It is much more cognizant of market failure and convinced of the ability of the social sciences to inform policy solutions that deal with market failure.
With policies informed by growth models that emphasize investments in physical and human capital, growth is still a priority, but with an awareness of the central role played by ideas and information.
Over the last century, the policy options available have tended to focus on what I call An outcome-policy focuses on manipulating the levers of government – taxes, expenditures, regulations, systems of implementation – to achieve certain outcomes.
The success of the policy is judged by those outcomes.
There is acute awareness of the inability of markets to deliver basic services to the poor and of systemic discrimination.
Poverty is still a welfarist metric, but along with data on income and consumption, household surveys now collect data on gender, religion, race, and caste to enable analyses of discrimination.The idea is that free markets result in high rates of economic growth, while electoral democracy ensures that governments are held accountable and create the conditions for growth.2 This approach underlies the “Washington consensus” that prevailed in the development policy world through the 1980s and 1990s and that over the long term, recent evidence has shown, has led to higher rates of growth.3The neoliberal approach to poverty reduction argues that maximizing economic growth and improving and equalizing access to human capital allows every individual to benefit from the growth and be liberated from poverty.There is some evidence in favor of this,4 There is also strong reason to believe that neoliberal policies increase inequality and reduce social support, for instance, by creating “opportunity markets” that commodify and sharply restrict access to basic needs such as education and housing.6The driving discipline behind neoliberalism is rational-choice economics, which provides a consistent framework to think about growth, welfare, poverty, and equality of opportunity.This commentary draws on the essays in this special issue of to make the case for “reflectivism,” which shifts structural inequalities in agency, power, social structure, empathy, and aspiration in an incremental manner that is more uncertain and difficult to measure, but that can result in more lasting change.represent a major attempt to move the diagnosis of inequality from a static to a process view.Most policies to combat inequality and poverty fall under this rubric.Think, for example, of conditional cash transfers (whose success is measured by the extent to which the transfers encourage people to satisfy the “condition,” such as keeping children in school), increasing estate taxes (measured by the extent to which they increase intergenerational social mobility), or providing health insurance (measured by effects on public health and economic hardship).While I will draw on experiences and evidence from the developing world, these points may be of broader relevance.The manner in which we translate the desire to create a more equal world with less poverty into action is shaped by how we organize and think about the world, how we approach causality, and how we make abstract ideas legible by methods of measurement and categorization.paradigm that grows from deep skepticism about the capacity of social science to understand complex human interactions, and thus the ability of policy to engineer a better world.This approach emphasizes the key principles of laissez-faire markets, free trade, human rights, and electoral democracy.