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February 1, 2006
Review essay, “ The 2006 World Development Report: Equity and Development”
by
John E. Roemer
Yale University
The 2006 World Development Report, issued by the World Bank and entitled
“Equity and Development,” marks a major step forward in the discussion of poverty and
development, and it is a significant event that this step has been taken by so august an
institution as the Bank.
For many years, economic development has been viewed as
co-extensive with the growth rate of GDP per capita; that view has been increasingly
challenged, as contemporary political philosophy and welfare economics have been
brought to bear on the analysis of development.
Notably, the UNDP initiated, some
years ago, an annual report in which a ‘human development index (HDI)’ was calculated
for a large panel of countries, an index in which GDP per capita is averaged with
measures of education and health.
The political philosophy which motivated the HDI
was Amartya Sen’s idea of functionings and capability (Sen(1980, 1985)).
In contrast,
the political philosophy upon which the 2006 WDR draws has, at its root, the idea of
equal opportunity, as it was first outlined by Ronald Dworkin (1981) in his theory of
resource egalitarianism, amended and modified by Richard Arneson(1989) and G.A.
Cohen(1989), and reduced to an economic algorithm by John Roemer (1993, 1998).
The 2006 WDR is by far the most thorough application of these modern ideas in political
philosophy, and welfare economics, to evaluating economic development.
Because I
believe that economic development must be conceived of in terms of the development of
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human welfare ( I do not here wish to take on the more subtle question whether the
welfare of all sentient beings should be made to count, as Singer(1975), for example,
advocates), and because the deep questions of how to conceive of human welfare are
most seriously addressed by philosophers, I think the Report is moving in just the right
direction.
In this review, I will first give a brief presentation of the theory of equal
opportunity; then a very brief outline of what “Equity and development” covers; and then
spend the majority of my space on some critical reflections on the Report.
That
allocation of my space does not accurately reflect my evaluation of the pluses and
minuses of the Report: I am its great fan, but as a reviewer, my responsibility is to be a
critic, and push the boundaries farther, if I can.
1. The theory of equal opportunity
We have a population, and we are concerned with evaluating, from an ethical
viewpoint, the distribution of some kind of advantage in it: that advantage could be
income, educational achievement, health status, wage-earning capacity, or even welfare,
if we could construct a measure of it.
Advantage is an outcome, thought to be of value,
by the agency or society which is carrying out the analysis.
Let me specialize to the
case where advantage is something objective – like income or educational achievement –
as this will avoid knotty problems of individual and idiosyncratic conceptions of welfare.
It is a useful abstraction to think of the advantage that an individual ends up acquiring or
achieving as a function of his or her circumstances and effort, where circumstances are
environmental factors, either social or biological, and effort comprises the set of actions
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that we view to be under the control of the individual.
In addition to circumstances
and effort, the advantage level a person achieves will be a function of the policy that the
agency or country adopts.
Thus, to summarize, we may write the level of advantage
acquired by the person as a function u(c,e,  ) where c is a vector of circumstances, e is a
vector of efforts or choices by the person, and  is the policy, chosen from set of
feasible policies  .
I assume that the function u is universal across the population,
although that could be modified.
For purposes of analysis, it is usually necessary to partition the population in
question into a fairly small set of types or groups, where a type is a set of individuals all
of whom have the same circumstances.
For example, we may choose the single
circumstance of parental educational level, and then partition the population into three or
four types, defined by the level of their parents’ education.
Suppose, for specificity, that u is wage-earning capacity; we are concerned how
individuals from different family backgrounds acquire that capacity.
The policies, in
this case, might be different choices of how to distribute educational finance monies in
the society – in poor societies, one might be particularly concerned with the allocation of
educational finance between primary and more advanced schooling, where increasing the
investment in primary schooling might help most the most disadvantaged type.
Associated with any policy there will ensue a distribution of efforts in each type.
the types are denoted 1,2,…,T,
If
and if we simplify by assuming that effort can be
summarized by a number, then we may denote the distribution function of effort in type t
if the policy is  by Ft -- a cumulative distribution function on the non-negative real
numbers.
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The philosophical idea behind equality of opportunity, as it emerged from the
literature I mentioned above, is that individuals should not be held responsible for their
circumstances, but it is morally all right to hold them responsible for their effort.
Effort, however, is a complex thing, and the question arises as to how to measure it.
The approach I have taken is as follows.
other individuals in one’s own type.
First, effort should be measured relative to
Thus, suppose we think of effort, in the wage-
earning capacity example, as the number of years of schooling the individual chooses to
acquire. There is surely personal choice involved in this: but that choice is also
influenced by circumstances. Thus the distribution of effort is itself a circumstance, it
is a characteristic of the type.
In measuring an individual’s effort, we should attempt
to sterilize out that aspect of effort which is attributable to circumstance.
A simple way
of doing so is to identify an individual’s degree of effort with the quantile which he or
she occupies on the distribution of advantage of his or her type.
Thus, if A and B
occupy quantiles 0.5 and 0.7, respectively, on the distribution of wage-earning capacity
of the type to which they both belong, then we say B has applied higher effort.
This
requires only that it be the case that greater effort leads to a higher level of the advantage
in question, holding circumstances fixed.
out ‘luck’ as a cause of advantage.)
(This assumption is not innocuous – it rules
Perhaps more contentiously, we say that if A and C
both occupy the 0.5 quantile on the distribution of wage-earning capacities of the
different types to which they belong, then we assert they have exerted the same degree of
effort.
We now say: Equality of opportunity for the acquisition of advantage of the kind
u measures has been achieved if, at every level of effort, the levels of advantage across
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types are the same.
In other words, given the discussion above, if the cumulative
distribution functions of advantage across types are identical.
More generally we say
that a policy  1 equalizes opportunities for advantage more than policy  2 if the
distribution functions of advantage across types are ‘closer’ under  1 than under  2 .
I will not discuss how we measure the distance between advantage distribution functions
(for that, see Roemer [1998, in press]); there are a number of possibilities.
In other words, equality of opportunity is a state in which the only differences in
advantage are due to effort, and not to circumstance.
It is often difficult to measure the distribution functions of a particular kind of
advantage, especially for developing countries, where the data may be poor. The 2006
WDR adopts an acceptable compromise: it looks only at the means of these distributions.
Thus, it asserts that equality of opportunity for a kind of advantage will have been
achieved if the means of the advantage distributions, across types, are equal.
Now, to be more precise, we are not simply concerned with equalizing
distribution functions, or equalizing their means, but rather with equalizing them at the
highest possible level. This leads immediately to the concept of maximin: that is, an
opportunity egalitarian should seek to maximize the mean advantage level of that type
with the lowest such mean.
Thus, if the mean level of advantage in type t under policy
 is denoted  t ( ) then the optimization problem is :
max min  t ( ).
  1t T
(1)
Let us call the value of this program  * ; it is obviously a function of the set of policies
we have identified as feasible, and the set of circumstances chosen, which determine the
types.
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In the example I have given, I chose the level of parental education as the unique
circumstance – in fact there may be many other circumstances, such as natural talent, race,
caste, sex, region of the country, urban vs. rural, and so on.
So, much of the
inequality within types that we observe, if parental education is taken to be the unique
circumstance, will in fact also be due to (other) circumstances.
In other words, because
in practice we always choose a small set of circumstances, and then identify the residual
difference in advantage within types as due to effort, we are underestimating the degree
of inequality of opportunity.
In the limit, if we thought of each individual as a type of
his own, as we would if we took the view that no choice a person makes is under his own
control, but all choices are due to circumstances, then we would attribute all the
inequality in a society to circumstances.
reduce to equality of outcome.
The equal-opportunity objective would then
In practice, however, we are always concerned with
measuring inequality of opportunity due to a small and discrete set of circumstances, and
so much of the inequality that we measure will be attributed to inequality of effort, and
hence will not be morally disturbing.
2.
Outline of “Equity and development”
The definition of equity chosen by the authors of the WDR is a state in which
“individuals have equal opportunities to pursue of the life of their choosing and be spared
from extreme deprivation in outcomes (p.2).”
Thus they append to a concern with
equal opportunity, one with avoiding extreme poverty.
So, if opportunities have been
equalized, but some individuals, due to imprudence (very low effort) end up in extreme
deprivation, they should be rescued – out of compassion or charity.
For practical terms,
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the authors often identify extreme deprivation as having an income of less than $1 per
day.
The report consists of three parts: first, ‘Inequity within and across countries,’
second, ‘Why does equity matter?’, and third, ‘Leveling the economic and political
playing fields.’
The first part presents a gold mine of data, summarized in charts and
graphs, of inequality of opportunity within and across countries; the second part argues
that inequity matters not only for its own sake, but also because it slows development,
and the third part is concerned with policies to reduce inequity, and, given the claim of
part 2, to thereby improve the rate of development.
The circumstances that are chosen to create the partition of a population in a
country into types include parental education level, rural versus urban, parental
economic status, sex, caste, and gender of household head. The kinds of advantage
measured are income, educational achievement, infant mortality rates, rates of child
immunization, and stunting level of children.
When global inequality is discussed, as
opposed to within-country inequality, then the main circumstance is country of residence.
In this case, kinds of advantage are life expectancy, years of schooling, and income.
The policies upon which the report concentrates in the third part have to do with early
childhood development and education, improving the health of the poor, guaranteeing
better ‘justice systems,’ chiefly through strengthening the rule of law, microeconomic
reforms to improve the efficiency of labor, credit, and land markets, macroeconomic
policy, and improvements in global markets.
3.
What is development?
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Throughout the report, there is an emphasis on the claim that equity is not only a
good in itself, but it is good for development.
I will cite several examples from the
report’s Overview:
Greater equity is thus doubly good for poverty reduction: through potential
beneficial effects on aggregate long-run development and through greater
opportunities for poorer groups within any society (p.2)
If the opportunities faced by children like N. are so much more limited than those
faced by children like P. or S., and if this hurts development progress in the
aggregate, then public action has a legitimate role in seeking to broaden
opportunities….(p.3)
Third, the dichotomy between policies for growth and policies specifically aimed at
equity is false (p.10)
In Part 2, one of the major emphases is that more equitable societies develop better
institutions which in turn make the societies more prosperous;
the justification here of
equity is the prosperity (presumably measured by income per capita) that it generates.
The concept of economic development that is implicit in these and many other
examples from the report is one of GDP per capita.
GDP per capita may be of interest
for two reasons: as a measure of the society’s endowments (capital, human capital,
technology, and the other resources that go into producing wealth), and as a welfare
measure. Presumably as economists or philosophers, we are interested in GDP per
capita as a welfare measure. How can it be so justified?
The obvious way is as
follows.
We take the concept of welfare for a country to be the total (or per capita) utility
of its members, and we measure the utility of an individual by his or her income.
Thus,
let v(x i ) be the utility of individual i as a function of his or her income x i , and choose
v(x)  x.
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We then immediately get total income of a country (or per capita income, assuming that
population is fixed in the short run) as the measure of social welfare.
Notice there are two requirements for this justification of GDP per capita: first,
that our conception of justice is total welfare (utilitarianism), and second, that welfare is
equal to income. Let us modify only the second premise; it is surely more reasonable
to suppose that there is decreasing marginal utility in income, as more urgent needs are
met first.
Suppose, for example, we chose v(x)  log x to reflect this.
Then the
utilitarian ethic would require us to
max  log x i ( )  max  x i ( ) .
 
 
Here, x i ( ) is the income of individual i under the policy . That is, the utilitarian
would not be concerned with maximizing income per capita but rather with maximizing
the product of incomes. Obviously, under this second construal of utilitarianism, there
would be a much greater concern with preventing very small incomes then under the first
construal.
Thus, to use GDP per capita, as a welfare measure, requires not only embracing a
utilitarian ethic, but also taking a particular view of the relationship between welfare and
income that denies the notion of basic needs and urgency.
Of course, the adoption of a utilitarian ethic is inconsistent with the report’s stated
ethic, which is ‘equity,’ as defined above.
So why does one have to justify policies
that improve equity by arguing that they improve GDP per capita? I see no reason to do
so; this is a logical inconsistency.
Perhaps what the authors of the Report mean to be saying is something like this:
“Even if you, reader, disagree with our view that equity is the right ethical posture to
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adopt, and you remain utilitarians of the type that endorse maximizing per capita GDP,
then you should nevertheless support our equity-improving policies, because they are the
path to maximizing GDP per capita.”
If that is the writing between the lines, then
the Report’s message is weakened.
The work of the philosophers upon which the Report explicitly rests (Dworkin,
Arneson, Cohen, Roemer) emerged out of John Rawls’s (1971) magisterial attack on
utilitarianism: while these writers disagree about the details of how equal opportunity
should be defined, they agree on the rejection of utilitarianism (as does, as well, Sen).
So the repeated attempt of the Report’s authors to justify their concern with equity by a
bottom-line endorsement of utilitarianism is inconsistent, and missing the main lesson in
the evolution of political philosophy in the last forty years.
Furthermore, the claim that improving equity is the best way to maximize
‘prosperity’ or GDP per capita is surely false.
The easiest way to see this is to note that,
except in singular situations, one cannot simultaneously maximize two objective
functions. The maximization of the program in (1) will almost never lead to the same
policy choice as the maximization of
 v(x ( )) .
i
To make this point slightly more
formally, consider a very small country with just two individuals, each of whom
comprises one type. Suppose that total income is maximized at point P in income space
(see Figure 1a), and also opportunities for income are maximinned at P.
In this simple
case, the indifference curve of the opportunity – maximizing welfare function (1) is the
rectangular Leontief curve LL, and the indifference curve of the utilitarian social welfare
function is the straight line UU.
The simultaneous double maximization means that the
point P belongs to the income-possibilities set, but there are no points of the incomes-
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possibility set lying in the shaded region illustrated in Figure 1b. But this can only be
the case if the income-possibilities set has a kink, a non-differentiable boundary, at P.
This is the singularity referred to above. In other words, the claim that maximizing
equity will maximize prosperity or GDP per capita can hold in a world with nondifferentiable income-possibilities sets.
[Figures 1a and 1b here]
This is a perhaps pedantic way of saying that the growth-with-equity school,
which maintains that growth in GDP per capita is maximized by maximizing equity is
almost surely making an opportunistic argument. Perhaps a correct and honest statement
of the view would be “Maximizing equity is important as an end in itself, and probably
the sacrifice in GDP per capita that would be endured by doing so is quite small.” I am
willing to believe that this may be the case, but I am not willing to believe the stronger
case that the Report attempts to make, of possible simultaneous maximization of the two
objectives.
There is, moreover, always the possibility that maximizing equity will require
some substantial sacrifice in GDP per capita.
The Report implicitly argues that this is
not the case, because various market imperfections (e.g., in credit markets) prevent poor,
talented individuals from realizing their potential; and if that potential were realized by
improving their opportunities, then everyone would benefit – or more circusmpectly,
GDP per capita would grow.
This may indeed be the case in many developing
countries, but it is not necessarily and always the case.
To defend my claim, I cite results of Betts and Roemer (2006), in which we ask
what policy of educational finance would equalize opportunities for achieving wage
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earning capacity among children in the United States.
various different typologies.
We study this question for
Typology 1 takes parental education as the unique
circumstance; we partition the population of young male workers into four types, defined
by the level of their mother’s education.
We take the set of feasible policies to be the
possible distributions of the US educational budget, where different amounts of
investment can be targeted on each of the four types of student. We compute that the
equal-opportunity policy would indeed increase total earnings by about 2.6%.
This is a
case where equity is good for growth. But we then study Typology 2, where again there
are four types, but this time both parental education and race are taken as circumstances.
Now, the equal opportunity policy reduces total wages by 2%. In other words, equity is
bad for growth.
In this case, the policy maker is forced to choose: is she pro-equity or
pro-growth – is she an opportunity egalitarian or a utilitarian?
I do not think that one can deny that such cases are likely to occur fairly often – at
least in the short run.
If one understands the simple mathematical principle that two
different objective functions can rarely be maximized by the same policy, then there
will be in theory cases where maximizing one of them reduces the value of the other, and
given the complex world we live in, these cases will occur.
I do not mean to heap all the criticism on the growth-with-equity school; the
same peccadillo is committed by the neo-liberal school of development, which tries to
argue that reducing poverty is best accomplished by maximizing entrepreneurial
opportunities for the wealthy.
Again, these are two different goals, and they will not
in general be maximized with the same policy.
Neo-liberalism, however, is, thankfully,
not the philosophy of the Report upon which I am here commenting.
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4. What is efficiency?
As I have noted, the Report does not make explicit its definition of development,
but from its statements, we may deduce that it accepts the classical definition of
development as measured by GDP per capita, or the rate of development as measured by
the rate of growth of GDP per capita.
There is a similar ambiguous treatment of the term efficiency in the Report.
Efficiency is not defined by the authors. The standard meaning of efficiency in
economic theory is Pareto efficiency (PE): a policy (in our case) is PE if it is not possible
to find another policy that increases the welfare (or the advantage, or the opportunity for
advantage) of all.
But it seems that often the Report uses efficiency in the utilitarian
sense: that is, a policy is efficient if it is impossible to find another policy that engenders
a larger GDP per capita (or a faster rate of growth of such).
For instance:
there may be various short-run policy level trade-offs between equity and
efficiency (p.3)
Greater equity implies more efficient economic functioning (p. 3)
This inequality is objectionable on both intrinsic and instrumental grounds. It
contributes to economic inefficiency….(p.9)
Related to this is the view that inefficient institutions are often perpetrated by the
powerful:
…market imperfections may arise not by accident but because they distribute
income and power in particular ways. In this view, there will be social conflict
over the institutions of society and incentives for people who control power to
shape institutions in ways that benefit them (p.8).
I prefer the following triple nomenclature: technological efficiency, Pareto
efficiency, and social efficiency.
An allocation is technologically efficient if, with the
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same bundle of inputs, it is impossible to achieve a vector of outputs that dominates,
component-wise, the first vector of outputs.
Pareto efficiency was defined above.
Social efficiency means that the allocation (or policy) maximizes the social objective
function – in the case of this Report, equity.
If one writes ‘efficiency’ without a
modifier, the default meaning, for economists, is Pareto efficiency.
The most sensible interpretation of some of the quotations I have given is that
efficiency means ‘social efficiency in the utilitarian sense,’ namely, maximizing GDP per
capita or its growth rate.
That is inconsistent with the concept of social efficiency
which the Report has advocated.
As I have been at pains to say in the last section,
this Report should consistently advocate equity as the concept of development, and hence
social efficiency as the maximization of equity – formally, of the program stated in (1).
Consider the last quote reproduced above. ‘Market imperfections’ are always
identified by economists as a source of Pareto inefficiency.
But in this quotation, the
authors are saying that market imperfections may often be maintained because they
benefit the wealthy and powerful.
But if market imperfections are ipso facto Pareto
inefficient, then why cannot these powerful rich people find a set of institutions that
Pareto-dominates the present ones, which, by definition, would make them better off?
In other words, either the economic theory is wrong, or the wealthy and powerful are not
really that powerful – not powerful enough to implement the Pareto-dominating
allocation that could be achieved by reducing market imperfections.
Market imperfections that exist may well arise by accident, not by the conscious
manipulation of the rich and powerful.
The last quotation smacks of functionalism –
the error of asserting that because an institution benefits some powerful social class, that
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class must have brought it about.
The best insurance against functionalist errors is to
always search for mechanisms by which the benefiting group actually does bring the
benefiting institution into being1.
As far as I can see, the Report does not do this.
My own view is that imperfect markets may well be part of a Pareto efficient set
of institutions, in the sense that, given what is politically feasible, eliminating those
imperfections would harm some individuals – namely, the rich and powerful.
But if
this is the case, then the authors of the Report should not claim that reducing
imperfections is in everyone’s interest, or would be a Pareto improvement.
Doing so
might well improve equity, and as well might improve the rate of growth of GDP, but it
also might not be a Pareto improvement, in the sense that the wealthy would suffer.
On a more historical note, let me also express some skepticism about the claim
that improving equity will always improve growth.
The Report argues (p. 9) that the
difference between the successful development path of North America and the
unsuccessful one of South America was due to there being labor scarcity in the North and
labor abundance in the South. The argument is that, in the South, unskilled labor was
prevalent, and wealth could be created by mining and plantation agriculture, without
technological innovation and increasing labor productivity. In North America (with the
exception of the US South) this was not the case; capitalists had to compete for scarce
labor, and introduce technical innovation to save on labor.
Workers in the North won
the franchise, and other liberties, because their scarcity forced the wealthy and powerful
to grant them concessions.
Thus, equitable institutions had ‘positive consequences for
long-run economic development.’
1
The strongest advocate of this view is Elster ( 1989).
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I am not a historian, and cannot judge this claim from my own research. But
there was a long debate in the journal Past and Present, in which the historian Robert
Brenner argued quite the opposite: that the reason France’s industrial revolution came
late, and Britain’s early, was that the French yeomen peasantry succeeded in winning a
large degree of independence, and were able to live as subsistence farmers without
innovating or become proletarianized, whereas in Britain, weaker farmers were driven off
the land, proletarianized, and capitalist competition among both large agriculturalists and
manufacturers led to rapid economic development.
Here, then, we have two class-
oriented tales, with precisely opposite conclusions2.
5. How much inequality is due to inequity?
One of the important analyses of the Report is presented in chapter 2, where the
authors attempt to measure the proportion of inequality that is due to inequity, in various
countries. For instance, Figure 2.11 takes the circumstance to be education of the
household head, and reports the fraction of income inequality which is explained by
type variation, as opposed to ‘within type.’
In other words, this figure reports an
attribution of total income inequality to inequality between distributions of income, by
education of household head, and the inequality within such distributions. Two different
ways of making the attribution are computed.
In Brazil, over 30% of income
inequality is due to such inter-type inequality while in Belgium, less than 5% is so
explained.
From the figure, it appears that the degree of inequality due to inequity is
fairly low in the high-income economies (Luxembourg is the highest, with about 15%)
2
The exchanges in this debate are available in Alston and Philpin (1985).
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and East Asia (for the most part), and it is high in Latin America and sub-Saharan Africa.
This would suggest that as countries become wealthier, equity improves.
The caveat here is that there is only one circumstance: the education of the
household head.
That is not an optimal choice of circumstance, because the choices
that determine income overlap with the choices that determine the education of the
household head. In other words, if low effort determines low education of the household
head, it may also determine low income of that family.
It would be better to look at the
earnings of the children of parents typed by their level of education, but I am sure those
data are available for only a handful of countries at present.
Because one should, ideally, take into account many other circumstances, one can
confidently conjecture that the proportions of inequality due to inequity reported in this
chapter are only lower bounds for the true proportions: the authors make this point.
Moreover, one cannot be confident that the proportion of inequality due to inequity truly
falls with increasing wealth of the country, because it may be the case that the salient
circumstances change with wealth.
For instance, natural talent may be the
circumstance that accounts increasingly for high incomes, as markets become more
efficient.
And is this not a circumstance that should count with respect to our
conception of inequity? Is it morally right that those with high natural talent should have
higher consumption than those with less?
Perhaps we would consider it a great
achievement if the only circumstance which made a difference with regard to income
were natural talent; but as wealth increases, is it not right that nations should cast the net
of circumstances more broadly? When we eliminate inequality of opportunity due to
typologies based upon caste, race, parental education, and parental social connections,
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should we not start including certain genetic dispositions as grounds for social
compensation?
We already do so in advanced democracies, to some extent: consider
the Americans with Disabilities Act (ADA), which requires employers to equalize
opportunities for functioning at work for disabled workers. American businesses and
other institutions have had to spend many millions of dollars, for example, to install
wheelchair ramps to conform to the ADA.
6. Global inequality
The chapter on global inequality takes, as the circumstance, the country a person
is born in.
Many have argued that birthplace is morally arbitrary, and this leads to what
is called the cosmopolitan egalitarian view, that advantage (say, income) should be
equalized across countries. It also may imply a liberal immigration policy.
The Report
argues, correctly in my view, that global inequalities are unjust, and it is important to take
steps to rectify them.
Here, I wish only to comment that the Report is a bit ahead of contemporary
political philosophy: by this I mean that there are some political philosophers who
advocate egalitarian measures within nations, but not across them.
mention are John Rawls and Thomas Nagel.
Two names to
Rawls( 1999), in his writing on global
inequality, did not advocate applying the difference principle (roughly speaking, equality
of opportunity).
And recently, Nagel (2005), who would agree with this Report’s
stance towards within-nation inequality, would not extend that ethic to inequality among
nations. Nagel argues that justice is a concept that applies only to collections of citizens
who belong to a state, and because there is no supra-national state, the concept of justice
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does not apply globally.
Citizens of rich states, he maintains, have no obligations to
citizens of poor ones beyond the prevention of extreme deprivation, and whatever charity
might dictate.
I believe that Nagel is wrong; for a response to his view, see Cohen and Sabel(in
press).
My intent here is only to point out that the philosophical authority for
maintaining that country of birth is properly taken to be a circumstance compensable at
the bar of justice is still in contention, although I, personally, think that in a century or
two, it is global inequality that will seem to be the most morally egregious.
7. Conclusion
The authors of “Equity and development” have made an important contribution
both to the literature on development and welfare economics: this book is the most
thorough application to date, of which I am aware, of important ideas in recent political
philosophy to a massive world problem.
Not only will it change the terms of the debate
in development circles (at least, so I hope), but it shows the importance of political
philosophy for welfare economics.
Economists have, far too frequently, lauded
themselves on their discipline’s being ‘value free,’ and eschewed any justice talk in
favor of efficiency talk. This is, I believe, a mistake, and the publication in question
makes a strong case against that narrow view.
In critique, I say the Report has not gone far enough. It correctly takes inequality
of opportunity as the appropriate concept of inequity, but then goes on to argue that there
is no contradiction between that view and utilitarianism of a certain narrow type, namely,
the view that justice recommends the maximization of per capita income. I have
20
belabored this point above; but see also page 78 of the Report, where the authors
backtrack and say they are not necessarily recommending the equalization of
opportunities, but only that opportunity be the argument of the social objective function.
In the highlighted box on this page, they say they take no stand as between equalizing
opportunities across types, or maximizing the sum of opportunities across types, or
maximinning opportunities across types.
I have argued that only the last of these
corresponds to the notion of equity advanced elsewhere in the Report. Note that if one
takes ‘mean income of the type’ as the measure of its opportunity, then maximizing the
sum of opportunities across types, if they are (reasonably) weighted by their population
fractions, becomes: maximize GDP per capita.
I can only conjecture that the language
on page 78 was a concession to a minority view on the editorial committee of the Report.
It is inconsistent with the rest of the Report.
I believe that the conception of development which is consonant with the Report’s
definition of equity is the value  * of the program in (1).
The rate of economic
development should be taken to be the rate at which the mean advantage level of the
worst-off type grows over time. I agree that maximizing this objective will probably, in
most cases, lead to an increase in GDP per capita, although I disagree that it will
maximize the rate of that growth.
I look forward to a future number of the WDR that
carries out the computation, across countries, of this new definition of economic
development.
21
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