June 22, 2013 by Kasey Dufresne/Ref Blog http://www.p2pfoundation.net/Transfinancial_Economics
In the Forward to Paul Farmer’s Pathologies of Power, Amartya Sen writes on the importance of power in the developing world,
For example, if inequality of power, in different forms, is central to deprivation and destitution, then little sense can be made of the frequently aired and increasingly popular slogan, “I am against poverty, but I am really not bothered by inequality.” xvi.
Recognizing that power determines who will struggle to find adequate health, education, and dignity requires realizing that inequality matters. Inequality is of utmost importance to issues of development. Yet astonishingly, development economists ignore inequality. The recent hit popular econ book Poor Economics by Esther Duflo and Banerjee contains no chapter on inequality, which is truly baffling. Some argue that the entire field of development economics is implicitly about inequality, but this is only falling prey to exactly the kind of ignorance that Sen warns about in the quotation above.
Worrying about increasing wages and educational and health outcomes for those in extreme poverty is necessary, of course; but it is NOT the same thing as inequality. Duflo and Banerjee’s interventions could be successful, and meanwhile the income distribution in India could be increasing, decreasing, or staying the same – depending on whether the rest of the society gains at a faster or slower rate than those at the bottom. The analysis of success or failure of the intervention program is completely independent to changes inequality. And until economists heed Sen’s warning that fighting poverty while ignoring inequality does not make sense, the field of development economics will be vastly limited in its effectiveness.
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