Poverty: A ‘Failure of Capabilities’ or the ‘Lack of Historically created Opportunities’?

Poverty, in today’s world, is often looked upon as the deprivation from the attainment of necessities such as food, clothing and shelter. Reducing poverty to merely material poverty raises questions regarding qualitative aspects of it such as inequality or the unevenness in the ability of people across the different social groups to participate in community life or the rising discrepancies in entitlements. Tony Atkinson’s paper in 1970 on the normative measurement of poverty has been quite significant in bringing the issues of poverty and inequality to the central stage of economic discussions. However, this paper did not address the void in prevailing literature regarding the foundation and conceptualization of poverty; instead, it initiated a category of literature that dismissed these aspects of poverty in entirety. 

Poverty is multidimensional and thus the concept of it has to be extended beyond the deprivation of income; not only extended to the deprivation of basic necessities such as food, clothing and shelter or access to social securities of health and education, but also to the deprivation of freedom (such as political freedom) or social acceptance. The income approach or the basic needs approach in poverty evaluation fall short of realizing the extent of poverty in a country. Poverty is associated closely with the relative concept of deprivation. Prof. Amartya Sen, through his capabilities’ approach to poverty, is the torchbearer in this regard in the modern days. Based on the concept of capabilities developed by Sen, a new measure called the MPI (multidimensional poverty index) has been introduced, which combines the incidence and intensity of poverty. A person is considered poor if the sum of weighted deprivations is greater than or equal to 30%. While the MPI has no implications on causality, it indicates the degree of correlation between elements of economic growth and social justice. However, despite intentions of addressing poverty as a result of the multiplicity of various causes, MPI too falls into the same trap of a narrow and restrictive definition of poverty.

Prof.Sen’s ‘Capabilities approach’ bears resemblance to the concept of poverty put forward by Marxist theory, where poverty is observed through the lens of class. The capabilities approach considers the ability to function in a society or the deprivation of capabilities for some individuals in the society, in both absolute and relative terms, as the basis of poverty. The section in the society that Marx calls ‘surplus labour’ generated by the capitalist system, are the ones who struggle to fulfil their social needs or suffer from a lack of ‘entitlements’, in Sen’s language. Marxist theory states that the class based differences in performance, appropriation, distribution and receipt of surplus labour has serious implications on poverty. 

The Capabilities approach deviates from the concepts of utility or preference, welfare measures as well as growth in terms of commodities or income, which mainstream economics chooses to focus on while defining poverty. Sen defines capability as a combination of “doings or beings” called ‘functionings’, that enable a person to achieve a living or rather, choose one type of living over another. Capability, thus, represents freedom, available to individuals in their choice of the kind of living that they would like to achieve. A deprivation of capabilities is an inability to meet certain elementary and essential ‘functionings’ that prevent one from leading a decent life, in both absolute and relative terms. These capabilities are formed on the basis of ‘functionings’ such as the ability to avoid hunger and malnutrition, avail healthcare and education. These ‘functionings’ are in reality a range of abilities that enable people to participate in community life or socialise without any hesitation or “shame”.  Diversities in physical environment, social conditions, relational perspectives may prevent incomes from translating into well-being and may result in poverty. The concept of capabilities through its multidimensional approach, differs in its very nature to the utilitarian or the income based approach of orthodox economic theory.

“Even when we focus on economic poverty in the more conventional sense, the basic motivation will be its relevance as a substantial confluence on capability deprivation.” (Sen and Dreze, 1998)

The Marxist perspective connects class to poverty. At the origin of class-based oppression is the unequal distribution of property and power that leads to the hierarchy of one class over the other or the exploitation of one class in the hands of the other. Wright (1993) explained this as property based class differentiation that led to the deprivation of others and enhanced the power of one class at the cost of the other. Marxist literature says that the relation between capital and labour is exploitative in its very nature and is at the core of what generates poverty in a society. The deprivation of the working poor is due to a lower wage rate or due to constraints in the enhancements of the skill set or mobility or from the weak bargaining power of the labour union with respect to the capitalist class and the subsequent lower wages or benefits. Neo-liberal globalization is characterized by stable-capital nexus, capitalist competition, technological change and profit motives at the cost of a continued marginalization of a part of the labour force. One of the prime causes behind the underdevelopment of the third world, is the predatory nature of capitalism, that used its capital powers to colonise and exploit what is known today as the ‘third world’. The prevalence of mass poverty in Africa, Latin America and Asia can be attributed to their exploitation by imperialist powers and the accession of neoliberal policies to the throne, that totally ignore the qualitative aspects of poverty.

While Sen’s Capability Approach does not explicitly mention class as one of the factors determining poverty, it cannot be denied that class plays a significant role in the production and distribution of resources. It is class that dictates the socio-economic position of an individual and the freedoms that one has in choosing their way of life or ‘functionings’, such as opportunities to improve their own or their family’s health and nutritional outcomes, afford better education, attain better skills and choose a better life for their future generation. These freedoms or opportunities are passed on from one generation to another or in terms of Marxist theory, ‘historically created’. Marxist theory perceives poverty through the lens of class. The capitalist class is the one that dictates the command of the resources in the society over generations and it enables them to exploit the working class, the direct producers and exclude them from owning the means of production. Thus, this restricts them in low-wage traps, which in turn restricts their opportunities or freedoms in life, which Sen calls ‘functionings’. Class plays a significant role in determining the range of ‘capabilities’ of an individual. In the words of Prof. Sen, “…income is a general-purpose means the shortage of which can reduce a person to serious deprivation.” (Sen, 2006) 

The East Asian economic crisis 1997 in South Korea, Indonesia, Thailand and the Russian crisis in 1980s and 1990s; the greatest brunt of which was borne by those who had lost their jobs and had no access to social security. The decline in the production and thus the availability of food was one of the primary causes in the loss of entitlements in China; but the nature of poverty across different socio-economic and socio-political groups reveal that the causes of starvation extended way beyond the statistics of production and distribution of food. The infamous ‘Great Leap Forward’ in China was followed by a period of widespread starvation due to the unavailability of food and mass mortality. The ‘pattern of deprivation’ across different groups with varying extents of income losses and economic solvency, prove that poverty or starvation did not merely depend on food availability, but the socio-economic structure as well.

The Marxist theory and the Capabilities Approach, both, identify poverty and inequality as the inevitable outcome of the capitalist mode of production that cannot be eradicated without a change in the mode of production itself. Marxist literature states that poverty and inequality are also transferred from one generation to another through the freedom of opportunities that are available to individuals by birth. This concept of the availability of opportunities and services is echoed in Sen’s capability approach. The capitalist system treats human labour as a commodity that can be purchased by the capitalists. Thus, despite being direct producers, the working class in a capitalist setup, cannot own the means of production. Just as Sen’s idea of income is not mere fulfilment of certain caloric demands, Marx’s idea of wages was not merely a payment that could enable workers to afford the minimum basket for physical subsistence, but an income  that could enable workers to afford leisure, recreation, healthcare facilities, education or other socially defined wants. To create and sustain this inequality, the capitalist system needs to create a labour force that differs in educational attainments and skills and thus wages as well. So it uses wages to allocate costs to social reproduction and create inequalities in the availability of opportunities so as to enable each section of labour to only create its replacement for the capitalist system. Creating inequalities in the access to education and skill-creation enables the system to maintain the hierarchy of classes and the subsequent exploitation of the working poor; it forms the basis on which the system thrives. The accumulation of past labour forms the profit of the capitalist class, while the owners of that labour power are given wages. With the accumulation of capital the interclass inequalities are also bound to rise, enhancing the hierarchy of classes. During the phases of rapid economic development, the poverty of the working class might diminish, but in the long run, with the accumulation of capital, the share of income will rise in the hands of the capitalist class.

Mechanization is another tool in capitalism to obtain higher profits by driving down costs through greater division of labour. The technological advancement in the process of production raises labour productivity and in turn the level of investable capital. Ultimately the cost of production increasingly becomes the cost of depreciation of capital and the share of hiring labour diminishes in that cost. In Marxist literature, this change in the distribution of cost is called the change in organic composition of capital, which leads to a rise in constant capital relative to variable capital. The change in this organic composition of capital reduced the relative demand for labour in the capitalist mode of production. Marxist literature states that capitalism can only grow by expanding the section of working poor or the underclass and detaching the workers from the mechanized means of production or capital. Neither is inequality a “temporary aberration”, nor is poverty a “surprising paradox” in capitalism, but the default outcome or the desired denouement of the system. Both the approaches to poverty echo the belief that individuals are not excludable from the society that they live in; so interpreting poverty as some absolute deprivation is not feasible and thus poverty cannot be excluded from inequality.

Environmental resources and economic opportunities are bequeathed from one generation to the next. Thus, the freedom of opportunities available to an individual is a result of the social class of their previous generation. This concept lies at the heart of the approaches by both Sen and Marx. The Marxist concept of primitive accumulation can be defined as a process whereby the means of existence are expropriated from the working class, it is the means, used by the capitalist class, to drive down the basket of subsistence goods and services of the direct producers below the average that is required for production and thus render them ‘free’ to work as labour and be exploited by the capitalist class or become unemployed. Since the expansion of the capitalist class is a continuous process, so is the primitive accumulation and a simultaneous mass poverty of the working class. As the organic composition of capital changes opportunities for the white-collar jobs rise, while that for blue-collar jobs fall. This further widens the inequality amongst classes in a society. Every sector of the economy needs raw labour power which is reproduced in the economy by trapping the poorest section in a low income, low skill trap with a bare minimum income for sustenance without opportunities to afford healthcare or education and imparting a deep sense of work ethic. The standard response of the developmental state has been the mitigation of poverty through compensations and resettlement programs. The modern day method of primitive accumulation also involves the expropriation of liquidity from the working poor, as was observed during the Covid-19 pandemic. Amongst those who lost their jobs and were impoverished by a huge margin were the wage earners- agricultural labour, small farmers, informal sector workers and small traders. 

The nature of capitalism is to expand their surplus without raising real wages even when labour productivity increases, leading to a crisis of overproduction. Thus the rate of profit in reality is the ratio of the rate of exploitation to the organic composition of capital. The rate of exploitation is the ratio of surplus value to the value of labour power, while organic composition of capital is the constant capital with respect to labour power. Profit can decline despite rising rates of exploitation, if the rate of exploitation is outweighed by the increase in the organic composition of labour. During business cycle downturns, production units are shut down, the rate of unemployment rises and the subsequent effective demand also declines in the economy. The working population either lose their jobs or their wages and usually lack productive assets to back them up with; this results in working class poverty through the systemic class organization and labour exploitation. The neo-liberal globalized world post the 1970s saw a reorganization of the capitalist surplus extraction that has generated new income growth in certain sectors in the developing countries such as China, India and Brazil while developing a system conditioned with low-income or low-skill traps and systemic unemployment. There has been a technological advancement in telecommunication, transport, Artificial Intelligence and Robotics that helped in the compression of time and space and paved the way for outsourcing, subcontracting and offshoring. It can be said that the working poor are a systemic outcome of the neo-liberal global order. 

Prof. Sen says that unemployment leads to a wastage of the productive capacity of labour, it leads to a depreciation of the skill set of workers and this deskilling process leads to a loss of their cognitive skills. Unemployment leads to a loss of freedom even if there is sufficient social insurance to support them, such as the loss of freedom in decision making in things that affect their lives directly. Persistent unemployment also leads to a deterioration of mental health and loss of morale amongst workers. Countries today witness high suicide rates associated with the dejection towards life, arising from unemployment. Unemployment plays a significant causal role in amplification of the already existing divisions in the society, such as exclusion based on gender, race, religion or other social identities. Sen’s approach to poverty speaks of the lack of freedom to achieve certain functionings in the society as the primary factor leading to poverty, through social exclusion. Low income contracts the range of capabilities of individuals and traps them in it. While both approaches focus on the mode of production and its interlinkage with class as a determining factor for poverty, the Marxian theory is more progressive in this case, in terms of its explanation of the systematic generation of the surplus labour and its relation to mechanization and the low-income trap.

Despite being measures of poverty, the head-count ratio or the income gap ratio fail to bring forth the extent of poverty of an individual. Income is one of the factors commanding the set of functionings that form the range of capabilities of an individual. However, capability deprivation is almost always generalized in mainstream economics as deprivation due to low income. Sen identifies that the use of head-count ratio as a measure for poverty assessment has led to significant misinterpretations regarding poverty. Although other measures have been used instead of the head-count ratio in certain studies such as the ‘income shortfall of the poor’ or the ‘aggregate squared poverty gap’ i.e the sum of squares of the differences between the poverty line threshold and the actual levels of poverty. While it is obvious that the reduction in the availability of food that occurs during famines adversely affects the consumption and survival needs of the poor and vulnerable groups, it is neither the sole nor the ultimate cause of starvation and poverty, rather one of the many contributing factors to it. Prof. Sen questions the legitimacy of ‘spaces of income’ in the attainment of ‘equity and social justice’ by individuals. Income is merely a means of achieving a decent standard of living; the quality of life lived by individuals and the freedoms that they enjoy are determined by aspects that extend way beyond income. Sen is of the opinion that nearly all interpretations of poverty based on subsistence, can be challenged.

The Marxist perspective on poverty also goes against the notion of a fixed basket of goods and services as the definition of the minimum standard of living. The lack of income or social security, which is prevalent mostly amongst the working class, amplifies their poverty by reducing the freedom of opportunities that they have in choosing their way of life. Labour supply is determined by the sacrifices that a worker is ready to make in order to earn a higher income; when labour crosses a threshold of wages, the level of leisure too increases with income. However, that threshold level of wages is associated with the skills attained by the worker. Capitalism traps workers below that threshold level of wages, thus the working poor can only earn more by sacrificing more and more leisure in order to accumulate greater wealth. Accumulated capital enables the capitalist class to command the wealth and power in the sphere of politics and society and thus, the power to further exploit the working poor.

People must not be allowed to become so poor that they offend or are hurtful to society. It is not so much the misery and plight of the poor but the discomfort and cost to the community which is crucial to this view of poverty. We have a problem of poverty to the extent that low income creates problems for those who are not poor.” (Sen, 1981)

Prof. Sen’s views regarding the value judgement aspect of poverty bear resemblance with Marxist literature which states that since subsistence has a ‘historical and moral’ element to it, given the place and time, the minimum level of subsistence for a worker can never be defined or evaluated with precision.

The recognition of economic class and its role in the determination of entitlements is central to the idea of poverty in both the Capabilities approach and Marxist literature. Although the Capabilities approach does not delve as deep as Marxist literature in evaluating the role of class in the systemic generation and retention of poverty, it seems by and large inspired by the Marxist perception of poverty through the issues of subjectivity, intertwining of outcomes and value judgement.

Trisha Chandra
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Jawaharlal Nehru University.

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