Mahbub ul Haq: the goal of economic growth is the people

Gianluigi Segalerba

Επιμέλεια: Εύα Πετροπούλου Λιανού

I would like to express a few notes on the work of Mahbub ul Haq, Ul Haq, in his studies The Poverty Curtain: Choices for the Third World (Columbia University Press, New York 1976) and Reflections on Human Development (Oxford University Press, Oxford 1995), recognises that most of the economic analyses of his time had focused exclusively on the growth of the gross domestic product of the countries, thus completely forgetting people’s well-being, where well-being refers to all the aspects of the life of the people.

In Ul Haq’s view, traditional economic analyses contended that the goal of the economy is the growth of gross domestic product. Ul Haq considers economic growth only a means: people are the authentic end of the economy. Economic growth is a necessary means for the promotion of the well-being of the population. Ul Haq, therefore, contends that the improvement of people’s living conditions is the authentic goal of economic development. Economic growth is a means; people are the goal.

Ul Haq shows that the goal of economic development cannot be reduced to the growth of gross domestic product. The goal of economic development is the promotion of individual freedoms, human rights, health care, and educational opportunities. Therefore, the real goal of economic development proves to be, in Ul Haq’s view, the growth of individuals: the goal of economic development is to improve people’s living conditions. All interpretations of economic development which are based exclusively on the measurement of the growth of gross domestic product and of individual income turn out to be, on closer inspection, inadequate since they do not provide adequate information on the quality of life of the individuals. The quality of life and the improvement of the quality of life of individuals depend directly on the priorities set by the governments: the question is whether a government aims to produce butter or guns.

Economic growth is necessary for a government in order that a country could have the resources which the government needs to improve people’s living conditions. However, the improvement of people’s living conditions does not occur as an automatic consequence of the growth of the gross domestic product: an adequate government policy is indispensable. The improvement of the living conditions of the population does not necessarily correspond to a growth of the gross domestic product: the growth of the gross domestic product can take place without a corresponding improvement in the living conditions of the people taking place.

Ul Haq acknowledges that the inquiry into the conditions of the people has not represented the focus of the activity of economists. Economists’ surveys have previously focused exclusively on gross domestic product growth. The increase in the gross domestic product was considered the exclusive objective of economic development: from the growth of the gross domestic product, everything else would automatically follow.

Ul Haq draws the reader’s attention to the fact that there is no necessary connection between the increase of gross domestic product and the improvement of people’s living conditions. On the contrary, it can happen at the same time that the gross domestic product increases, on the one hand, and the general conditions of life, i.e., the average living conditions of people, on the other hand, worsen. The growth of the gross domestic product has led, in some countries, to an increase in disparities: these disparities involved both the difference between the incomes of individuals and the wealth conditions of the different regions. Economic growth has often had no positive impact on people’s living conditions: there has been no translation of economic growth on people’s living conditions. Ul Haq points out that economic growth has often been followed by rising unemployment, worsening social conditions, and growing absolute and relative poverty.

The authentic goal of economic research should not consist, in Ul Haq’s view, in measuring gross domestic product, since the gross domestic product does not say very much about the conditions of a society. Gross domestic product turns out to be just one aspect that researchers should investigate. A correct economic research ought to investigate, for example, the following aspects of the society: