ABSTRACT
This chapter argues that the ability of individuals to function economically so as to achieve and maintain self-sufficiency is critical to the achievement of full employment and a high road to economic growth. It attempts to increase employment by widening the distribution of income and deregulating the labour market have in reality created policy traps which reinforce and exacerbate inequalities and are counter-productive in terms of employment creation. The chapter discusses a better understanding of what needs to be changed, not only for reasons of social equity and justice but also for the purposes of effective economic policy. In conventional economic theory the initial resource endowments of individuals are taken as given and capabilities are seen as being determined largely by personal qualities. The state represents the third major force differentially influencing the economic functioning of individuals by its labour, industrial and social welfare legislation and by providing child and other forms of care.
