Post-Keynesian economics and social policy: equality of opportunity or equality of place?

Abstract

AbstractThis article shows that post-Keynesian economics is more closely tied to the proposal of equality of place rather than that of equality of opportunity. More precisely, it advocates for the approach of utilizing equality of place as a means to attain equality of opportunity. These are two conceptions of social policy. Equality of opportunity distinguishes between poor and non-poor, and state intervention is focused on poor people. This mode of intervention promotes individuals’ improvements in human capital, assuming that the poor can reach the position they want through a competitive process. In contrast, the idea of equality of place is intertwined with the concept of decommodification and supply-side subsidies. It envisions a scenario in which markets might not ensure that people can access fundamental rights. Consequently, it suggests an alternate role for state intervention. Because some heterodox and post-Keynesian authors have identified with the principle of equality of opportunity, it is important to clarify the nature of the relationship between social policy and post-Keynesian economics. The principle of equality of place can provide a framework of social policy that is consistent with the tenets of the post-Keynesian tradition.Keywords: Post-Keynesian economicssocial policysocial justiceequality of opportunityequality of place Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 In his article, “The economics of discrimination,” Becker (Citation2010) said that discrimination should disappear because competitive market forces are incompatible with discrimination.2 For example, Post-Keynesian Richard Holt, highlighting the importance of Sen's work for Post-Keynesian economics, argues that “Sen's writings go beyond economic growth and extend to the goals of development by incorporating human capabilities. Sen's work on welfare as capabilities has led to a variety of new applications in public policy in improving lives in developing countries” (Holt Citation2016, 375). I will discuss some of these policies implemented in developing countries later.3 For Post-Keynesian Marc Lavoie, Amartya Sen is an orthodox dissenter (Lavoie Citation2022). For a definition of an orthodox dissenter, see Rochon and Rossi (Citation2023).4 It is important to clarify that Sen's welfare theory is critical of neoclassical welfare economics. See, for example, Sen (Citation1970).5 The 8-h working day, the right to maternity and paternity leave, the right to vacation, the right to pension, and unemployment insurance, among others.6 For example, starting in 2014, the Colombian government created the “Ser Pilo Paga” program to promote higher education for poor people. If poor young people do well on standardized achievement tests, they are eligible to study at the top universities of their choice. Later, the program was modified because many students were leaving universities. Now, the program is called “Generation E,” but it still utilizes the voucher system.7 Examples of CCTS are the Bolsa Familia in Brazil, Familias en Acción in Colombia, Juntos in Peru, Prospera in Mexico, and Bono de Desarrollo Humano in Ecuador, among others.8 When one party who has entered a contract provides misleading information or has incentives to change their behavior, there is a “moral hazard” situation. On the other hand, the problem of “adverse selection” refers to a situation where market sellers have more information than buyers about some aspect of the product they are selling (Stiglitz and Rosengard Citation2015).9 A Pension Fund Administrator (AFP) is a company that manages and invests the pension funds in the employee’s retirement savings account.10 Due to various changes in the measurement of poverty, some Latin-American countries have reduced the number of people classified as living in poverty. Methodological tensions include how to measure income or other dimensions, the weight of the variables in multidimensional poverty, and the measure of the Orshansky coefficient (related to the cost of non-food goods and services).