Let's Talk About Poverty (2)

One chilly morning in a crowded European city, a young boy no older than ten stood by a bakery window. His clothes were tattered, his hands trembling from the cold, and his eyes fixed on a loaf of bread that had just come out of the oven. Inside, people laughed over warm pastries and coffee, unaware of the child’s silent desperation.

After a few moments, the baker noticed him. Instead of chasing him away, he stepped outside and asked gently, “Are you hungry, son?” The boy nodded, too proud to beg but too hungry to pretend otherwise.

The baker handed him a small loaf, still warm. The boy took it with both hands, eyes wide, and whispered, “Thank you, sir.”

Later that day, someone asked the baker why he gave bread to someone who couldn’t pay. He simply replied, “Because hunger should never be punished.”

That simple gesture—barely noticed by others—was more than charity. It was a quiet rebellion against a world where poverty is often treated as a crime.

There were no claps, no thunderous cheers. No headlines carved his name in gold. No digital tide carried it to the world’s feed. Mulyono—hailed like a messiah just for donning thrifted shoes and a budget blazer—basked in hollow praise from his faithful herd. Until, like an illness that knows no disguise, the truth emerged: unfiltered, unkind, undeniable.

And yet, the baker? With nothing but warm bread and a gentler heart, he mounted a quiet rebellion—against a world far too fond of punishing the poor for the crime of being poor.

In System of Economic Contradictions: Or, the Philosophy of Poverty (1846), Pierre-Joseph Proudhon embarks on a bold and intricate journey through the contradictions of capitalist political economy. He argues that the economic system, as it stands, is inherently self-defeating and riddled with internal conflicts. Each concept that appears to be a solution—such as the division of labour, competition, property, or credit—inevitably gives rise to its own problems, creating a vicious cycle of poverty and inequality.

Rather than calling for immediate revolution or centralised socialism, Proudhon proposes a form of mutualism—a society based on reciprocal relationships and voluntary associations among free individuals. He critiques both laissez-faire capitalism and authoritarian communism, believing neither can resolve the contradictions embedded in the system. For Proudhon, progress lies not in destroying the system entirely, but in transforming it through justice and balance.

Importantly, he also critiques the way economists glorify poverty as a necessary part of economic development. He labels this attitude as "the philosophy of poverty"—a cynical justification of suffering. In contrast, Proudhon believes true social science should aim to eliminate poverty altogether.

Proudhon does not offer a single, rigid definition of poverty in purely philosophical terms. Instead, he unpacks the concept through its socio-economic implications and moral contradictions. For Proudhon, poverty is not merely the absence of wealth or material comfort—it is a structural condition, deeply rooted in the very mechanisms of capitalist production and exchange.

He sees poverty as an outcome of systemic contradictions: each economic advance simultaneously generates a new form of deprivation. For instance, technological progress increases productivity, but it also displaces workers and creates instability. Property enables individual security, yet it breeds inequality. In this sense, poverty becomes the inevitable shadow of wealth—a necessary by-product of an unjust system.

Proudhon calls this the "philosophy of poverty" not because he believes in it, but precisely to criticise the way bourgeois economists romanticise, justify, or even rationalise poverty as an essential feature of economic development. He mocks their detached intellectualism that turns human suffering into an abstract variable. His own “philosophy” is actually a counter-philosophy: a passionate argument that poverty should not exist, and that justice and reciprocity must replace exploitation.

As a foundational figure in both anarchism and early socialism, Proudhon interrogates the very foundations of property and labour in The Philosophy of Poverty as central to understanding the persistence of poverty. He challenges the traditional liberal notion that private property is a natural right and the cornerstone of freedom. Instead, he famously declares, “Property is theft,” arguing that when one person owns the means of production—land, tools, or capital—they are able to extract profit from the labour of others without contributing equivalent labour themselves.

Proudhon sees this unequal relationship as fundamentally exploitative. The worker, who possesses only his labour, is compelled to sell it to survive, often under conditions where the value he creates far exceeds the wage he receives. Thus, labour, under capitalism, becomes a source of alienation and servitude rather than empowerment or dignity.

He also critiques how the property system consolidates power in the hands of the few, allowing capital to dominate labour and perpetuate systemic poverty. In his view, it is not enough to reform wages or redistribute income superficially. The entire structure of ownership and labour relations must be rethought around mutualism—where each person retains the full fruits of their labour and economic exchange is based on reciprocity, not exploitation.

In Poor Economics (2011), two Nobel Laureates, Abhijit V. Banerjee and Esther Duflo challenge many of the traditional assumptions held by economists and policymakers about poverty. Rather than viewing the poor as passive victims or irrational decision-makers, they present detailed empirical evidence—drawn from years of field experiments and Randomised Controlled Trials (RCTs)—to show that the poor often make decisions that are entirely rational within the complex constraints they face.

For instance, the authors highlight that the poor often do not invest in health or education not because they undervalue them, but because of uncertainty, poor infrastructure, and the absence of reliable services. Similarly, when the poor spend money on festivals, TVs, or sugary food rather than nutrition or savings, it is not necessarily out of ignorance or irresponsibility, but because small pleasures provide psychological relief in lives filled with stress and insecurity.

Banerjee and Duflo argue that the poor do not lack intelligence or ambition; they lack access to stable institutions, consistent incentives, and the safety nets that the middle and upper classes take for granted. Their core message is that combating poverty requires a bottom-up approach, grounded in understanding real behaviour, not just economic theory. In this way, they replace sweeping generalisations with careful, localised interventions.

Ruby K. Payne's A Framework for Understanding Poverty (1996, aha! Process Inc.), presents a compelling argument that poverty is not merely a financial condition, but a cultural reality governed by a distinct set of unspoken social rules. Payne contends that people living in generational poverty operate with a different worldview from those in the middle or upper classes—differences that often cause misunderstandings, especially in educational settings where middle-class norms prevail.

One of the book’s central contributions lies in its identification of what Payne calls “hidden rules”—the unwritten expectations and behavioural norms that shape how people navigate the world, whether in conversation, conflict, time management, or family roles. For example, in middle-class culture, future planning is prioritised, whereas in poverty, the focus may be on survival and the immediate present. These cultural codes, Payne argues, are rarely taught explicitly, yet they profoundly affect success in institutions like schools and workplaces.

Payne proposes that to genuinely understand and address poverty, one must look beyond material lack and instead consider poverty as a complex system of lived experiences shaped by hidden rules, values, and resources. Her framework is built around the idea that different economic classes—poverty, middle class, and wealth—function with their own unwritten codes of behaviour, which influence everything from language and relationships to discipline, decision-making, and aspirations.

Payne introduces eight categories of resources that go far beyond money: emotional, mental, spiritual, physical, support systems, relationships/role models, knowledge of hidden rules, and financial resources. She argues that sustainable change for those in poverty requires access to these resources, not just financial aid. For instance, emotional strength—the ability to withstand difficult circumstances without falling apart—is just as critical as having money in the bank.

Furthermore, she distinguishes between generational poverty, which is ingrained through at least two generations of experience, and situational poverty, which results from a specific crisis such as illness, job loss, or divorce. Generational poverty, she claims, forms its own culture, complete with unique norms, values, and survival strategies.

At the heart of her framework lies the concept of "hidden rules"—the tacit understandings that guide behaviour within each class. While the middle class may value achievement and long-term planning, people in poverty may prioritise relationships and survival in the present moment. Payne insists that these hidden rules must be taught explicitly to help individuals successfully navigate institutions designed around middle-class norms—particularly schools and workplaces.

Payne’s framework is especially focused on education. She argues that schools operate under middle-class values, and students from poverty are often unfairly penalised simply for not knowing the rules. By understanding the hidden rules of poverty and building bridges between cultural expectations, teachers can better support student learning and engagement.

Ultimately, her framework invites professionals—especially educators and social workers—to shift from blaming individuals for their poverty to recognising the systemic barriers and cultural differences at play. It’s not just about teaching people how to "act middle class"; it’s about equipping them with the tools to succeed without erasing their identities.

Andrew Shepherd and Julia Brunt’s framework, as articulated in Chronic Poverty: Concepts, Causes and Policy (2013, Palgrave Macmillan), offers a comprehensive lens for understanding poverty that persists not just for years, but for generations. Unlike transient poverty, which may result from temporary setbacks, chronic poverty is characterised by its durability, its deep entanglement with social exclusion, and its resistance to economic growth alone. Shepherd argues that chronic poverty is not simply about low income, but about powerlessness, voicelessness, and the structural conditions that trap people at the margins of society.

At the heart of Shepherd and Brunt’s framework is the notion of poverty dynamics—a focus on how people move in and out of poverty over time, and why some never escape. This dynamic understanding breaks away from static measures of income or consumption, and instead asks: What causes people to fall into poverty? What keeps them there? And crucially, what helps them escape?

The framework identifies three broad processes that drive chronic poverty: assetlessness, adverse incorporation, and capability deprivation. Those in chronic poverty typically lack tangible assets—land, education, secure jobs—and are often trapped in exploitative or marginal economic relationships (adverse incorporation), such as insecure wage labour or caste-based exclusion. Moreover, they experience capability deprivation: a lack of access to education, healthcare, political participation, and social recognition.

On the policy front, Shepherd and Brunt advocate for a multi-layered response. First, they argue for long-term social protection systems, not just emergency relief. These should include predictable cash transfers, pensions, and child support grants to help families stabilise their lives and make long-term decisions. Secondly, they stress the need to build assets among the poor—access to land, livestock, education, and credit—as a foundation for escaping poverty.

They also emphasise the importance of inclusive growth strategies, which ensure that economic expansion translates into real opportunities for the poorest. This means not only job creation but ensuring the poorest can access those jobs. Finally, they highlight the need to tackle structural inequalities—such as gender discrimination, ethnic exclusion, and violent conflict—that reproduce poverty across generations.

In sum, Shepherd’s framework is not just a diagnosis of poverty; it is a call for transformational change—for policy-makers to confront the deep social and political structures that allow chronic poverty to persist, and to empower the poor not only economically, but as citizens with agency and dignity.

David Pilling’s The Growth Delusion: Wealth, Poverty and the Well-Being of Nations" (2018, Tim Duggan Books) is a sharp, engaging, and at times amusing critique of one of modern economics’ most sacred cows: Gross Domestic Product (GDP). With a journalist’s flair and a sceptic’s eye, Pilling questions why GDP—a measure invented during wartime to account for national production—has come to dominate our understanding of success, progress, and even happiness.

Throughout the book, Pilling argues that our obsession with economic growth has led us to ignore the very things that make life meaningful. GDP, he notes, does not distinguish between good and bad growth. A flood that destroys homes but spurs construction boosts GDP. A rise in cancer rates increases medical spending, and thus GDP rises—yet no one would call that progress.

Moreover, GDP overlooks unpaid work, like caregiving or volunteering, which forms the social glue of communities. It doesn’t capture inequality, mental health, or environmental degradation. In short, GDP measures activity, not well-being. And what it doesn’t measure, governments tend to neglect.

Through a mix of storytelling, interviews, and data, Pilling travels across the world—from the informal economies of sub-Saharan Africa to the booming but toxic metropolises of China—showing how blind allegiance to growth can lead to policies that hurt rather than help.

Rather than merely criticising, he explores alternative approaches. He looks at efforts by countries like Bhutan with its Gross National Happiness index, New Zealand’s well-being budget, and indicators like the Human Development Index or the Genuine Progress Indicator. These, he believes, provide a richer, more humane picture of how nations are faring.

Gross Domestic Product (GDP) was never meant to be the ultimate measure of a nation's well-being; instead, its origins lie in a time of urgent national crisis. As a response to the Great Depression in the 1930s, Simon Kuznets developed national income accounting to help governments monitor economic health. By the Second World War, policy-makers needed reliable data to direct resources toward the war effort—specifically, GDP—to know how much of the economic “pie” could be allocated to weapons, troops, and national defence.

In the early Cold War, GDP became a badge of ideological strength. Leaders such as JFK and Khrushchev publicly asserted that economic growth would demonstrate the superiority of their respective systems—capitalism versus communism. Thus, GDP shifted from being a pragmatic wartime tool to a symbol of national success.

David Pilling explores this transformation in The Growth Delusion, showing how GDP’s expansion into peacetime policymaking entrenched it as the dominant indicator of progress. He recounts how its narrow focus on measurable output meant that much of what truly matters to quality of life—like leisure, environmental health, or unpaid work—fell outside its scope. While Pilling acknowledges GDP’s historical usefulness in lifting nations out of poverty, he warns against its elevation to an unquestioned measure of success. As a result, he argues that we should complement GDP with a broader dashboard of metrics that capture well-being, sustainability, and justice.  

The National Happiness Index—often referenced in the context of Bhutan’s pioneering Gross National Happiness (GNH) model—represents far more than mere material wealth or economic growth. Unlike traditional measures like GDP, the GNH framework captures a holistic picture of well-being, aiming to reflect how people truly experience their lives.

This index is composed of several key dimensions: psychological well-being, health, education, time use, cultural diversity and resilience, good governance, community vitality, ecological diversity, and living standards. Each of these components is carefully measured through surveys and indicators that assess both subjective happiness and objective conditions.

Psychological well-being includes metrics such as life satisfaction, positive emotions, and spiritual practices. Health is not just the absence of illness, but also access to healthcare and mental well-being. Education considers not only years of schooling but also lifelong learning and cultural knowledge. Time use measures how much time people have for leisure or family life, while cultural resilience values the preservation of heritage and identity.

Importantly, the GNH model acknowledges that economic prosperity is just one part of a fulfilled life. A truly happy society is one where people feel connected, respected, and empowered—not just productive. As such, this index represents a quiet but radical challenge to the global economic system that prioritises profit over people.

Finland currently holds the title of the happiest country in the world, according to the latest World Happiness Report, which compiles data from 2022 to 2024. For the eighth consecutive year, Finland has secured the top position, thanks to consistently high scores across factors such as trust in others, optimism about the future, strong social support, freedom and minimal well‑being inequality. These Nordic values are reflected in the self‑reported life evaluations of Finnish citizens. Following closely behind are its Nordic neighbours Denmark, Iceland and Sweden, while other top‑ten spots are taken by the Netherlands, Costa Rica, Norway, Luxembourg and Mexico

Ultimately, The Growth Delusion is a call to rethink what we value and how we measure it. If growth becomes the only goal, we risk building societies that are economically bloated but spiritually bankrupt.

[Part 3]
[Part 2]

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