Neither the state nor the market are tackling poverty

As it stands, neither the state nor the market are solving poverty

The last two years have been brutal for people living in poverty, and for the billions more who teeter on its brink. COVID created the biggest economic shock in 75 years, eviscerating lives and livelihoods. The pandemic’s impacts didn’t only play back global inequalities: it widened them. In 2021 the world’s poorest 40 per cent saw incomes fall to 6.7 per cent below pre-pandemic projections, more than double the drop for the world’s top 40 per cent.

Conflict is adding a second mega-shock, most obviously in the impact that war in Ukraine is having on food and energy prices. In 2017, on average people in Africa spent a fifth of their income on food. By next year, food costs in the region are projected to exceed a third of household budgets. But even before the war in Ukraine, poverty was becoming increasingly concentrated in conflict settings where political and economic stability is elusive.

Meanwhile, the climate crisis is contributing to weather-related shocks that outstrip many of the modelers’ worst predictions. People in poverty are being hit twice: firstly, because they rely heavily on agriculture, and tend to live in areas that are exposed to the greatest risks, and secondly, because they have the fewest buffers to cope with environmental destruction. The climate crisis, to which people in poverty have contributed least, is only set to get.

Increasingly, efforts to tackle poverty are missing a more fundamental challenge. Put simply, the core assumptions behind ‘development’ are running out of road. The rate at which poverty was reducing, and social indicators were improving was already slowing before the pandemic. Trickle down approaches to wealth creation were always ethically suspect and economically illiterate. But deep inequality means that already rich people are needing to become even richer in order for poor people to see a marginal uplift in their incomes. Carbon-intensive hyper-consumption by a wealthy minority of the world’s people reflects a systemic breakdown in the relationship with the natural environment. Living beyond planetary boundaries threatens quite literally to make human beings homeless.

A deep rethink is needed. The poverty shocks described here are at root a failure to take human dignity seriously. Both state and market-led approaches to development often fall into the trap of acting for people in poverty, rather than with them, stripping them of agency and voice, and trampling on rights. Governments and international institutions bear a particular responsibility to learn from such failures, but NGOs too need to open up to critical challenge.

Poverty is complex and multi-dimensional, and people experience it collectively, as well as individually. Yet mainstream development efforts still hinge on two-dimensional economic measures of progress and have little to say about the fact that poverty is increasingly concentrated among structurally disadvantaged groups who face exclusion and discrimination. Unless power is shifted, within households, communities, and societies, and between the rich and poor, development efforts will be blunted and, in many cases, reversed.

Perhaps the greatest rethink that is required is of the very idea of development. Since the industrial revolution gave rise to the first wave of development in Western Europe, it has been framed largely as a linear process of cumulative consumption and acquisition. We are now paying the price of development as the march of progress. Yet if it was recast as a struggle for flourishing – being more, rather than having more – it would open space for approaches that more accurately reflect the breadth of human experience and need.

It has been said, “never waste a good crisis”. The current crises engulfing our world are a once-in-generation opportunity to explore new social and economic possibilities that are just and sustainable. The time to begin that exploration is now.