Poverty as Low Levels of Per Capita Income

May 07

In the immediate post-Second world war period what is now known as the poverty problem was generally known as the problem of underdevelopment, and the distinction drawn was between the rich and the poor countries of the world. In the United Nations circles and in most parts of the world, countries with a per capita income of less than one-tenth of that of the United States were classified as underdeveloped countries. By this reckoning nearly 70 per cent of the population of the world lived in underdeveloped countries. But the spokesmen of mankind, particularly in the richer nations of the world, were undaunted by the magnitude of the problem. In fact, a sense of resolve and optimism was the cardinal note among them.

When poverty is measured in terms of per capita income, it tends to become very much of an arithmomorphic concept leading to very mechanical and physical measures to solve it. Thus, since per capita income has national income as its numerator and the size of population as its denominator it seems to indicate, almost intuitively, that the way to eradicate poverty is to increase the former and decrease the latter. Population control becomes something of a sure remedy for the poverty problem which is old doctrine. Although, with an arithmomorphic conceptualization of poverty it may appear eminently logical to say that a reduction of population must reduce poverty, the relationship between the two is neither so direct nor so simple.

But the hangovers of an arithmomorphic conceptualisation of poverty continue through the numerator, viz., national income. There are many economists and their passive followers who tenaciously hold that an increase in national income is both necessary and a sufficient remedy for the problem of poverty. There was a doubt whether an increase in national income is a sufficient condition to eradicate poverty. From an economic point of view income, national income in particular, is not a mere number or quantity. It is the value of goods and services produced during a period of time, and since valuation is a social process, national income cannot be an innocent number. It is not even possible to say under all the circumstances whether a change in physical output constitutes an increase or decrease in national income. That too depends on the underlying social forces that value goods and services. Hence one had better be not too sure about playing the game of numbers.

There is another problem in identifying poverty with low per capita income. Per capita income, after all, is a simple average which does not say anything about the distribution of income among the population. If the distribution is much skewed the average loses much of its representative property. It may be that a low per capita income indicates simply that a few are very rich and many are very poor. From this angle also per capita income is a poor indicator of poverty. This is the reason for the more efforts to develop other norms for the identification of the ppor.

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