ABSTRACT
This chapter relates the theories discussed earlier to a specific social problem. The comparative approach to the definition of poverty starts from this recognition that social factors are of vital importance in determining whether an income of a particular level gives people an adequate standard of living. Inequalities of income due to earnings differentials are intensified by inequalities in the distribution of wealth, and the existence of substantial numbers of non-earners. Neo-classical economic theory is a normative theory as well as a positive theory — it sets out to describe the conditions which produces the best possible outcome, as well as to explain the actual distribution of production and consumption. Phelps Brown attempts to integrate theories of earnings differentials based on supply and demand with those based on the importance of custom. Radical explanations of poverty tend to focus on the role of power in determining income, of which 'market power', the ability to compete in the economic market.
