THINKING ABOUT THE POOR II – REVIEW OF SHAH AND MANDAVA'S "LAW, LIBERTY AND LIVELIHOOD"

In a previous blog post, I had concluded based on the randomized control trials (RCTs) carried out by Abhijit Banerjee and Esther Duflo and others (and summarized in Banerjee and Duflo's Poor Economics (2011)) that the "trickle-down" effect is probably not valid when we look at the very poor and that some paternalistic interventionism might be justified.

Here, in this article, which can be construed as a continuation of the earlier one, I wish to discuss further why the trickle-down effect fails to work. To do this we need to bring in a legal dimension that Banerjee and Duflo's work lacks. This dimension is well brought out in Parth J Shah and Naveen Mandava's edited book Law, Liberty and Livelihood: Making a Living on the Street (2005).

THINKING ABOUT THE POOR – REVIEW OF BANERJEE AND DUFLO’S “POOR ECONOMICS”

E M Forster once wrote, “We are not concerned with the very poor. They are unthinkable, and only to be approached by the statistician or the poet.”

While I am of the opinion that capitalism works well for most of society, can it really touch the very poor and destitute? To be sure, there are books like C K Prahalad’s The Fortune at the Bottom of the Pyramid (2004) which discuss how firms and corporations can reach out to address the needs of the poor and reap profits for themselves but that didn’t seem to be the complete answer.

Here I wish to talk about a handful of people who have looked at the face of poverty unflinchingly and come up with answers to whether capitalism actually works at the lowest rungs of society.