My article is about Peter Townsend’s relative definition of poverty, which underpins OECD and EU poverty lines set at a fixed percentage of mean or median national income. For more than half a century authors have claimed Townsend’s definition is consistent with Adam Smith’s writing about poverty and need. Recently some have also claimed his definition is given support by evidence about what the public regards as necessities. My article rejects both these claims, and it asserts that the key idea behind Townsend’s definition – that people’s needs grow in parallel with their nation’s economy – is traceable to a passage by Wilhelm Schulz. That passage established the term ‘relative poverty’ and was quoted by Karl Marx in opposition to Smith.
Books and articles covering the meaning of poverty have tended to contrast absolute and relative definitions. Yet virtually nobody argues in favour of an absolute definition. My article explores differences between ‘purely’ relative and more ‘narrowly’ relative definitions (and measures) of poverty. With a ‘purely’ relative definition, someone is in poverty if they are poor relative to the usual or average material standards of a particular country at a particular time. A ‘narrowly’ relative definition accepts that needs are greater in the richer of two countries, but it also acknowledges that increases in prosperity shared across a whole society can reduce hardship levels.
Peter Townsend developed the purely relative definition. He was the first to suggest setting the poverty line at a percentage of national average income. Such poverty lines can lead to people being seen to escape poverty despite their real (after inflation) income falling; this can happen if, for example, during the covid-19 crisis their nation’s median income fell by a greater proportion than their own. Townsend stated that his definition was a return to the outlook of Adam Smith and Alfred Marshall, as they both understood human needs as differing between societies. Townsend cited Smith’s reference to a ‘linen shirt’ being necessary for day labourers in much of eighteenth-century Europe, despite there being no linen in some other times and places.
Yet Adam Smith is perhaps the person in all history most associated with the idea the purely relative definition rejects: that if a country’s average income increases while its inequality level stays the same, the lives of its poorest citizens are improved. Britain’s leading poverty researchers before Townsend, including Arthur Bowley and Seebohm Rowntree, agreed with Smith on this point. My article uncovers Rowntree’s familiarity with Marshall’s identical view to Smith’s – that economic growth improves working class people’s lives. Furthermore, Rowntree’s detailed accounts of needs specific to working class Britons included, for example, ‘respectable’ work clothes, which chimes with Smith’s example of a labourer’s linen shirt. As Townsend acknowledged, Rowntree’s poverty lines were narrowly relative; their rises over time fell midway between price and wage increases. Rowntree is often wrongly assumed to have supported a more minimal view of poverty due to his well-known absolutist definition. However, as John Veit-Wilson demonstrated, Rowntree only deployed this definition to help convince his critics that real poverty existed.
When criticised for disregarding rising prosperity’s effect on people’s wellbeing, Townsend stressed that any increase in national prosperity is always matched by a corresponding increase in human need. He used Friedrich Engels’ term ‘false consciousness’ when explaining that people often underestimate the extent of their needs. Like Townsend, Wilhelm Schulz defended a purely relative poverty definition by claiming that as a society becomes more prosperous the material needs of its citizens increase by the same amount. Schulz’s support for what he called ‘relative poverty’ was quoted by Marx in his Economic and Philosophic Manuscripts of 1844 when he countered Smith’s assertion that working class people’s lives are improved by capitalism’s economic growth.
Despite Townsend’s claims about false consciousness and perceived need, research into what publics regard as necessities is nevertheless said to show that people agree that their needs grow in parallel with their nation’s economy. The four Breadline Britain/Poverty and Social Exclusion surveys (1983, 1990, 1999 and 2012) provide the only chance to monitor changes over several decades to a country’s citizens’ views on necessities. If the public regards need as purely relative, then the cost of the necessities voted for by majorities of survey respondents would have increased, between the first and last surveys, by approximately the 77% that real median income increased. In fact, the necessities votes were quite stable across the 29 years. None of the items voted necessities for adults in 2012 were ‘new’ – all were widely used by Britons in 1983. Only one of the 2012 adult necessities scored under 50% in any of the earlier surveys – a telephone, which 43% considered a necessity in 1983.
Evidence from similar surveys elsewhere indicates that what publics consider necessities does not vary anywhere near as much as their nations’ real income per head. For example, majorities in Benin, Gabon, Liberia and Mali voted a television, radio and ‘meat or fish every day’ necessities, despite the UK’s 2012 real income per head being roughly double that of the four West African countries combined in their surveys’ years (2005-10). This and other evidence from around the world indicates that people’s experience of need is consistent with a more narrowly relative understanding of poverty.
If we accept the apparent view of Smith, Marshall, Rowntree and the world’s publics – that poverty is ‘narrowly’ relative not ‘purely’ relative – what implications does this entail? For policy, it clearly implies that poverty can be reduced by not only redistribution, but also economic growth. But what implications might it carry for poverty measurement? Noble attempts by some economists to combine absolute and relative considerations into one narrowly relative poverty measure are, I believe, ‘caught between two stools’; publishing together the meaningful, unconvoluted findings from both purely absolute and purely relative poverty measures would provide a useful and balanced portrayal of countries’ hardship levels.
About the author
Andrew Dunn is currently studying for an MSc in Criminology at the University of Teesside. He has been a Lecturer in Social Policy at the University of the West of Scotland and a Senior Lecturer in Social Policy at the University of Lincoln.