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10.CouretBranco

10.CouretBranco

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Published by: Alam Gabriel on Aug 25, 2013
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05/30/2015

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CAN MARKETS ENSURE HUMAN RIGHTS
SEPLA 4
TH
INTERNATIONAL CONFERENCE Faculty of Economic Sciences, University of Buenos AiresOctober 22-24, 2008Author: Manuel Couret Branco Address:Universidade de Évora, Departamento de Economia,Largo dos Colegiais, 2 7000, Évora -Portugal e-mail:mbranco@uevora.pt
INTRODUCTION
Going on the recent Subprime Crash, French economist Jacques Sapir sustained that this was above all theresult of an unequal income distribution which induced the American middle class to borrow too much to maintainits consumption level. Credit became, therefore, a proxy for a more balanced income policy (Sapir 2008). As amatter of fact, more than just for maintaining their consumption level, Suprime Credit was also a proxy forallowing many impoverished middle class families to access housing. In this sense we can legitimately ask if theSubprime Crash is not, above all, the dramatic and global expression of the incapacity of markets to providehuman rights, housing being clearly recognized as a human right by the Universal Declaration on Human Rights(UDHR) and the subsequent International Covenant on Economic, Social and Cultural Rights (ICESCR) adopted bythe general assembly of the United Nations in 1966.In an era where the dominant school of economics is convinced that the state must abdicate of playing aleading role in the economy and simultaneously human rights are supposed to be one of the major legalinstruments within international law, one cannot refrain, consequently, from wondering what will be the role of markets, the announced alternative to the state, in providing those human rights that, as housing, demand thesupply of goods and services. Indeed, ensuring economic, social and cultural rights, demands the production of both tangible objects, like houses, and
 
intangible services like social security. As for every human right thisprovision of goods and services raises the questions of how, and by whom, should these goods and services beproduced, and also how should they be distributed within the community. As one would expect, answering thesequestions differs according to which goods and services we are talking about. Some general questions apply to all,though. On the first hand, one must stress the normative character of this particular sort of production. Indeed, toproduce goods and services in order to satisfy a consumer’s viable demand is one thing, to produce these exactsame goods and services in order to satisfy a citizen’s petition, is quite another. The tension lies precisely along theline that separates these two different manifestations of an individual need; the former of economic, and therefore,private nature, and the latter of political, and therefore, public nature. For this reason market and Stateresponsibility in providing goods and services as human rights will be the main subject examined here. Water andsocial security will be taken as examples of goods and services which need to be provided in order to ensurehuman rights. The main issue this paper wishes to address concerns the conflicting relationship betweenmainstream economics discourse on the superiority of market provision of goods and services and the promotionof human rights. The first contradiction concerns the intrinsic disregard of economic logic for human rights.
 
 
 ECONOMIC WANTS VERSUS HUMAN RIGHTS
First of all one must admit that economic theory feels more comfortable when dealing with wants than withrights. Within economic analysis, satisfying wants implies the use of concepts like cost, benefit and price, andtherefore the issue is ability to pay, in other words purchasing power. With rights, on the other hand, the issue isquite different; the heart of the matter here concerns entitlement, the criteria according to which an individualshould be qualified to enjoy rights (purchasing power being obviously excluded) and the consequences of the useof such criteria. Furthermore, whilst dealing with needs, economics can take shelter in a positivist approach;dealing with rights, on the other hand, compels it to risk a normative stance, adding supplementaryembarrassment to economics’ traditional insight.In traditional economic theory, efficiency and equity are dealt with separately. Whereas efficiency, beingessentially a technical issue, can be approached through positive analysis, equity, on account of its value judgement content, demands a normative approach. This separation has been severely questioned by manyeconomists for a long time, but the fact is that economic resources can be unequally allocated, for example,without economic efficiency being the least troubled. As a matter of fact, from a normative liberal standpoint,inequality is perfectly compatible with social justice as long as the least favoured sectors of a community canimprove their living conditions, as ensues from the wording of John Rawls’ second principle of justice (Rawls 1972).Besides inequality, economic efficiency can also tolerate exclusion of individuals from the distribution of resourceswhen limited by tight budget constraints.None of this is tolerable when rights are at stake. Rights, if they are to be fully taken as rights, must beequally allocated amongst all those entitled to enjoy them within the community. Basic liberties, for instance, donot admit any allocation other than an egalitarian one (see Rawls 1972). Indeed, it is quite unacceptable for someindividuals to deposit more votes in the ballot box than others. One need not be reminded that universal suffrage,as opposed to historical property or tax-based electoral systems for example, confers one and only one vote toevery citizen of voting age. Beyond the legitimate statutory exceptions, basic liberties do not admit exclusioneither. If a citizen is arbitrarily excluded from participating in an election, this not only means that he is denied hisright to vote but also that the right to vote is not ensured in the community to which he belongs, even if all exceptone are allowed to participate in the voting. Indeed, rights are either guaranteed for all or they are not guaranteedfor anyone. A slight digression is perhaps needed now in order to specify the way in which economics classifies goods aswell as services. Economics divides goods into two main categories, public and private. In economics a public goodis a good that is non-rivalrous and non-excludable. This means that the consumption of this good by one individualdoes not reduce the amount of the good left for the consumption of other individuals, and that no individual caneffectively be excluded from consuming that good. Take the example of a bowl of strawberries and cream. If oneindividual eats it, that particular bowl ceases to be available for the consumption of other individuals. It is alsopossible to prevent an individual from consuming the bowl of strawberries if he or she is not willing to pay for it. Inthis case it is that rivalry and exclusion which makes our bowl of strawberries and cream a private good. On theother hand, breathing air does not significantly reduce the amount of air available to others, nor can people beexcluded from breathing it. That is why air is a public good, a pure public good one might even add.Therefore, when economics states that individuals cannot be excluded from breathing air, it is not stating amoral imperative, it is not indeed referring to the fact that an individual prevented from breathing air will merelydie; it is just saying that individuals cannot be prevented from breathing air because it is technically impossible toexclude from consumption individuals who are not willing to pay. In other words it is openly pointing out that noindividual can make a living out of selling air to breathe, because there is plenty of free air available. In the realworld it is hard to stick to this categorization of goods, as we shall see further on, but for the time being thisdivision between private and public goods is sufficient enough to make our point. As can be easily observed, asserting human rights implies the provision of both public and private goods andservices, which means that economics, whether it likes it or not, is forced to deal with human rights. However, theintroduction of human rights, namely economic, social and cultural rights, into economics’ theoretical body wouldforce mainstream economics to adopt an unnatural behaviour, since to accept rights would also require acceptingthat the allocation of many goods and services should not necessarily observe market distribution rules. Theeconomic efficiency precept does not contradict this where public goods and services are concerned; but satisfyingrights, economic and social rights in particular, goes way beyond the definition of distributive rules referring only topublic goods and services. It applies to private goods and services too, as determined by article 11 of the ICESCR,for instance, which declares the right of all persons to an adequate standard of living for both themselves and theirfamily, including adequate food, clothing and housing, and to the continuous improvement of living conditions. Asa simple private good, housing for example can be unequally distributed and can contemplate exclusion, that is tosay homelessness. As a right, housing not only demands that it be distributed in such a way that nobody is
 
deprived of shelter, but also that some basic qualitative criteria must be met, normative issues which traditionaleconomics is unwilling to address. Another aspect that may enlighten us regarding the divorce between mainstream economics and humanrights is the fact that there is an institution within whose vocabulary equity and inclusion can be found – the State.Indeed, one of the State’s functions is to promote equity and inclusion in the allocation of its resources; therefore,the introduction of human rights language into economics means that the responsibility for the process of allocating private goods and services as rights might have to be transferred from the market to the State.However, given that mainstream economics abhors State intervention, being seen as an unbearable interferencewith the market, one should not be surprised if mainstream economics ends up displaying a notable distaste for aconcept which actually contributes to legitimizing such interference.
 
THE HUMAN RIGHT TO WATER 
Water is at the origin of life on earth, no organism can live without water under any of its forms; as a matterof fact all living beings, humans included, live in an aqueous environment. For a long time water was consideredan element and it was only in the eighteenth century with the works of Henry Cavendish that it was demonstratedthat water consisted, after all, of a combination of two atoms of Hydrogen and one of Oxygen. Two centuries later,as a result of the development of research in social sciences, other structures of water have been revealed.Indeed, water also happens to be an economic, social and cultural good, and, if only it mattered, all there is left todiscover is the exact proportion of each of its constituent parts that can be used as a good intended to satisfy theever-growing range of human needs.Despite water being essential to human life in its many dimensions, access to it is far from being guaranteedto everybody and, amidst those communities which benefit from this access, water is also far from beingdistributed equitably. The World Health Organisation believes that more than a billion people are deprived of basicaccess to water (WHO 2001:1). The United Nations Organisation, in its turn, estimates that about2.3 billion people suffer from diseases connected to water, in other words to both its shortage and poorquality (UN 1997: 39).
Water as an Economic Good
Until the beginning of the second half of the twentieth century the weak demographic pressure put onavailable resources led people, as well as economists, to take water as a free good, in other words as a goodavailable for consumption according to the principle of the first come first served (Bontems and Rotillon 1998).However, the fast pace of economic development that has characterized world economy since then boosted waterconsumption in order to meet all kinds of demands, which implied that water management had to be thoughtwithin a frame of scarcity, which, in turn, implied changes in the way water was classified as a good. This fact,along with the shocking gap between supply and demand, made that the right to water could also be expressed asan economic problem. The first step that must be taken in order to express the right to water as an economicproblem consists in identifying what sort of economic good water is. The United Nations explicitly mentions wateras a public good, but because this classification could appear at first sight as deriving from a political discourserather than from an economic analysis, and in order to avoid misunderstandings, one should, thus, argue morecarefully.We have said above that economics divides goods in two main categories, public and private goods. In thereal world it is hard to stick to this categorisation of goods, though, especially when water is concerned. Indeed,based on the combinations of exclusion and rivalry one can determine two other categories of goods. There aregoods that are rivalrous but non-excludable and goods that are excludable but non-rivalrous. Goods that that fallinto the first group are called common pool goods and goods that fall in the second group, toll or club goods. Inthe first case it is impossible or very hard to stop people from consuming these goods but the consumption of anindividual limits the consumption of another individual. It is the case of fish in the ocean, for instance. One canfreely fish in the ocean but the stock is limited and therefore excessive fishery by an individual can prevent anotherindividual from fishing. In the other group, consumption of an individual does not affect the ability of anotherindividual to consume in his turn, but it is possible to exclude individuals from consumption if they are not willing

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