ABSTRACT
In the South, capitalism presents itself under the garb of development whose primary arm is ‘growth through industrialisation’. Industrial development is not simply about securing the expansion of capitalist enterprises, but also involves procuring the required conditions of existence consisting of infrastructure, industrial platforms, cities and townships, roads and highways, irrigation systems and so on. Such an aggressive kind of industrial development requires a claim over space. Hence, people are made to give up their claim over space that had hitherto enabled them to reproduce forms of life quite different from those in industrial hubs. In lieu of giving up their claim over space, displaced people are to be compensated as part of the larger canvas of the poverty management exercise; which, as we have explored, is the secondary arm of development. How would they be compensated? Following the Hicks-Kaldor compensation criteria, the overwhelmingly
dominant and popular answer, at least among economists and policy makers, has been ‘monetary compensation’ or some variant of it. For more than half a century, mainstream economics has been grappling with the meaning of compensation as a legitimate ‘answer’ to dislocation. Taking a cue from this approach, policy makers have tried to devise ‘efficient’ methods to conceive of and implement policies on compensation. We refer to the terrain of thinking of ‘compensation’ from the vantage point of mainstream economics and policy making as the ‘economics of compensation’. It is also notable that alternative economic approaches have since appeared
that supplement the concept of compensation by broadly accounting for the inequity effects of dislocation. These include the social cost-benefit approach using egalitarian weight to internalize distributional aspects as pioneered by, to name a few, Ian Little, James Mirrlees, Amartya Sen and Partha Dasgupta in the late 1960s. In recent times, the safety net approach of Ravi Kanbur stands out. On the other hand, sociologists and anthropologists have been raising
questions regarding the ‘economics of compensation’. They have argued that the ‘economics of compensation’ as a solution to displacement is beset with internal inconsistencies and cannot make good its self-proclaimed assertion of ‘improving or at least restoring re-settlers’ prior livelihoods and incomes’.
However, the approach that has found wide currency is the sociological approach of Michael Cernea’s Impoverishment Risk and Reconstruction (IRR) approach, which forwards the need to move from the domain of monetary compensation to resettlement. Cernea’s thrust in turn has been assimilated in the World Bank policy framework. Notwithstanding legitimate questions regarding the authenticity of the
alternative approaches, which have their own quota of problems and criticisms, the pertinent point to note is the common recognition by these experts that none of their proposed alternatives has come close to overcoming the popularity of ‘economics of compensation’ among mainstream economists or policy makers. The frustration among many of the discussants of these alternative approaches becomes clear from these quotes.
