Rethinking Economic Policy for Social Justice The dominant approach to economic policy has so far failed to adequately address the pressing challenges the world faces today: extreme poverty, widespread joblessness and precarious employment, burgeoning inequality, and large-scale environmental threats. This message was brought home forcibly by the 2008 global economic crisis. Rethinking Economic Policy for Social Justice shows how human rights have the potential to transform economic thinking and policy-making with far-reaching consequences for social justice. The authors make the case for a new normative and analytical framework, based on a broader range of objectives which have the potential to increase the substantive freedoms and choices people enjoy in the course of their lives and not upon narrow goals such as the growth of gross domestic product. The book covers a range of issues including inequality, fi scal and monetary policy, international development assistance, fi nancial markets, global- ization, and economic instability. This new approach allows for a complex interaction between individual rights, collective rights, and collective action, as well as encompassing a legal framework which offers formal mechanisms through which unjust policy can be protested. This highly original and accessible book will be essential reading for human rights advocates, economists, policy-makers, and those working on questions of social justice. Radhika Balakrishnan is the Faculty Director at the Center for Women’s Global Leadership, and Professor of Women’s and Gender Studies at Rutgers University, USA. James Heintz is the Andrew Glyn Professor of Economics and Associate Director of the Political Economy Research Institute at the University of Massachusetts Amherst, USA. Diane Elson is Emeritus Professor of Sociology at the University of Essex, Visiting Professor at the Centre for Research on Women in Scotland’s Economy at Glasgow Caledonian University, and Research Associate of the Center for Women’s Global Leadership at Rutgers University, USA. Economics as Social Theory Series edited by Tony Lawson University of Cambridge Social Theory is experiencing something of a revival within economics. Critical analyses of the particular nature of the subject matter of social studies and of the types of method, categories and modes of explanation that can legitimately be endorsed for the scientifi c study of social objects, are re-emerging. Economists are again addressing such issues as the relationship between agency and structure, between economy and the rest of society, and between the enquirer and the object of enquiry. There is a renewed interest in elaborating basic categories such as causation, competition, culture, discrimination, evolution, money, need, order, organization, power probability, process, rationality, technology, time, truth, uncertainty, value, etc. The objective for this series is to facilitate this revival further. In contemporary economics the label “theory” has been appropriated by a group that confi nes itself to largely asocial, ahistorical, mathematical “modelling”. Economics as Social Theory thus reclaims the “Theory” label, offering a platform for alternative rigorous, but broader and more critical conceptions of theorizing. Other titles in this series include: 1. Economics and Language 5. Rules and Choice in Economics Edited by Willie Henderson Viktor Vanberg 2. Rationality, Institutions and 6. Beyond Rhetoric and Realism Economic Methodology in Economics Edited by Uskali Mäki, Bo Gustafsson, Thomas A. Boylan and and Christian Knudsen Paschal F. O’Gorman 3. New Directions in Economic 7. Feminism, Objectivity and Methodology Economics Edited by Roger Backhouse Julie A. Nelson 4. Who Pays for the Kids? 8. Economic Evolution Nancy Folbre Jack J. Vromen 9. Economics and Reality 20. Reorienting Economics Tony Lawson Tony Lawson 10. The Market 21. Toward a Feminist Philosophy John O’ Neill of Economics Edited by Drucilla K. Barker and 11. Economics and Utopia Edith Kuiper Geoff Hodgson 22. The Crisis in Economics 12. Critical Realism in Economics Edited by Edward Fullbrook Edited by Steve Fleetwood 23. The Philosophy of Keynes’ 13. The New Economic Criticism Economics Edited by Martha Woodmansee and Probability, uncertainty and Mark Osteen convention Edited by Jochen Runde and 14. What do Economists Know? Sohei Mizuhara Edited by Robert F. Garnett, Jr. 24. Postcolonialism Meets 15. Postmodernism, Economics Economics and Knowledge Edited by Eiman O. Zein-Elabdin and Edited by Stephen Cullenberg, S. Charusheela Jack Amariglio and David F. Ruccio 25. The Evolution of Institutional 16. The Values of Economics Economics An Aristotelian perspective Agency, structure and Darwinism Irene van Staveren in American institutionalism Geoffrey M. Hodgson 17. How Economics Forgot History 26. Transforming Economics The problem of historical Perspectives on the critical realist specifi city in social science project Geoffrey M. Hodgson Edited by Paul Lewis 18. Intersubjectivity in Economics 27. New Departures in Marxian Agents and structures Theory Edward Fullbrook Edited by Stephen A. Resnick and Richard D. Wolff 19. The World of Consumption, 2nd Edition 28. Markets, Deliberation and The material and cultural revisited Environmental Value Ben Fine John O’Neill 29. Speaking of Economics 38. History of Financial Crises How to get in the conversation Dreams and follies of expectations Arjo Klamer Cihan Bilginsoy 30. From Political Economy to 39. Commerce and Community Economics Ecologies of social cooperation Method, the social and the Robert F. Garnett, Jr., Paul Lewis and historical in the evolution of Lenore T. Ealy economic theory Dimitris Milonakis and Ben Fine 40. The Nature and State of Modern Economics 31. From Economics Imperialism Tony Lawson to Freakonomics The shifting boundaries between 41. The Philosophy, Politics and economics and other social Economics of Finance in the 21st sciences Century Dimitris Milonakis and Ben Fine From hubris to disgrace Edited by Patrick O’Sullivan, 32. Development and Nigel F.B. Allington and Globalization Mark Esposito A Marxian class analysis David Ruccio 42. The Philosophy of Debt Alexander X. Douglas 33. Introducing Money Mark Peacock 43. What is Neoclassical Economics? 34. The Cambridge Revival of Debating the origins, meaning and Political Economy signifi cance Nuno Ornelas Martins Edited by Jamie Morgan 35. Understanding Development 44. A Corporate Welfare Economics James Angresano Its challenge to development studies 45. Rethinking Economic Policy Adam Fforde for Social Justice The radical potential of human 36. Economic Methodology rights An historical introduction Radhika Balakrishnan, James Heintz Harro Maas and Diane Elson Translated by Liz Waters 37. Social Ontology and Modern Economics Stephen Pratten Rethinking Economic Policy for Social Justice The radical potential of human rights Radhika Balakrishnan, James Heintz, and Diane Elson First published 2016 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2016 Radhika Balakrishnan, James Heintz, and Diane Elson The right of Radhika Balakrishnan, James Heintz, and Diane Elson to be identifi ed as authors of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patent Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identifi cation and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Names: Balakrishnan, Radhika, author. | Heintz, James, author. | Elson, Diane, author. Title: Rethinking economic policy for social justice : the radical potential of human rights / Radhika Balakrishnan, James Heintz and Diane Elson. Description: Abingdon, Oxon ; New York, NY : Routledge, 2016. Identifi ers: LCCN 2015040283| ISBN 9781138829145 (hardback) | ISBN 9781315737911 (ebook) | ISBN 9781138829152 (pbk.) Subjects: LCSH: Human rights--Economic aspects. | Social justice--Economic aspects. | Economics--Sociological aspects. Classifi cation: LCC JC571 .B337 2016 | DDC 330--dc23 LC record available at http://lccn.loc.gov/2015040283 ISBN: 978-1-138-82914-5 (hbk) ISBN: 978-1-138-82915-2 (pbk) ISBN: 978-1-315-73791-1 (ebk) Typeset in Palatino by Saxon Graphics Ltd, Derby Contents List of fi gures ix Acknowledgements xi List of abbreviations xiii 1 The radical potential of human rights 1 2 The human rights framework and economic policy 12 3 What does inequality have to do with human rights? 30 4 A human rights approach to government spending and taxation 52 5 Mobilizing resources to realize rights: debt, aid, and monetary policy 68 6 Financialization, credit markets, and human rights 84 7 Extraterritorial obligations, human rights, and economic governance 103 8 Economic crises and human rights 122 Conclusion 142 Index 144 This page intentionally left blank Figures 2.1 Maximum available resources 23 3.1 Changes in income distribution from the early 1990s to the late 2000s 31 3.2 Income inequality and under-5 child mortality, high income countries, 2010 41 5.1 Cash reserves of US depository institutions held at the Federal Reserve, 2001–2014 80 6.1 IMF Commodity Price Index (all commodities), Jan. 1992–May 2012 94 6.2 Index of open interest, weekly, Jan. 1993–April 2012 95