Social Funds and Poverty - World Bank

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Social Funds, poverty management and subjectiﬁcation: beyond the World

Bank approach
Article in Cambridge Journal of Economics · August 2013

DOI: 10.1093/cje/bes077
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Cambridge Journal of Economics Advance Access published February 28, 2013
Cambridge Journal of Economics 2013, 1 of 21

doi: 10.1093/cje/bes077
Social Funds, poverty management and

subjectification: beyond the World Bank
approach
Anjan Chakrabarti and Anup Dhar*
Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

Revisiting, from a Marxist perspective, the World Bank’s discourse on Social Funds,
we highlight three findings. One, Social Funds gets deployed in the context of a
larger Third Worldist discourse of poverty management, which in turn helps deepen
the logic of capitalist development. Two, generating a class-focused understanding
of Social Funds (via the concept of social surplus), we argue that class processes
and need processes constitute one another and through this conduit emerges a rela-
tion between global capital and the poverty alleviation programme of Social Funds.
Lastly, interrogating the management approach underlying Social Funds leads us
to question claims of decentralisation and participation. Our analysis exposes an
underlying process of subjectification by way of a control mechanism exercised
through the code of conduct encapsulated in that managerial approach.
Key words: Social funds, Poverty management, Surplus, Class and subjectification
JEL classifications: O19, P16, Z13
1. Introduction
Since the emergence of capitalism in its overtly globalised form, the orientation of the
World Bank has, in tandem with allied organisations such as IMF, ILO and WTO,
shifted towards a more global approach to poverty. Such an approach brought in its
wake a global convergence in the language and conceptual tools of poverty-related
programmes, exemplified by the rise of a new family of categories, such as targeting,
cost–benefit, risk management, social protection, inclusion, community, social capital,
etc. (Standing, 2007). A global approach to poverty departs from traditional treat-
ments of poverty in three directions. First, there is foregrounding of a universal stand-
ard of conceiving and implementing poverty-related projects (cost–benefit, targeting,
etc.), with the intent of persuading/directing national agencies to follow this standard;
rather than centralisation, the ideal universal standard seeks decentralisation. Second,
poverty eradication is treated as a management problem, i.e. as materialising through
Manuscript received 10 May 2010; final version received 23 May 2012.

Address for correspondence: Anjan Chakrabarti, Department of Economics, Calcutta University, 56 A, B.T.
Road, Kolkata 700 050, West Bengal, India; email: chakanjana@yahoo.co.in
* Calcutta University and Dr B.R. Ambedkar University, India, respectively.
© The Author 2013. Published by Oxford University Press on behalf of the Cambridge Political Economy Society.
All rights reserved.
Page 2 of 21 A. Chakrabarti and A. Dhar
top-down supervision and control of the given category ‘poor’, who are in turn seen
as constitutionally vulnerable and stuck in backwardness. Third, it seeks to open a
new-fangled process of subjectification1 by shifting the conditions in which subjects
of poverty make decisions; thus there is now a growing awareness in treating subjects
as active rather than docile. The second and third points seem to indicate both an
ambiguity and a paradox. While presuming docile subjects, the management approach
opens a conduit of participation to incite activeness in the otherwise docile poor. We
will exploit this ambiguity and paradox to unpack the relation between the model of
poverty management and its subject.
These three elements are assimilated in the discourse of Social Funds (SF), which
has been principally designed, set up and implemented by the World Bank and
other donors (Tendler, 1999, 2000; Jorgensen and Van Domelen, 1999; Haan et al.,
2002; Garnier and Imschoot, 2003; Rawlings et al., 2004; De Silva and Sum, 2008;

Bhattamishra and Barrett, 2008). SF has been defined as:
quasi-financial intermediaries that channel resources, according to pre-determined eligibility
criteria, to small scale projects for poor and vulnerable groups, and implemented by public or
private agencies. (1998 Portfolio Review of Social Funds World Bank Quality Assurance Group
in Haan et al., 2002, p. 2)
And also as:

agencies that finance small projects in several sectors targeted to benefit a country’s poor and
vulnerable groups based on … demand generated by local groups and screened against a set of
eligibility criteria. (Jorgensen and Van Domelen, 1999, p. 1)
Each SF is an organisation and a financial institution. The assembly, board of directors

and/or steering committee oversees the strategy, work plans, annual budgets and open-
ing of the frontline offices of the SF. Subsequently, depending upon the mandate of
the board of directors and/or steering committee, there appears a national-level general
management, regional-level project committees and users’ association and the imple-
menting agencies (NGOs, cooperatives, community organisations, etc.) that form the
subsequent tiers of the organisational structure of the SF.
Popularised by the World Bank, SF emerged in the 1980s as an instrument to temper
and mitigate the negative effects of the structural adjustment programme (SAP) pio-
neered by the IMF; it appeared chiefly in the form of publics works (principally infra-
structural projects), social services (health, education, etc.) and compensation for layoffs
following privatisation (Tendler, 1999, 2000). The SAP sponsored reform processes—
taking the form of tight fiscal policy, targeted monetary policy and free trade—and
reduced the scope, control and intervening capacity of the state. Neoliberal philosophy
claimed that reforms would help create a global competitive market economy deemed
necessary to propel capitalist induced growth, which in turn is considered as the final
panacea for eradicating poverty. Besides facilitating SAP, the idea of SF has over the
years become a permanent instrument of poverty alleviation that intends, in the long
term, to create social capital in marginal(ised) areas (Jorgensen and Van Domelen, 1999).
1
Foucault understands the subject in two ways: ‘subject to someone else by control and dependence, and
tied to his own identity by a conscience or self-knowledge. Both meanings suggest a form of power which
subjugates or makes subject to’ (1983, p. 212). Like Foucault, we understand processes of subjectification
in both the above-mentioned senses.
World Bank discourse on Social Funds Page 3 of 21
Particularly, it seeks to serve those who cannot be reached by government programmes:
‘Social funds have successfully served the poor and those communities that, on account
of physical isolation, social exclusion, or gender and ethnic barriers, were not benefiting
from the national investment programs or from the state’s ordinary social safety nets,
if available’ (Bigio, 2001, p. 12). The Social Action Programme, Social Development
Fund, Investment Fund for Employment and Social Development, Emergency Fund
and Agence d’Execution de Travaux d’Interet Public are some of the alternative termi-
nologies for SF. In the period 1987–2007, the World Bank has approved 147 SF projects
worth $5.4 billion (De Silva and Sum, 2008). SF programmes are particularly common
in Latin America, in erstwhile communist countries as well as in Africa, which are all
major regions for the SAP experiment; SF has less of a presence in Asia.
Despite regional variations, SF programmes have come to possess a few common
characteristics (Rawlings et al., 2004, pp. 10–11). First, SF programmes are about

second-tier financial agencies that appraise, finance and supervise investments carried
out by other agencies. Second, SF programmes offer the choice of multisectoral invest-
ments spanning health, education, infrastructure, microcredit and disaster manage-
ment. Third, investment is driven by demand from local actors and the responsibility
to oversee projects remains with community groups, NGOs, local government and line
ministries. Fourth, SF programmes have operational autonomy and deploy modern
management techniques.
SF programmes work closely with governments who are pursuing policies of decen-
tralisation in poverty reduction. While the World Bank does not seek confrontation
with the nation state, it certainly has an agenda in trying to persuade it to change
its direction. To this end, the idea of SF is deployed to persuade governments—who
otherwise employ centralised social programmes—to graduate to decentralisation: ‘In
several countries, SFs have served as innovators and demonstrators of new methods
of decentralized participatory decision-making, management, and accountability that
may be adopted for broader application by public sector organizations’ (World Bank,
2011A). SF programmes are driven by a vision of grassroots-level and participation-
based community development; hence its focus is on strengthening institutions of local
governance as against more centralised forms of governance. To achieve this it is nec-
essary for SF programmes to be somewhat autonomous rather than being restricted
by the limited scope imposed by the extant laws and regulations of poverty alleviation
programmes of nation states. However, the relation with the state is underscored by
the fact that funds are typically routed through a central ministry—its board of direc-
tors at times including state representatives alongside NGOs, local officials, co-finan-
ciers and even beneficiaries. Therefore, the limited (yet fast-growing) presence of SF
programmes in contrast to the continuing dominance of conventional state-sponsored
projects should not tempt us to underestimate its potential impact, which increasingly
stretches into the domain of policy creation at state and local levels. It foregrounds an
approach that seeks to change the terms in which poverty is explained and managed.
Not surprisingly, alternative governance models coupled with operational autonomy
mean that the success of SF programmes partly depends on the ‘sensitivity of the fund-
ing design to politics based on an understanding that they are of national and local level
politics. Development of parallel structures can be temporarily important, but these
structures must serve in the long run to have effects on governance (strengthening
local governance, influencing pro-poor politics, etc.)’ (Method Finders, 2004, p. 2).
Overall, we are drawing attention to the imperial mandate underlying the SF model.
Parallel with the rise of the SF programmes, the following criticisms have also been
forthcoming. The impact of its income-generating, job-creating and capacity-building
ability is limited and temporary (Tendler, 1999, 2000; Garnier and Imschoot, 2003).
Women’s participation and benefits accrued are relatively less compared with those of
the male members (ILO, 1998; Garnier and Imschoot, 2003). Despite its claim to be
apolitical, vulnerability to local and state-related power interests have influenced SF
programmes, leading to resource redistribution towards the relatively rich and thus
preventing genuine decentralisation (Jorgensen and Van Domelen, 1999; Conning
and Kevane, 2002; Mansuri and Rao, 2004; Mude, 2006; Ensminger, 2007). SF
programmes are in effect a supply-side (top-down) rather than a demand-side (bot-
tom-up) approach, pointing to a mismatch between the SF goal of decentralised par-
ticipatory development and the adopted policy of top-down management; at best SF
produces deconcentration (some devolution of power to community and locals) rather

than decentralisation (where power indeed resides with the community, the locals and
the margins) (Tendler, 1999, 2000). Lastly, claims of the efficiency and superiority
of SF-run private projects vis-à-vis state-run programmes are at best ambiguous and
at worst wrong (ibid.). Most of the above-mentioned criticisms have been acknowl-
edged and attempts are being made to reorganise the functioning of SF programmes
to account for these failings (World Bank, 2003), although we believe that the last two
criticisms are tricky and resist straightforward assimilation into the SF paradigm.
Against this backdrop, which provides the point of reference and departure for our
discussion, we seek to produce a critique of the World Bank’s theory of SF by way
of describing the ‘dominant in terms different than its own’ (Achuthan et al., 2007).
While critical engagements with the development paradigm have taken shape in both
non-Marxist and Marxist quarters, there has been, to our knowledge, little engage-
ment in the space of Marxism with the concept of SF. Moreover, as we will argue, there
is a need to reinterpret Marxism itself if we are to resituate SF in a discourse that is
dissimilar to that of the World Bank. Such a reinterpretation of Marxism opens new
avenues to interpret the discourse and effects of development and distribution; in this
regard, the utility of our analysis extends far beyond the compass of SF.
Our critique, by way of defamiliarising the World Bank rendition of SF, encompasses
three of its central tenets to which we have drawn attention: its (i) discursive location,
(ii) financial mechanism and (iii) organisational model. To begin with we distil the role
of SF within the poverty eradication programme in particular and the development
paradigm in general. The purported shift of SF from SAP to permanency is celebrated
as the advent of a distinct poverty eradication thrust that represents a real break with
the past. By virtue of its long-term target, it is hoped that an SF-type demand-driven
participatory approach will play a more effective role in reducing and eliminating pov-
erty. We ask, what about the big-bang strategy of capitalist induced growth to reduce
mass structural poverty—a central tenet of mainstream development economics? The
corollary is that the so-called subsistence-based Third World economy, by virtue of
its backwards nature, cannot do away with mass structural poverty, even through
institutional and market reform (Lal, 1999; Chakrabarti and Dhar, 2009, ch. 2). In
short, the antidote to structural poverty is taken to be, in general, economic growth
and, to be more effective, a capitalist-induced economic growth. The World Bank-type
development paradigm that advocates capitalist-induced economic growth as its prin-
cipal strategy for eradicating poverty (operating by breaking down the ‘third world’
economy) simultaneously adopts a poverty management strategy (social protection,
social risk management, etc., with the intent to preserve and persevere with a Third
World economy), displaying an inherent ambiguity. We would further probe into the
processes through which the World Bank internalises this ambiguity in support of a
march towards capitalist development. It is necessary, as we will argue, to relocate SF
within this attempt to resolve the ambiguity in favour of capitalist development.
Second, we question the non-class setting in which SF is conceptualised, which
in turn helps set the terms of discussing SF as an exclusively distributional mat-
ter without any relation to the conduit of production. In the process, SF appears as
delinked from class in general and global capital in particular. To unravel this linkage
and the need to view social programmes such as SF in the context of capitalist devel-
opment (thereby complementing our first point of critique), we take recourse to a
class-focused approach (Resnick and Wolff, 1987; Gibson-Graham, 1996), which was
expanded through the concept of social surplus (Chakrabarti, 2001; Chakrabarti and

Cullenberg, 2003). To put it telegraphically, class is defined in this paper as the process
of performance, appropriation, distribution and receipt of surplus labour; this in turn
is related to values.2 Specifically, total values produced in an economy comprise of the
already-embodied values of means of production and new values created by direct pro-
ducers who get part of it back as wages (equivalent of value of labour power or neces-
sary labour) while the rest remains the unpaid portion of surplus value (equivalent of
surplus labour). Once appropriated, this produced surplus value (discretionary wealth
of society) is then distributed across society, as Engels has perceptively observed:
The origin of surplus-value … (is) unpaid labor, that constitutes the share of the capitalist, or
more accurately, of the capitalist class … In general it is unpaid labor which maintains all the
non-working members of society. The state and municipal taxes, as far as they affect the capital-
ist class, the rent of the landowners, etc., are paid from it. On it rests the whole social system.
(Engels, 1974, p. 16)
Following Chakrabarti and Cullenberg (2003, ch. 7), total surplus value can be
divided into production surplus and social surplus. Production surplus denotes the quan-
tum of surplus value that is distributed to reproduce conditions of existence pertaining
to processes of performance and the appropriation of surplus. Social surplus refers
instead to the distribution of surplus value, over and above production surplus, to meet
various social needs. This social supplement to the given category of surplus (i) inau-
gurates a discursive space whereby production and distribution domains, rather than
being delinked, are shown to be constituting one another, (ii) connects distribution to
not merely processes related to production, but also to social needs and (iii) extends
that connection to facilitate an inspection of the role of various development catego-
ries, such as poverty and its associated programmes. All three aspects are brought to
bear on the analysis of SF in order to elucidate how and why class plays a critical role
in constituting the quantum, flow, structure and administration of SF; specifically, the
finance of SF is reinterpreted in this paper in the context of global value flows, which
in turn unravels its linkages with global capital. Our objective is to highlight this link-
age of class with social surplus, social surplus with social funds and that of social funds
2
Surplus labour can take the form of surplus product or surplus value, depending upon whether the use
value takes the form of exchange value or not. Given the nature of the problem addressed here, we take into
account only the market economy and therefore only value and surplus value. Consequently, our analysis
considers only those class enterprises that are value creating.
with global capital to inaugurate a class-focused perspective in the poverty manage-
ment programme of a nation and the possible role of the World Bank discourse in it.
The final point in the paper refers to the connection of SF to processes of subjecti-
fication. The focus is on how the World Bank discourse seeks to produce new kinds of
subjects rather than on evaluating whether its attempt at subjectification is successful
or not. Specifically, it is on how micromanagement and institution building encapsu-
lated in the World Bank’s rule book of practices—the operational manual—aspires to
displace the subject’s existing mode of being (we have in mind the World Bank’s posi-
tioning with respect to the given understanding of ‘Third World’ subjects as victims of
backwardness). Referring to social exclusions in India, it says:
Social exclusion … has its roots in historical divisions along lines of caste, tribe, and the excluded
sex, that is, women. These inequalities are more structural in nature and have kept entire groups
trapped, unable to take advantage of opportunities that economic growth offers. Culturally

rooted systems perpetuate inequality, and, rather than a culture of poverty that afflicts disad-
vantaged groups, it is, in fact, these traps that prevent these groups from breaking out. (World
Bank, 2011C, p. 2)
Declaring war on these divisions, the World Bank sees economic programmes as
key to transforming Third World cultures and institutions. Thus, the focus of its pro-
grammes is as much normative as it is positivist in an economic sense:
An Inter-American Development Bank report on Latin America states that ‘inclusion is not just
about changing outcomes, but crucially about changing the processes that produce and repro-
duce exclusionary outcomes’ and that ‘in order to make normative changes effective, institutions
must change the ways in which they operate, hire employees, and enforce laws and regulations.
This in turn materializes as changes in the implementation of programs and policies.’ (World
Bank, 2011C, p. 32)
In this context, the new template of poverty management that SF promotes is aspir-
ing to transform the Third World from within. And this is not happening endogenously,
but through external interventions by way of a global social project in which the Third
World society is sentenced to decrepitude. To underscore this point, the World Bank’s
operational manual telescoping the SF management model marked by the trope of par-
ticipation and community reconstruction is shown to be encapsulating a project of sub-
jectification so as to render competitive market economy friendly to Third World subjects.
The ‘participatory and bottom-up imagination of the political’ it seeks to open for Third
World subjects is thus telescoped in the rather ‘top-down and alien political’ of capitalist
development. Following this, economic, cultural and political transformations are seen to
be intersecting, compensating and reinforcing one another in any applied scenario of SF.
2. The location of social funds in development paradigm

The prevalence of certain concepts signifies not just a desire to communicate meanings but also
to frame a problem in a particular manner (Dwivedi, 2002, p. 715).
In the context of development discourse, ‘traditional’ Third World (agriculture-

based) economies symbolise ‘mass structural poverty’ and, consequently, its eradication
can be achieved by a transition to a predominantly ‘modern’ (industry-based) capital-
ist economy. As this process unfolds, the agricultural sector too is supposed to subse-
quently come under the capitalist mode of production. Alongside capitalist induced
growth, to make possible this big-bang kind of structural transformation, the World
Bank further developed a distinct strategy of poverty management, since the 1980s, to
address the existing mass of the ‘poor’. This schism and the need to maintain a delicate
balance is likewise acknowledged in the World Bank discourse of SF:
Social funds can play an active role in obtaining political commitment to the incorporation of
social equity objectives in macroeconomic growth policies and at the same time dispel unjusti-
fied expectations about the effect of social funds on structural poverty …
Social funds are not a panacea. Sustainable poverty reduction requires a complement of actions
from sound macroeconomic policies to broad social investments to targeted investments focused
directly on the poor. Social funds are only one of many instruments to reduce poverty. It is
important to keep the overall strategy in proper perspective. (Bigio, 2001, pp. 14, 28)
We are thus made to encounter two seemingly contradictory moments. The first locates
poverty as structurally determined by backwards institutions and hence necessitating
a big-bang transition of such institutions. In Marxian discourse this process has been

seen through the lens of primitive accumulation. The second emphasises the need for
the benevolent handholding of the individual poor by cultivating social protection pro-
grammes and developing social capital so as to meet a set of defined social needs. The for-
mer moment is based on the lacking/lagging economic structure of the Third World while
the latter flows from individual victimhood resulting from the same economic structure:
Every intervention in the name of a civilization requires an initial contempt for the situation as
a whole, including its victims. And this is why the reign of ‘ethics’ coincides, after decades of
courageous critiques of colonialism and imperialism, with today’s sordid self-satisfaction in the
‘West’, with the insistent argument according to which the misery of the Third World is the result
of its own incompetence, its own inanity—in short, of its subhumanity. (Badiou, 2001, p. 13)
The ‘backwardness’ of Third World economic structures and ‘victimhood’ of indi-

vidual subjects characterise the dual necessity of capitalist induced growth and poverty
management. Under conditions of primitive accumulation, the image of structural
backwardness is foregrounded. In poverty management, individual victimhood is the
focus of solutions (epitomised through targeted public distribution systems), even as
the poor victims may be seen as belonging overwhelmingly to a marginalised group
(e.g. to the indigenous population). ‘Poor en masse’ is invoked to condemn ‘backward’
structures while ‘victimhood’ forwards the individualistic solution. If the former sug-
gests an enchaining of the victim, the latter underscores the path of liberation of the
same victim. In tandem, primitive accumulation and poverty management underpin
what could be called the functioning rationale of contemporary Third Worldism.
Take the first dimension. It is well recognised that industrial capitalism and associ-
ated urbanisation have the potential to cause two broad kinds of dislocation: a wholesale
displacement of the Third World and at other times alteration of one or many indispen-
sable conditions of its social existence (e.g. changing the ground water level in an area
by setting up a global capitalist enterprise) such that it becomes impossible for forms of
life within third worlds to be reproduced. Notwithstanding the diverse forms, the pro-
cess of dislocation is an outcome of capitalist induced growth and it evidently creates
conditions of poverty. In the context of (post)colonial countries where capitalism func-
tions through the trope of development, the Third World has been discursively situated
as its target of dislocation in order to facilitate the expansion of industrial capitalism.
Taking off from the writings of later Marx, we have shown elsewhere that this capitalist
development-induced dislocation can be understood along the lines of primitive accu-
mulation, albeit via a retheorisation of the latter (Chakrabarti and Dhar, 2009).
Following the Kaldor–Hicks compensation principle, monetary compensation (if at
all) was proposed as restitution for victims of development-induced dislocation. However,
as the resistance to primitive accumulation became increasingly feisty, the idea of com-
pensation was replaced by that of resettlement (Cernea, 2003). The World Bank (2001B)
now sees resettlement as appropriate for addressing the problem of poverty arising from
development-induced dislocation (though the absence of any binding constraint makes
its commitment look suspect). Two points demand attention. First, compensation and
resettlement are not arguments against primitive accumulation. Rather, keeping primi-
tive accumulation as a necessary moment of capitalist development, it is asked how best
to remedy the consequent destruction and resulting poverty through compensation and/
or resettlement. Second, the idea of compensation and resettlement remain implicated in
a top-down approach, because there is no ‘freedom’ for Third World societies to say ‘no’
to dislocation (Dwivedi, 2002; Chakrabarti and Dhar, 2009).

Instead, compensation and resettlement came to be complemented by a distinct
poverty-focused discourse of social protection and social risk management.3 Coming
under the broad rubric of social protection, social risk management4 attempts to
deal with Third World societies per se and in terms different from compensation and
resettlement:
our experience has shown the need for a new, integrated conceptual framework that builds on
previous knowledge but better reflects the world situation at the beginning of the 21st century—
a situation where risks and opportunities are on the rise, here it is recognized that neither the
state nor the market alone will provide the best solution, and where the plight of more than
1 billion poor people poses the question of how to manage risk better, not merely providing
handouts after a shock has occurred. For the World Bank, this implies an even stronger need
to incorporate social protection sub-sectors within an overall framework. It also indicates the
urgency of integrating social protection with other sectors and themes at the World Bank. (World
Bank, 2001A, p. 7)
Further, by integrating their idea of social risk management,

... social protection consists of human-capital oriented public interventions (i) to assist indi-
viduals, households, and communities better manage risk, and (ii) to provide support to the
incapacitated poor. (Jorgensen and Van Domelen, 1999, p. 3)
In the three-prong framework for poverty reduction consisting of ‘voice to the poor’,
‘security’ (from risk) and ‘opportunity’ (World Development Report 2000/2001), social
risk management deals fundamentally with security, but in a manner that will influence
voice (through demand-based projects with individual, household and community
participation) and opportunity (helping the poor undertake higher risks and returns,
including through existing or newly created markets) (Jorgensen and Van Domelen,
1999, p. 3). Social protection via risk management includes the following strate-
gies: (i) prevention strategies (to reduce the probability of a down-side risk before a
shock, ensuring preventive social protection), (ii) mitigation strategies (to decrease the
3
The two subdiscourses of poverty do have intersections. For example, the resettlement discourse is
based on risk mitigation and could well be considered a component of social risk management. However,
viewing poverty management in relation to capitalist development produces a distinction between poverty
management pertaining to dismantling of the Third World and to that of cultivating it from inside, a differ-
ence we exploit here.
4
It is notable that the term ‘risk’ is used in the sociological sense of ‘danger’ rather than the economic
sense of ‘uncertainty’.
potential impact of a future down-side risk if the shock was to come anyway) and (iii)
coping strategies (to relieve the impact of the shock once it has hit).
SF, seen fundamentally as an instrument of social protection with a strong component
of social risk management, was conceived as a form of financial investment designed to
essentially mitigate and reduce the various risks, and generate possibilities of employ-
ment and income for the poor so as to satisfy their defined needs. In this context, it was
considered essential to have a participatory approach through which the beneficiaries
can create and cultivate ‘community forms and forums’, which in turn is seen as useful
for its ability to pool, and deal with, risks. In the period 2000–07, SF comprised of 18.5%
of the total social protection lending by the World Bank (De Silva and Sum, 2008).
Growing out of its early stage as a coping mechanism to offset the possible pov-
erty impact of SAP following the meltdown of the statism of erstwhile years, SF is
now additionally seen as a permanent instrument for satisfying poverty-related needs

(essentially, through income and employment generation) in the ‘Third World’ space
outside of the emerging and expanding competitive market economy tied to global
capital. This role follows from two complementing and reinforcing realisations. The
creation of new institutions and better practices will lead to increased income, devel-
oped social capital and an enhancement of the capacity to confront risks. Moreover, it
was considered more advantageous to intervene in Third World societies and change
their subjective dispositions in favour of commodity, market and capital. This inter-
vention would not only make the Third World subjects friendlier to the markers of
competitive market economy, but help stymie any resistance and instability that may
undercut the logic of capitalist development.
A balanced and holistic understanding of the causes and effects of poverty can lead to reforms
that promote inclusion, economic growth that reaches the poor, and social development—these
are key to sustainable peace … Our job will be to help countries harness the trends … to promote
growth, poverty reduction and social harmony. (Wolfensohn, 2000, pp. 7–8)
Thus while it is held that mass structural poverty would be principally eradicated by
capitalist-induced growth, poverty management exercises (in the form of compensa-
tion and resettlement as also social protection and social risk management) are struc-
tured to supplement, support and harmonise this growth process. However, when it
comes to choosing between primitive accumulation and the strengthening of Third
World communities with its social programmes, including SF, history shows that the
World Bank stands unambiguously by the side of the former.5 Given that it has histori-
cally placed an enduring importance on structural poverty, this is hardly surprising.
3. Class, need and poverty

Wealth produced in the economy is divided between wage remuneration (delivered
to the workers on account of necessary labour) and the surplus value generated (on
5
Between 1947 and 1994, the Executive Board of the World Bank accepted all the 6000 projects that
were submitted by the World Bank management (Roy, 2001, p. 76). Since then the World Bank has only
opposed a few projects, such as the Narmada Valley project in the state of Gujarat. However, other than a few
highly publicised cases, generally, it at best murmurs and more often than not retains a stony silence on the
question of dislocation and rehabilitation, not only for these projects (carried out by state governments) but
for others as well. The mere fact that it does not impose or is not even seeking a binding law (necessitating
punishment in case of violation) for nations and enterprises even for its own models of compensation and
resettlement is proof of its complicity.
account of unpaid surplus labour performed by the labourer). In this context, processes
of performance, appropriation, distribution and receipt of surplus labour designated as
‘class’ and other ‘non-class’ processes mutually constitute a specific site and reality (as
a cluster of an infinite number of overdetermined processes) in general (Resnick and
Wolff, 1987). Through a distinction between production surplus and social surplus,
class-focused Marxian theory is further extended to theorise development and poverty
(Chakrabarti and Cullenberg, 2005; Chakrabarti et al., 2008), which in turn can be
related to the SF programme.
3.1 Production surplus

The class process of performance and appropriation of surplus labour (fundamental
class process, FCP) is related to its distribution and receipt (the subsumed class pro-

cess, SCP). Specifically, the appropriated surplus value is distributed as subsumed
payments to various agents and agencies (bankers, merchants, landlords, state, manag-
ers, shareholders, etc.) for fulfilling diverse non-class conditions of existence (advanc-
ing loans, selling the product, etc.) that secure the FCP. The non-class conditions of
existence in turn are guaranteed by their managers and workers, who are remunerated
through the further distribution of surplus value now in the hands of bankers, mer-
chants, etc. Taking the sum of the surplus value appropriated and distributed by all
enterprises, production surplus in an economy is:

∑ SV 1
= ∑ SC (1)
where SV = surplus value and SC = subsumed payment.
If we take subsumed class payments as the only form of distribution, then there is
no surplus available beyond production surplus; there is no leakage of this surplus to
any non-class processes or agents who are not condition providers of FCP. Production
surplus exhausts itself completely through subsumed payments.
3.2 Social surplus

Another portion of surplus value—surplus beyond production surplus—gets distributed
for purposes that apparently fulfil no conditions of existence of FCP. Such surplus is
defined as social surplus. It implies that what is usually conceptualised as subsumed
payments cannot capture the full extent of surplus distribution as, they are, on their
own, unable to explain Engels’s observation that it is ‘unpaid labor which maintains all
the non-working members of society’ (Engels, 1974, p. 5). Instead of reducing distri-
bution per se to SCPs, there is thus a need to distinguish subsumed distribution from
the rest designated social surplus. If the former distribution pertains to reproducing
class conditions of production, the latter subjects distribution to the aspect of need.
Marx (1970, pp. 13–30)6 too felt the necessity for the division of the distribution of
surplus into a component related to production and another that had nothing to do
with production per se, capturing, in his own words, ‘the general costs of administration
not belonging to production per se’, ‘that which is intended for the common satisfaction
of needs, such as schools, health services, etc.’ and ‘funds for those unable to work, etc.,
6
While Marx’s discussion in the ‘Critique of the Gotha Programme’ relates to communist societies in
general, in our understanding he differentiates between two kinds of communism. In the first, surplus exists
but appropriation is non-exploitative (Lenin later named it ‘socialism’) and in the second, the very dis-
tinction between necessary and surplus labor disappears. Our discussion pertains to Marx’s discussion of
in short for what is included under the so-called poor relief today’. While subsumed
payments would partly, but not totally, capture the administrative expenditure (at least
the ones focused on reproducing FCP), it will most certainly not capture the expenses
on account of poverty-related need, and indeed much of social needs. It also suggests
that any relation between surplus distribution and poverty must follow from the prem-
ise that the dual aspects of surplus distributed to the point of production and those away
from it, while conceptually distinct, are not unrelated. Since their common source is
surplus, our expanded framework helps unpack newer avenues to locate and interpret
the categories ‘surplus’, ‘distribution’ and ‘poverty’ as also the relation between them.
Let us provide a tentative and by no means exhaustive list of need distributions that
would constitute a claim on social surplus:
(i) One needs to consider agents and groups who are not related in any capacity to

the surplus-generating production process, but who must be accounted for as eco-
nomic agents from the point of view of consumption. Such populations fulfil no
conditions of existence of surplus production and yet their state of being must be
reproduced. The population may include the old, the differently abled, the unem-
ployed, the children, etc. Surplus beyond production surplus could be in the form
of payments that account for their diverse needs. They receive the payments not
because they are poor or rich, but by virtue of being old, differently abled, unem-
ployed, children, etc. A child-related example of the distribution of social surplus is
the Midday Meal Scheme in India, which requires every child studying in classes
I-IV in every government and government-assisted primary school to be provided
with a freshly prepared midday meal with a minimum content of 300 calories and
8-12 grams of protein for a minimum of 200 days per year; it was later extended
to upper primary school children who were to be provided with a minimum of 700
calories and 20 grams of protein per child/ school day for the same period. Call this
entire set of needs disadvantage need and the social surplus to this end SSD.
(ii) Post-colonial countries (and for that matter any country) are replete with many
people who are able to just reproduce their material existence. The basket of use
values required to fulfil their material existence is basic need. The exact fulfilment
of this basic need is the benchmark for the category ‘poor’. People either at or
below this benchmarked basic need are defined as poor. Call the social surplus
that goes for poverty eradication, SSP. The claim over this social surplus, SSP,
is not by virtue of people being unemployed, old or being children, etc., but is
a result of being poor. A poverty-related example is the Antyodaya Anna Yojana
scheme requiring the Indian government to identify the poorest of the poor and
distribute grains to them at highly subsidised rates.
Out of the total surplus produced, ∑ SV 2 is the surplus component that leaks out
from the point of production to other circuits in order to be further distributed as
social surplus, SS, towards the mentioned social needs. Social surplus is:

∑ SV 2
= SSD + SSP
(2)
Appropriated Distributed
transition from capitalism to the first kind of communism, where he is crossing swords with fellow socialists
on the importance of conjoining distribution and production and is giving us the glimpse of a framework to
do so in a surplus scenario. It is this glimpse that is theorised and expanded upon in our work.
With the dominance of the development rhetoric in the South, the question of ‘need
distribution’ is one of the principal components that move politics and policies; the
current shift in the development goal from that of mere growth to inclusive growth
(growth with equity) epitomises the importance of need distribution. The various com-
ponents of social surplus immediately bring to light the possibility of addressing the
complex domain of developmental need. Need considerations related to the poor, old,
children, ‘Third World’ women, unemployed, environment, etc. are now within the
realm of the Marxian framework.
3.3 Class, social surplus and poverty

Total surplus (STSL) is now redefined as:
STSL = (∑SV)
1
+ (∑
SV ) 2

(3)
ProductionSurplus Social Surplus
Combining equations (1–3):
∑ SV = (∑ SC) + (SS D
+ SSP )
SSD + SSP  =  ∑ SV  − [C]

∑ SC (4)

SocialSurplus TotalSurplus Production Surplus
Equation (4) tells us that social surplus is determined by the total surplus generated,
appropriated (FCP) and subsumed distributions for non-class conditions that repro-
duce FCP. With further readjustment:
 −  ∑ SC  − SSD 
SSP =  ∑ SV (5)
Evidently, class struggle (struggle over FCPs and SCPs), need struggle (struggle
over processes related to social surplus) and ‘non-class non-need struggle‘ (strug-
gle over meaning of social need that effect production and social surplus) constitute
one another in influencing the actual quantum of poverty-related social surplus, SSP.
Conditions of poverty and its eradication are thus also class determined, even though
they cannot be reduced to merely class process or even economic process; beyond
economism and mere distribution, such conditions and their trajectories remain over-
determined by class and non-class processes (ownership, power, caste, race, gender,
etc.) as also by the complexity of struggles over these. One can discern this complexity
in the Indian debate over the proposed Food Security Act. On one side, the ‘radicals’
are calling for making right to food an unchallenged universal right for all, with zero
tolerance for its violation (Human Rights Law Network, 2009). On the other, the ‘con-
servatives’, led by neoliberal economists, are challenging it on grounds of budgetary
considerations and possible distortions to the real economy, arguing that the quantum
of created, appropriated and distributed wealth might be adversely affected by such
a measure, thereby undercutting the very act. In other words, the Food Security Act
debate is over the meaning of need of food security (combining cultural and politi-
cal struggles), over how other need distributions would be affected (need struggle)
and over how surplus creation, its appropriation and subsumed distribution might be
affected (class struggle).
3.4 Social surplus and social funds
The connection between class distribution to maintain the working population (through
redistribution from subsumed payments) and social surplus distribution towards social
projects for the ‘non-working’ population could now be extended to the specific pro-
gramme of social funds. We are particularly interested in the relation between global
capital and local economies that is articulated through SF. To begin with, consider a
world economy consisting of nation states. Each nation state is in turn constituted by a
value-producing economy in which the surplus value is partly distributed as subsumed
payment and the rest as social surplus, which, through the mechanism of taxation by
state, donation by enterprises or charity as part of corporate social responsibility, etc., is
further distributed for both national and international projects. Various need-based pro-
jects get sponsored by private trusts, charity and religious organisations, corporations,

nation states, regional blocs (e.g. the European Union) and other known global agen-
cies (World Bank, DFID, etc.). Because ‘the proportion of international funding usually
exceeds 80 percent of the total resources managed by the Social Funds’ (Garnier and
Imschoot, 2003, p. 29), SF appears fundamentally through the global conduit of social
surplus. Not surprisingly, the World Bank is the leading exponent of SF.
In a country then, at any point in time, total social surplus for poverty eradica-
tion splits into programmes of social funds, SS P (partly from internal source, SS PN ,
SF SF
and the bulk through global sources, SS PG ), and other poverty-related schemes, both
SF
global and national, including for disadvantaged needs, SSP . From the perspective of
N
a country (here, home country), the quantum of its SS P in turn is:

SF
 ∑ SV − ∑ SC − (SS + SS

F
D
H
D ) − SS F
PSF GLOBAL  ∑
 +  SV − ∑ SC − SSD 
NATIONAL
(6)
The first component of equation (6) represents the global funds, SS PG , and the sec-
SF
ond component strictly is national funds, SS PNSF , making up the total SF in a particular
country. Concerning the first component, SS PF is the global SF destined for countries
SF
other than the home country and (SS DF + SS HD ) is the total global fund for disadvan-
taged needs for both foreign and home countries, respectively. Deducting these global
funds and subsumed payments from the quantum of globally appropriated surplus value
(other than home country) gives us SS PG .Total national funds spent on poverty and other
SF
need expenses, SS N , is SS PN + SS P , where SSP = SS DH  + SS D  NATIONAL .

SF N N GLOBAL
Three aspects demand attention. The first suggests a relation between SF and global
capital. The following are some of the sources of financial resources of SF: International
Development Association (IDA) credits, African Development Bank, Asian Development
Bank, Inter-American Development Bank, Arab Fund, the European Union, Japan,
the US Agency for International Development, the Netherlands, French Development
Agency, global corporations, government of the host country, donations from private and
public sponsors, etc. (see Garnier and Imschoot, 2003, pp. 29–32 for details). In terms
of our value equation, this suggests a flow of global surplus for SF that is derived from
the unpaid surplus value produced by capitalist enterprises (principally of the richest
countries, as the donor list shows), which, after deductions of subsumed payments (to
meet all non-class conditions of existence) and social surplus expenses for other need
expenses, are getting deposited with the donors (state agencies, international agencies,
regional blocs, corporations, etc.), who then forward them to the World Bank (or simi-
lar such institutions) for the agreed project. At times, international agencies such as the
World Bank may borrow from global financial institutions for lending for projects (sig-
nifying further flow of global financial capital), though this route is not popular in case
of SF. Instead, as an investment bank, intermediating between investors and recipients,
a large sum of World Bank loans on account of social protection, including SF, comes
from grants from its rich member countries and the other above-mentioned sources, e.g.
large sums of funds are typically routed through the IDA to poor countries at zero or low
interest rates. Due to the financial reliance of social surplus on global capital, it is hardly
surprising that the philosophy of SF and its programmes, rather than being inimical to
global capital, should be in sync with its language–logic–ethos. In the least, it would be

farfetched to imagine that international agencies such as the World Bank would initiate
programmes that undercut the image and function of capitalist enterprises on which it
(and other donors in the vertically integrated global conduit of finance) in the last instance
depends for its existence. This connection of global capital in poverty management via the
SF should dispel any doubt about the possibility of any significant kind of contradiction
between economic growth (propelled by the expansive logic of global capital) and poverty
management (secured to a large extent from distributions of global capital).
Second, the availability of SF would clearly depend on the state of the global economy,
i.e. whether the produced unpaid surplus is more or less. In case of the economic boom
with increased total surplus, one would expect expanding SF after having deducted for
subsumed payments and payments of social surplus for other need purposes. In the case
of recession compounded by additional stress on financial markets, as we are witness-
ing now, the global economy would be hard pressed to reproduce the given production
surplus, which in turn induces downward pressure on the availability of social surplus
in general and for SF in particular. However, the exact amount of available SF would
ultimately depend on the class process, need process and other social processes, and on
the outcome of their relations and struggles; even with unchanged surplus, distribution
for SF could increase if either SCP or other need distributions or both are reduced.
Third, the extent of World Bank’s influence on national policy-making bodies
depends greatly on the relative proportion of SS N in the overall poverty eradication
programme of a country. In countries where SS N is low or virtually non-existent on
account of a struggling surplus-value-producing economy or severe maldistribution of
surplus value restricted to a powerful elite, we see a clear influence and at times direct
control of the World Bank and IMF over their national policy bodies; where miner-
als are present in these countries, global capitalist enterprises often enter under the
‘benevolent’ shield of these international agencies (Goldman, 2005). Not surprisingly,
one finds a greater presence of SF in two types of countries: those going through ruth-
less SAPs, resulting in severe pressure on SS N , and those countries having low SS N
due to the low production level of overall surplus value or maldistribution of existing
surplus. In both cases, high SS PG , along with other globally articulated programmes,
SF
not only implies the dominance of World Bank’s poverty approach, but in many cases
its de facto control over the national poverty management programme. The geographi-
cal variations in the penetration of SF (with increased presence in Africa, erstwhile
‘socialist’ countries and Latin America) seem to depend greatly on this ability or ina-
bility of nations to generate social surplus from within.
4. Community reconstruction and subjectification
In line with the World Bank model of decentralised governance, SF seeks to combine
a top-down approach of management with a bottom-up approach of decentralisa-
tion operationalised through the participatory approach to community reconstruc-
tion. Keeping the latter in the foreground, the World Bank through its operational
manual introduces an elaborate menu of procedures listing the manner in which SF
projects are to be managed. The process of speaking ‘to’ the people (World Bank oper-
ational manual) is combined with that of being spoken ‘by’ the people (Owen and Van
Domelen, 1998). Among other effects, this unique mode of intervention built around
the trope of ‘community’ and ‘participation’ can be shown to be an attempt to recon-
dition subjects so as to make them favourably disposed towards competitive market
economy. This sharply distinguishes World Bank intervention through programmes

such as SF from the more centralised governance model that has hitherto afflicted
much of the state-sponsored interventions.
In the World Bank discourse the term ‘community’ is both undermined and ren-
dered useful. It is undermined since community is often used as a substitute signifier
for ‘Third World’,7 thus capturing a homogenously devalued figure of what actually
are heterogeneous societies consisting of diverse and contesting cultural norms and
customs, political institutions, economic structures (including multifaceted class
enterprises) and modes of interaction with nature. Modern economies require cer-
tain conditions, such as divisible and excludible property rights, impersonal rules and
contracts enforceable by law-state, markets based on such clear property rights, rules
and contracts; these conditions would either be absent or inadequately present in
these ‘Third World’ societies. Transmuting this otherwise heterogeneous space into a
homogenised whole specified by stereotype attributes (Hall, 1992) transpires through
the foreclosure of its language–logic–experience–ethos (notwithstanding the effort to
give an ear to the voice of the poor).8 Not surprisingly, the category ‘community’
in the World Bank discourse, exclusively reserved for the Third World economy, is
applicable to an associated ‘local’ space embodying characteristics of low income,
7
In contrast to this rendition of community, Nancy (1991) and Gibson-Graham (2006) have proposed
an alternative imagination of community based on the idea of a contingent being-in-common, in which com-
munity is not given but is ceaselessly constructed/created in a shared, collective yet contradiction-ridden man-
ner. Such endeavors also have a long tradition in the Orient and in India. In sharp contrast to the World
Bank-type rendition of community that could be seen as orientalist (Chakrabarti and Dhar, 2009, ch. 5),
alternative community construction projects along the template of being-in-common were proposed by both
Mahatma Gandhi and Rabindranath Tagore in the Orient (see Chakrabarti and Dhar, 2008, for an exposi-
tion on Tagore).
8
Evidently, the category ‘Third World’ is derived in relation to orientalism and capitalocentrism
(Chakrabarti and Dhar, 2009). This implies that its epistemology, description and analysis are inflected
with stereotypes generated through the foregrounding of a devalued and deformed imagery of the South.
Conceptually, ‘Third World’ is the foregrounded other derived from orientalism–capitalocentrism, while
what we have named elsewhere as world of the third epitomises the disaggregated experience–language–logic–
ethos of the wholly Other that stands foreclosed in development discourse (Chakrabarti and Dhar, 2009,
2012; Chakrabarti et al., 2012). For the sake of brevity and given that World Bank exclusively acknowledges
Third World (or its substitutes, such as community), we have in this paper retained only the term ‘Third
World’, even as we remain sensitive in our analysis to the fact that it does not and cannot relate to or encom-
pass the whole (reality) of the Other. Rather, in the way ‘Third World’ is invoked, it helps foreclose the ‘world
of the third’. For example, while the Adivasis (indigenous population) are included in the development
model, the very terms of inclusion secure the foreclosure of its language-logic-experience-ethos that consti-
tute the life world of Adivasis in all its complexities. Not surprisingly, the idea of development and the pro-
cess of subjectification we analyse underscore this complex phenomenon of foregrounding and foreclosure.
poverty, risk proneness and vulnerability, and whose received structures and cul-
tures are rendered backwards and reactionary by their inability to facilitate economic
development.
However, there is also an effort to relocate the constitution and role of community
from its conventional moorings, which, as explained, is criticised by the World Bank for
sustaining mass poverty. A reconstituted community, friendly to the signals of compet-
itive market economy, is considered as useful on many counts. First, it allows the par-
ticipatory approach to function by giving voice to individuals, to translate individual
empowerment into a collective force and for individual risks to be pooled. Second, it
is considered an alternative to state-sponsored institutions in creating and cultivating
social capital. Centralised top-down development (that considers subjects as docile)
is positioned as opposed to community-driven development (that considers subjects
as active and participating); such community-driven institutions are also opposed to

other local institutions (including erstwhile communities) seen as stifling the voice
of the poor. Third, the discourse of community is central to maintaining social har-
mony by paving the way for the control of the heterogeneous societal forms, which, in
turn, reduces the possibility of resistance. Fourth, as we shall particularly emphasise,
it can be used as an instrument to reshape the Third World so as to make the latter’s
subjects sensitive to the markers of competitive market economy and therefore capi-
talist development. It seems that a standout feature of this idea of community is its
firm economic grounding, whereby individuals come together to maximise their eco-
nomic self-interest. The set of norms, rules and processes pertaining to this commu-
nity would certainly be different from those based on erstwhile cultural identities that
the World Bank holds responsible for the inequality and social exclusion that symbolise
the Third World.
Deploying the idea and techniques of modern management in the background of
such a community representation within which participation is considered important,
the World Bank-sponsored discourse on poverty attempts to supplant existing local
and state programmes/institutions in order to prop up an alternative set of structures
in harmony with its proposed idea of community. This structural transformation is put
in place by the dissemination of the value of cost–benefit perspectives, monetisation,
competition, etc. The idea is to change the individual’s subjective disposition towards
what constitutes the social and how good life is to be comprehended in relation to the
altered discursive setting. Thus, any favourable idea of community must absorb a pro-
cess of subjectification encouraging managerial mindset and practices:
Social Funds have operational autonomy and employ modern management practices. Social Funds
reside in the public sector but operate like private firms. Because they were created in crisis
situations, most of them were granted exceptional status, either as autonomous agencies or
with operational autonomy under existing ministries. This autonomy extends to such areas as
personnel policies (remuneration, hiring, and firing) and systems for contracting projects and
disbursing Funds. To counterbalance their operational autonomy, Social Funds must submit to
independent audits and to public and donor scrutiny to ensure strict accountability and trans-
parency. (Rawlings et al., 2004, p. 11)
Further:
[Social Funds] have shown the ability to respond quickly to the needs of the beneficiary target
groups and to deliver jobs, services, and infrastructure efficiently, using modern and cost-effec-
tive management tools and techniques at low administrative costs. (Bigio, 2001, p. 12)
SF is governed by the operational manual, which provides ‘the managers of a Social
Funds with a practical reference guide that sets out its modus operandi in an accessible
manner’ (Garnier and Imschoot, 2003, p. 33). The operational manual serves as a code
of conduct that ‘makes it possible to identify and evaluate the operations to be financed,
to sign memorandums of understanding with the intermediaries, to conclude deals
with local consulting firms and enterprises, to channel Funds to operators, to moni-
tor and pay subcontractors promptly and to evaluate project impact’ (ibid., p. 27). In
short, modern management with its code of conduct is routed through the operational
manual to set the terms of discussing, choosing, financing, implementing, monitoring
and evaluating SF projects.
Regardless of the choice menu of available projects, as the financing of poverty-
related projects gets tied to the code of conduct, individuals, households and com-
munities have no option but to abide by the criteria set by the code. Right from the

beginning, agents embedded within SF programmes remain subjected to the condi-
tions in the code: ‘Social Fund approach to local participatory approach is limited;
there are usually predetermined criteria concerning the eligibility of participants or
eligibility projects, making communities bind to a certain range of activities’ (Method
Finders, 2004, p. 4). ‘Participation’, the new buzz word of developmentalism, is thus
constrained by the code of conduct.
Despite its claimed devolution in the choice and implementation of projects, SF dis-
allows beneficiaries to govern them as would happen in a truly democratic and decen-
tralised space. Instead, the new/benevolent sovereign, here the World Bank, controls the
actors by allowing them to take only some responsibilities according to the terms set
in the operational manual. In case of violation, the World Bank uses the bloodline of
finance to exclude the violators from further funds consideration, which becomes an
extremely effective signal, primarily because the World Bank retains considerable sway
over national and local-level policy. Tendler (2000, p. 115) describes the approach of
the World Bank as a case of ‘deconcentration’ (somewhat between centralisation and
decentralisation), which, while sharing some aspects of decentralisation, does not fit
the image of ‘moving from a “top-down” to a “bottom” up style’.
Against the backdrop of our analysis, we now seek to elucidate the conduits of sub-
jectification derived from the modern management template of the World Bank SF.
To what extent are the subjects being attempted to be tied to a new set of signifiers?
Moreover, can the construction of selfhood be undertaken in a scenario where the self
is governable? In the specific case of SF, does then the code of conduct circumscribe
the meaning and scope of self and selfhood? The following examination of the central
features of the management template encapsulated in the operational manuals throws
new light into these questions.
•• The central evaluative criterion for choosing and implementing the SF project is the
cost–benefit approach, which helps to implant certain assessment procedures in the
minds of the actors. The beneficiaries themselves or the implementing agencies are
now asked to use the evaluative techniques of cost–benefit in designing and imple-
menting their projects. Displaced onto a new evaluative space, the subjects learn to
inculcate the cost-control technique, get accustomed to using it in their economic
life and develop the marginal approach mentality in general and the profit mentality
in particular.
•• ‘One of the important tasks of the Social Funds is to contribute to the monetisation
of the rural environment by funding social and economic activities; this involves a
remuneration of labor’ (Garnier and Imschoot, 2003, p. 30). This, along with the
cost–benefit approach, reorganises the mindsets of people, especially in those Third
World societies where neither is operative, or if operative, only partially. The benefi-
ciaries are made to come in contact and get embroiled with the culture of modern
markets; further, they are being given the first lessons of a ‘free’ labourer, who is now
learning to live by selling labour power for a wage.
•• SF promotes private sector development and entrepreneurship, individually or col-
lectively: ‘Social funds allow the private sector firms to compete for the projects. This
competitive bidding process should allow the projects to be completed at the least
cost, thus helping efficiency and resource allocation’ (Bigio, 2001, p. 32). It extols
and smuggles the spirit of competition through various modes and mediums. First,

in a scenario where the poor with limited funds are targeted, potential beneficiar-
ies compete with one another to emerge as the ‘appropriate victim’ for targeting.
Second, the implementing agencies, including local contractors, are held account-
able by the beneficiaries and have to compete with one another for a share of SF.
Lastly, potential beneficiaries compete with one another for SF; the beneficiaries
qua communities propped up by the World Bank also compete against each other
and dilute the other societal forms. It is believed that inculcating the spirit of com-
petition would help the assimilation of the complementary markers of cost–benefit
and efficiency in Third World subjects.
•• The beneficiaries are conferred ownership status of the SF project. The idea is to
develop a sense of ‘possession’, for the beneficiaries to learn to distinguish one’s
property from others’. This is particularly important in the so-called Third World
societies where a large body of subjects is embedded in an economic-political-cul-
tural continuum that renders property rights hazy or absent. Moreover, ownership
status is tied to the code of conduct specified in the owner manual, which marks
‘the terms, conditions, frequency of maintenance, details of operation, the origin
and the budgeting of the needed financial resources in addition to the institutional
characteristics of the project’ in a scenario where ‘users must receive training at
the time of construction’ (Garnier and Imschoot, 2003, p. 83). While problems are
acknowledged in case of maintenance of projects, it is also important to consider the
targeted changes in the disposition of subjects and the resultant divisive effect that
assimilation of such a mentality of ownership and property rights would produce
within existing societies, especially in those with a strong sense of common rights and
entitlements.
•• By capacity creation, World Bank means ‘the process of equipping individuals with
the understanding, skills and access to information, knowledge and training that
enables them to perform effectively. In turn, skilled and empowered individuals con-
tribute to strong, capable communities’ (World Bank, 2011B). Specifically, part of
the SF goes for capacity creation designed to train grassroots-level managers and
supervisors in individual and organisational capacities so that they can better dis-
seminate the code of conduct embedded in the operational manual, and in the pro-
cess help percolate to the lowest level the spirit of cost–benefit, profit, monetisation,
ownership and competition. At the level of implementation of projects, beneficiaries
can use their own system of contracts or they can agree to outsource that function
to the SF, which now takes on the role of contract management involving other
contractors to supervise the work. Most importantly, no matter the kind of manage-
ment system in place, the supervisors are typically trained in line with the code of
conduct in operational manuals. Notwithstanding the rhetoric of stirring activeness
in the subject’s constitution, SF embodies a pastoral characteristic wherein the crea-
tion of a group of shepherds trained to guide the flock of sheep is not only acknowl-
edged but considered indispensable.
Where at least some ‘Third World’ subjects have been theorised as embedded in
the economic-political-cultural continuum of common rights and entitlements, the pro-
cess of subjectification must be elaborated in situations of a long-term transition from
that embedded continuum. World Bank condemns this very continuum for procreating
mass poverty. In this regard the social protection economic programme of SF encapsu-
lates an attempt to inaugurate a new trajectory of subjectification. Managerial respon-

sibility, financial management and the mechanics of participation inherent in the code
of conduct laid down by the manuals have all the ingredients of facilitating the pro-
duction of a self-centred and calculating individual, a subject expected to gradually
move closer to the competitive market-based norms making the current existence of
the embedded continuum moot. It is hoped that economic transformation pioneered
by the World Bank-type programme and project management will let loose a long-
drawn cultural transformation through a process of subjectification, and the latter in
turn will invite calls for further expansion of such programmes. As the subjectification
process transpires and the subjects become favourably disposed towards market sig-
nals in organising their economic life, the given societies including the extant ideas of
community will be sought to be transformed by the people themselves. Rather than
being merely transformation of (economic) structure, the modernisation project is also
about transformation of subjects; each constitutes the other in seeking to produce a
transformation of the Third World. Take an example—the tragedy of the commons
was never a tragedy for the so-called ‘traditional’ societies that nurtured commons as
part of the economic-political-cultural-nature continuum using suitable methods of
assessment conduct. The tragedy of the commons is ‘tragedy’ from the perspective of
a self-centred disposition where the common is assessed amidst conflicting interests
of contending agents. Once subjectivity transformation à la self-centred disposition
is accepted as given, the extant commons will be annihilated from within. While the
participatory approach of community-driven development may allow the World Bank
to take its poverty-based intervention deep into the heartland of the Third World, the
resulting process of subjectification, with its associated transition towards a modern-
ist mindset that it lets loose, is bound to make the very existence of community moot
in the long term. But then, if the economy is seen as being increasingly dominated by
modernist values, the very trope of community loses its utility.
5. Conclusion
Arguing that SF needs to be located within the ambit of the development paradigm in
general and poverty management in particular, we have inaugurated a class-focused
theory of SF, so as to defamiliarise the category of SF by showing the connection
between class and social surplus, between social surplus and SF and between SF and
global capital. On the one hand, capitalist development is producing the breakdown
of the Third World and, on the other, the poverty management exercise, such as SF,
is attempting to transform the subject–community relation in the Third World itself
in order to make it friendlier to the markers of a competitive market economy. The
ambiguity between war (primitive accumulation) and peace (poverty management),
between aggression and benevolence and between addressing long-term structural
poverty through annihilation of the Third World and redressing poverty by attending
to the poor Third World individual, is sought to be resolved through the inauguration
of a protracted war within the Third World where extant societal forms and associ-
ated subjective dispositions are to be dislocated through a managerial institution of
‘deconcentration’.
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Social Funds, poverty management and subjectiﬁcation: beyond the World

Article in Cambridge Journal of Economics · August 2013

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Cambridge Journal of Economics 2013, 1 of 21

Social Funds, poverty management and

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

Manuscript received 10 May 2010; final version received 23 May 2012.

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

And also as:

Each SF is an organisation and a financial institution. The assembly, board of directors

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

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Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

2. The location of social funds in development paradigm

In the context of development discourse, ‘traditional’ Third World (agriculture-

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

The ‘backwardness’ of Third World economic structures and ‘victimhood’ of indi-

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Further, by integrating their idea of social risk management,

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3. Class, need and poverty

3.1 Production surplus

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3.2 Social surplus

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3.3 Class, social surplus and poverty

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Combining equations (1–3):

SSD + SSP  =  ∑ SV  − [C]

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

a country (here, home country), the quantum of its SS P in turn is:

need expenses, SS N , is SS PN + SS P , where SSP = SS DH  + SS D  NATIONAL .

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Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

Downloaded from http://cje.oxfordjournals.org/ by Robert Looney on March 2, 2013

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SSD + SSP  =  ∑ SV  − [C]