Economists Don't Know Poverty

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Barefoot Economics

It's time for economists to start getting dirty.

Adbusters , 08 Mar 2011



Jim Denevan / Beach Spiral / 2005

From an interview with Manfred Max-Neef on Democracy Now!. Manfred Max-Neef is an acclaimed Chilean economist and a recipient of the Right Livelihood Award. He is the author of From the Outside Looking in: Experiences in Barefoot Economics and the upcoming Economics Unmasked: From Power and Greed to Compassion and the Common Good.

I worked for about ten years in areas of extreme poverty in the Sierras, in the jungle and urban areas of Latin America. And one day at the beginning of that period I found myself in an Indian village in the Sierra in Peru. It was an ugly day. It had been raining all day. And I was standing in the slum. And across from me, a guy was standing in the mud – not in the slum, in the mud. He was a short guy … thin, hungry, jobless, five kids, a wife and a grandmother. And I was the fine economist from Berkeley. As we looked at each other, I suddenly realized that I had nothing coherent to say to that man in those circumstances, that my whole language as an economist was absolutely useless. Should I tell him that he should be happy because the GDP had grown five percent or something? Everything felt absurd. Economists study and analyze poverty in their nice offices, they have all the statistics, they make all the models and are convinced they know everything. But they don’t understand poverty.

I live in the south of Chile in the deep south. And that area is known for its milk production. Top technologically, and in every way the best there is. A few months ago I was in a hotel there for breakfast, and there were these little butter things. I looked at one. It was butter from New Zealand. And I thought, isn’t that crazy? Why? The answer is because economists don’t know how to calculate true costs. To bring butter from 10,000 kilometers to a place where you already make the best butter, under the argument that it is cheaper, is a colossal stupidity. They don’t take into consideration the environmental impact of 10,000 kilometers of transport. And part of the reason it’s cheaper is because it’s subsidized. So it’s clearly a case in which the prices do not tell the truth. It’s all tricks. And those tricks do colossal harm. If you bring consumption closer to production, you will eat better, you will have better food, you will know where it comes from and you may even know the person who produces it. You will humanize consumption. But the way economics is practiced today is totally dehumanized.

We need cultured economists, economists who know the history, where the ideas come from, how the ideas originated, who did what; an economics that understands itself very clearly as a subsystem of the larger system of the biosphere. Today’s economists know nothing about ecosystems, nothing about thermodynamics, nothing about biodiversity – they are totally ignorant in those respects. And I don’t see what harm it would do to an economist to know that if the beasts and nature disappear, he would disappear as well because there wouldn’t be food to eat. But today’s economists don’t know that we depend absolutely on nature. For them, nature is a subsystem of our economy. It’s absolutely crazy!