Challenges of Affluence and Poverty

♠ Posted by Emmanuel in ,, at 3/12/2007 02:26:00 AM
I recently took out two academic titles from the library that have gained a fair measure of attention. The first is economic historian Avner Offer's The Challenge of Affluence: Self-Control and Well-Being in the US and Britain Since 1950 and the second is David Ellerman's Helping People Help Themselves. On the surface, Offer's book covers the challenges of having too much, whereas Ellerman's book those of having too little. After reading both, though, there are many similarities in the approaches they take to their topics. Common to both are a focus on limits to human cognition in terms of bounded rationality. That is, cognitive limitations cause people to behave differently from the proverbial rational economic man. Hence, contextualizing these cognitive limitations in terms of "affluenza" and development may yield better results in terms of coping with the challenges of abundance and scarcity.

The Challenge of Affluence is another book in a seemingly endless literature stream dedicated to cataloging human fallibility and its effects on well-being. A recurring theme is that economic growth and prosperity by no means guarantee well-being, vide the "Easterlin paradox." Part I provides a good start by illustrating how
rising wealth in developed countries has not resulted in increasing happiness; rather, stagnation and even decline are pervasive. The neoliberal notion that choice is the sine qua non of human existence is critiqued by pointing out that choice is fallible (due to bounded rationality and imperfect knowledge). Hence, socialization is needed to ensure that better information flows among market participants to avoid this unwelcome eventuality. The "gift economy" where non-market exchanges occur such as among persons in households is then covered as an alternative. So far, so good.

I start having difficulties with this book in Part II. Here, the evils of marketing's "false sincerity" are blamed for everything ranging from obesity, overspending, unsightly billboards, SUVs, to disposable culture. Unfortunately, Offer does not cover much literature from consumer research which challenges the notion that consumers are hapless victims of ever-more sophisticated ad pitches. People can and do filter out a majority of marketing messages. And, they can discern underlying contradictions in marketing messages, such as advertising that features countercultural elements like sixties nostalgia while selling mainstream products. Offer portrays consumers as passive victims to a degree which I believe is unwarranted.

Offer gets somewhat back on track with Part III where he examines the social costs of modernity--rising incidences of divor
ce, sad childhoods, competition for status, diminishing mental health, growing inequality blamed on neoliberalism, etc. However, there is effectively no conclusion after this part. To be honest, the book presents many, many sources without digesting them fully. While I did pick up some additional useful references, most of what is presented should be quite familiar by now to those following critiques of neoliberalism or modernity. Had these sources been better integrated, a genuine conclusion could have been formed elaborating possible steps for mitigating such social ills. As it stands, I would recommend the likes of Jonathon Porritt's Capitalism as if the World Matters and Barry Schwartz's The Paradox of Choice as books that go past description by making some actionable suggestions.

David Ellerman--who was the speechwriter for Joseph Stiglitz during his tumultuous tenure as chief economist at the World Bank--presents his volume as a companion to Stiglitz's Globalization and Its Discontents. While Stiglitz critiqued (or better yet, slammed) the IMF, Ellerman purports to do the same for the World Bank. According to him, the World Bank would do better if it began with these perspectives:
  • First Do: Start from present institutions (and not "start from scratch")
  • Second Do: Seeing the world through the eyes of the client
  • First Don’t: Transformation cannot be externally imposed
  • Second Don’t: Avoid benevolence which tends to render others dependent and thus contradicts the professed aim of helping others
  • Third Do: Respect the autonomy of the doers

He then applies findings from the literature on learning in reference to the Bank's learning (or lack thereof):

  • Roadblock to Learning 1: Official views as dogma, with examples
  • Roadblock to Learning 2: Funded assumptions as dogma
  • Roadblock to Learning 3: “Social science” as dogma (economic truisms)
  • Roadblock to Learning 4: The rage to conclude
Finally, he covers the literature on organization theory and identifies the structural problems that the Bank faces in fostering worthwhile changes:
  • Structural Problem 1: Monopolistic power
  • Structural Problem 2: Affiliation with US policies and interests
  • Structural Problem 3: Money is not the key to development assistance
  • Structural Problem 4: Working through governments that are part of the problem
  • Structural Problem 5: Trying to control bad clients instead of exiting deleterious relationships
Along the way, Ellerman too covers a lot of literature from different fields like Offer does, but his approach is better digested as he is more able to make workable suggestions by book's end. There are bits of economics, organization theory, learning theory, political science, and sociology thrown in for good measure. In some respects, this book is similar to William Easterly's The White Man's Burden in suggesting that development solutions will most likely be found locally and not through massive, master-planned aid programs. The best that organizations like the World Bank can do is engage their clients from the standpoint of joint learning which encourages experimentation to find creative solutions to developmental roadblocks. For example, how can learning networks be formed that successfully transmit fruitful ideas to different parties? Overall, this book is a recommended read, though more examples of Ellerman's ideas in action could have made them more vivid. A condensed version of this book is available on Ellerman's website.