Growth, distributive justice and social policy

After more than a decade of economic reform and structural adjustment in the developing countries, there is increased recognition that economic growth and social equity must go hand with hand. This article starts asking what is meant by "social equity". It notes that reduction of poverty and improvement of income distribution are two perfectly complementary policy objectives, since less inequality can help both to reduce poverty and to speed up economic growth. It reviews the main elements of the modern theory of distributive justice, covering the ethical and economic dimensions of inequality. It then turns to the recent analytical and empirical literature on the relationship between growth, inequality and development and addresses the question of whether is it possible to have both sustained economic growth and a simultaneous reduction in social inequality. It also focuses on social policies and discusses the scope and limits of growth-driven poverty reduction, targeting of social programmes and private sector participation in the provision of social services, highlighting the role of education, broader access to credit, more democratic ownership of productive assets (land; stocks and shares);, and popular participation in the management of social policies as necessary means of making sustained growth compatible with distributive justice.