swings is that policy changes, formuch of the time, seem to be determined by political struggle and conflictrather than consensus. A consensus may eventually be reached but only afterdecades of political movements, and often there is not a consensus forchange, but one side ‘wins’—as for example with the repeal of the CornLaws, or the Poor Law reform of 1834, or Lloyd George’s reforms. AsFeldman and Gellert argue:
The welfare states, which perhaps come closer to providing for thecapability(ies) that Sen and Nussbaum advocate, did not emerge inthe abstract world in which people decided to ‘assign responsibilities’to institutions that promoted social welfare programmes ((Nussbaum2004): 15). Rather, welfare states were historically produced in West-ern Europe and North America in the early decades of the twentiethcentury through struggle and negotiation by working-class andwomen’s movements. (Feldman and Gellert, 2006, p. 429)
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The HD approach has been much more concerned with specific policychange, and has therefore moved a little further in the direction of incorpo-rating politics into the discussion. However, the Human DevelopmentReports generally are careful to avoid pronouncements about politics, andmost analysis (including my own) has classified countries according to theirpolicies (e.g. high or low social expenditure; more or less equal incomedistribution) but not according to the underlying political systems (Ranis andStewart, 2000; UNDP, 1990).
However, it was noted, at an early stage, that ‘political will’ is needed topromote an HD approach, and that to achieve this one needs to ‘build’ acoalition of the willing (Griffin and McKinley, 1992; Streeten, 1995):
It is not enough to design programmes which if implemented willincrease the well being of the great majority of people, it is alsonecessary to create the political conditions which make it possibleactually to implement human development policies. Thus policymakers intending to introduce a human development strategycannot afford to neglect the need to create a supporting coalition.
This coalition may or may not be based partly on political parties,but even if it is, support from other organised groups will beneeded as well. (Griffin and McKinley, 1992)
The role of political struggle has not, of course, been totally neglected by thoseworking in the HD and CA traditions. It emerges clearly, for example, in theanalysis of Feldman and Gellert (2006) and of Deneulin (2006, 2009); and isimplicitly a factor in the entire effort to challenge the neo-liberal paradigm ofthose working in the HD and CA traditions—including the work of Sen andNussbaum, the Human Development Reports (Cornia et al., 1986; Drèze andSen, 1989; Reddy and Pogge, 2002), and many others. The point being madehere is not that those participating in advancing the HD and CA approach donot themselves recognize that the issues are political as well as moral and tech-nical, but that the foundational analysis stops too soon—at pointing to objec-tives and to mechanisms for achieving them, leaving it to an aspirationalconsensus to make actual advances. Yet the historical analysis presented heresuggests that change requires coalitions (often in conflict and not in consen-sus with others). Moreover, such coalitions cannot be ‘built’ by outsiders, assuggested by Griffin and McKinley. Coalitions for change usually come fromlong-term participation in political organizations by groups of citizens.
Conclusions
The review of policy change presented above—based on Polanyi’s analysis—suggests the need to incorporate political struggle into the analysis of CA andHD to a greater extent than hitherto. Democratic structures are needed to
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provide the space for political organization. But democratic discussions with-out underlying political organization are not likely to give the deprived suffi-cient space or lead to policies in their favour.
Indeed, for Polanyi it is the political reaction to the consequences ofeach swing that leads to policy change. This political reaction is not just thatof polite debate, but of movements of protest, involving strikes, marches andsometimes even violence. Progressive change is always particularly difficultto achieve because the elite possess the most powerful weapons: they canbuy people off; they can control the media; they often control the police andarmy. This is one reason why so many of the progressive leaders in LatinAmerica see the first need as constitutional reform, in order to reduce theconstraints imposed by elite interest groups.
In conclusion, what we learn from Polanyi is that if we are to understandhow to achieve progress in expanding capabilities, we have to understandnot only the nature of valuable capabilities and how to choose the capabili-ties we have reason to value, but also the political forces underlying choiceof policy regime.
Acknowledgements
I am grateful to Graham Brown, Richard Gott and Severine Deneulin for theirinsightful comments.
Notes
1 According to Polanyi, “Enclosures have appropriately been called a revolution of the richagainst the poor” (1944, p. 37).
2 By the Prescriptions Act, the Inheritance Act, the Fines and Recovery Act, the Real Prop-erty Act and the general Enclosures Act of 1801, as well as subsequent legislation.
3 The Speenhamland System essentially entitled every worker to a quite generous minimumincome, irrespective of their work situation or earnings, discouraging work and imposingheavy burdens on the rates.
4 Worker combinations developed, nonetheless, and the Act was repealed in 1824 in thebelief that if legalized they would be less threatening. In fact, they burgeoned, and in 1825a new Combination Act was enacted that permitted trade unions to form but limited theirright to strike (Briggs, 1959, p. 212).
5 Engels was among the first to record the conditions of the English working class in detail.Later in the century, Rountree started his pioneering investigation into poverty. Amongmany more recent accounts, see for example Thompson (1963), Daunton (1995) andHuck (1995).
6 For example, the Argentinian economist Prebisch was highly influential in Latin America,influenced by the western economist Hans Singer; in Africa, most plans were drawn upwith western inputs, including, for example, advice from Dudley Seers; in India, the econ-omist Mahalanobis was most influential, but was supported by visiting economists fromthe West.
7 Widely documented, including for example by Little et al. (1970) and Killick (1976).8 In a famous statement, Truman announced that: “We must embark on a bold new
program for the making the benefits of our scientific advances and industrial progressavailable for the improvement and growth of underdeveloped areas. The old imperialism
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s dead—exploitation for foreign profit has no place in our plans” (President Truman, Inau-gural Address, 1949, [https://trumanlibrary.org/educ/inaug.htm], accessed 20 June 2010).
9 Chile, perhaps, is an exception, where the dictator, Pinochet, introduced market reformsearly on—although without any popular support. See Martinez and Diaz (1996); and seede Olarte (1991), who argues that there were domestic as well as international pressuresfor such policy swings in Peru.
10 I have drawn this account largely from Gott (2005).11 Rodrik (1997) has shown, for developed countries, increased fluctuations associated with
globalization and that governments reduced ability to protect people.12 In 1820/21, spending on relief for the poor was estimated at 2.7% of the Gross National
Product, a considerable increase on the pre-Speenhamland system in 1997 of 1.6%; butafter the 1834 Poor Law Reform, expenditure dropped to 1.1%—still more than manyother countries (Lindert, 2004).
13 See also Ranis and Stewart (2000).
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