INTRODUCTION TO SUSTAINABLE LIVELIHOODS

Index of material:
  1. The Sustainable Livelihoods approach.
  2. A personal (DRH) view.

1.    Sustainable Livelihoods Approach (Ellis & DFID)

There is no unique and commonly accepted version of the development process.  One framework which is currently gaining acceptance is that developed by the Department for International Development (UK), DFID, called the sustainable livelihoods framework (DFID, Sustainable Rural Livelihoods, ed. Diana Carney, 1998). This approach is also explored in some detail by Frank Ellis: Rural Livelihoods and Diversity in Developing Countries, Oxford  University Press, 2000. 
This approach has now taken over, in the international development field, from the the earlier Integrated Rural Development approach, which, interestingly, still seems to dominate much of the developed (European Union) discussion of rural development. (See here for the official DFID Guidance sheets on Sustainable Livelihoods approach, introduced by this overview (pdf file) and a contrast with the previous Integrated Rural Development programme framework).

The starting point is a definition of sustainable livelihoods (following from Robert Chambers and Gordon Conway):

"A Livelihood comprises the capabilities, assets (including both material and social resources) and activities required for a means of living. A Livelihood is sustainable when it can cope with and recover from stresses and shocks and maintain or enhance its capabilities and assets both now and in the future, while not undermining the natural resource (NR) base."
Capabilities (Sen, 1997):   "contrast between two distinct but related areas of investigation in understanding the processes of economic and social development: the accumulation of “human capital” and the expansion of “human capability.” The former concentrates on the agency of human beings - through skill and knowledge as well as effort - in augmenting production possibilities. The latter focuses on the ability of human beings to lead lives they have reason to value and to enhance the substantive choices they have."  "The set of alternative beings and doings that a person can achieve with his or her economic, social and  personal characteristics" (Ellis, p. 7, quoting Dreze and Sen, 1989). - potentially confusing overlap between assets and activities;  processes and outcomes.

Assets: (see also, below) include claims and access in addition to recognised economic assets:  typically classified as
Access (controlled by social norms and rules) is an important attribute to the asset holdings by any household, and emphasises the role of social relations and institutions.

Ellis's Definition: (p 10) "A livelihood comprises the assets (natural, physical, human, financial and social capital), the activities, and the access to these (mediated by institutions and social relations) that together determine the living gained by the individual or household." where the dynamic nature is also to be emphasised - livelihoods adapt and adjust, and hence evolve through time in response to changing conditions and circumstances.  Asset stocks change, as do availability and access.

[Incomes:  different income categories (farm, off-farm, non-farm, transfers & remittances, rental) reflect different labour (and capital) markets. -> the outcome of the livelihood strategy and activities, and asset base]

Diversity:  the range of income sources in the household 'portfolio'.  Diversification:  the creation of diversity as an ongoing socio-economic process reflecting both pressures and opportunities. "the process by which households construct an increasingly diverse portfolio of activities and assets in order to survive and improve their standard of living. " (p 15).

Entitlements: (p17)  'the set of alternative bundles of consumption  goods over which a person can establish command given the prevailing legal, political and economic arrangements' (Dreze and Sen, 1989), or the exercise of asset deployment which can generate command over commodities and goods. Includes rights and claims and privileges associated with command over consumption, but is wider in that it also includes household capacities.

The Focus:  Households or Families?  (Ellis, p 18 - 21) Households, here,  mean "the resident social unit, extended where applicable to include migrants and others who make intermittent or regular contributions to household  welfare" (p21) [or can claim entitlement to household welfare.  Rural homesteads diverse in two main directions (axes):  concentrated/resident (no migrants - remittances or claims from a distance) to dispersed; simple, single family or extended, multiple family -> four way classification of 'households'.

The Sustainable Livelihoods Framework (SLF):

The following outline is a summary of this framework (SLF).  "The asset status of poor individuals and households is fundamental to understanding the options open to them, the strategies they adopt for survival, and their vulnerability to adverse trends and events. Poverty policy should be about raising the asset status of the poor, or enabling existing assets that are idle or unproductive to be used productively." (Ellis, p 28).


Assets, also known as resources, or capitals, include investments for the future (including surpluses, or retained earnings from previous periods, as well as training, education, networks etc.), stores or stocks of physical capital, and claims which can be exercised on others.  "most of the anomalies between the lists of different researchers can be resolved  through the classification as Natural, Physical, Social, Human and Financial." (Ellis, p 32).
Natural Capital comprises land, water, biodiversity, environmental resources etc. - [which could be called the natural circumstance of the community or household], of varying agro-ecological potential, and differentiated between renewable and non-renewable (mostly mineral) resources.
Social Capital includes the social institutions (rules and habits) and associated trust and networks [the history (context) and culture of the community] - "the reciprocity within communities and between households based on trust deriving from social ties" - see Harriss& De Renzio, 1997 - which can also be described as vertical linkages (authority relationships (parent/child) and social responsibilities of the better-off, with associated claims by the less well-off) as well as horizontal linkages in voluntary and kinship networks. Exclusion from these networks and reciprocal trust relationships clearly presents potentially serious problems for the excluded. The literature distinguishes three major types/forms:  Bonding (horizontal associations such as family and kinship ties, and common language);  Bridging (communications networks etc. which connect seperate bonded groups);  Linking (which generates and encourages respect, recognition of mutual dependence, inclusion, reciprocity etc., and exchange)

Harriss and de Renzio (1997) argue that Social Capital can be further divided usefully into:
 [Note  it is principally via Social Capital that this Framework seeks to integrate Sociology, Anthropology and (perhaps) Politics with Economics so as to provide a more inclusive social analytical framework.  Perhaps not suprisingly, this attempt to integrate very different traditions, practices and theoretical approaches generates some antagonism - see here for a recent critique)

Human Capital includes the skills, training and education of the people (as workers) as well as their health [the character of the community, as its potential for action] - typically the major asset of the poor. In the context of Structural Adjustment Programmes in developing countries, with an emphasis on government budgetary balance and liberalisation, may compromise this asset by cost-recovery edicts for health (drugs) and education, while in economies in transition, many of these 'services' which were supplied through the production cooperatives have not yet been adequately replaced by the state or public funds.
Physical Capital is man-made, and includes the infrastructure (transport, housing, water, energy systems (mains electricity), sewage systems,  communications networks etc.) as well as production equipment: factories, machines and tools, and also 'consumer' capital (fridges, deep-freezes, telephones, internet connections etc.) - [the physical circumstance of the community or household].
Financial Capital: household savings (if any) and access to loans and credit, which "owe their role in the asset portfolio of households to their convertibility into other forms of capital or, indeed, directly into consumption. Fungibility, meaning ease of switching between uses, is a fundamental characteristic of capital in the form of cash." (p.34). But savings are often held in less liquid forms, as stocks of livestock (goats, cattle), or as gold, food stocks etc. (especially when financial institutions and organisations (banks etc.) are missing or mistrusted.

Mediating Processes
Here separated into Social Relations; Institutions; Organisations as the conditions affecting access and transformation of assets into Livelihoods (which are at least partly endogenous (within the community's control) , and Shocks and Trends, which reflect the wider contexts and circumstances (largely exogenous - beyond the community's control) affecting livelihoods and their generation from the base assets.

Social Relations refers to the positioning of individuals and households within society (e.g. Davies and Hossain, 1997), including class, ethnicity, age, religion, caste and gender relations.

Institutions  used here in the North (and Williamson) sense: the rules, codes, conventions and norms by which society governs its social, political and economic relations, see North, Douglas C. (1990), Institutions, Institutional Change and Economic Performance, Cambridge University Press. - "the role of institutions is to reduce uncertainty by establishing a stable structure to human interaction", and generating reliable, if not always desirable or satisfactory, expectations about behaviours and responses.

Organisations are the formal bodies through which these authorities are exercised - "groups of individuals bound  by some common purpose to achieve [specific?] objectives." (Ellis, quoting North, 1990, p 38)

These three aspects of human interaction are critical in determining the deployment of assets to achieve livelihood ambitions and objectives - "they inhibit or facilitate the exercise of capabilities and choice by households." (Ellis, p 39).

Clearly, the levels and quality of Social Capital possessed by households are closely related to these mediating processes. [Indeed, the distinction between structure and process is especially blurred and indistinct here - information on one will typically generate information on the other, while the systems of interaction (the processes and the structures) tend to co-evolve.]

Trends in population, density, migration, economic performance (incomes and growth), prices, trade flows, technological change, and structural adjustment (changing relative importance of different sectors and regions), will all affect household livelihood strategies, though with varying force depending on local conditions and circumstances.

Shocks: droughts, floods, pests and diseases, civil war [and also economic shocks - sever depression, rapid inflation - and social upheaval (as in some transitions between centrally-planned (communist) systems and market -based systems], and also include local and personal shocks (death, accident, disease, etc.).

Livelihood Strategies: coping and adaptation behaviours in response to the mediating factors and predicated on the asset base,  which generate the means of living and the capacities to have a life. The strategies are revealed by the Activities which households follow, here classified according to their dependence on natural resources (land and the environment).  Different portfolios of activities will be more or less vulnerable to changes, shocks and dislocations, and differently responsive to policy initiatives or changing market forces.  Scoones, 1998, suggests an agriculturally based typology of strategies:  Agricultural intensification or extensification (using land more or less intensively, with more or less inputs per hectare); Livelihood diversification (off-farm employment and activity); Migration. But Ellis cautions against typologies, on the grounds that the options and possibilities they (necessarily) exclude can be more important than those they include, and that the very process of classifying behaviours restricts attention and analysis to the conventional practices.

Effects: an illustration of the possible indicators of the outcomes [interestingly, here, apparently ignoring the capacities for  growth and development except indirectly].

Ellis suggests that there are three important behaviours (conditioned by situations etc.) which condition the adoption of strategies:

Substitution: Willingness and capacity to substitute  different assets for one another has an important effect on the ability of households to cope and adapt (and thus grow). The existence of well-functioning asset and capital markets (and thus reliable finance) are important here (see below). "Assets that can freely be converted into cash  that is then used to purchase other assets provide considerably more  livelihood flexibility than  assets which cannot be substituted in this way" (p 42), and illustrates this with the example of the Amazon rainforest - which cannot easily be 'capitalised' by the residents other than by exploiting it by felling it (thus improving the land for farming), and then using it for extensive grazing (since land is abundant and labour scarce).

Crisis Management:  Coping strategies - short term responses to unanticipated crises - typically realise the least important or the most mobil assets first: seek alternative income sources (diversify);  draw on social capital (claim obligations); migrate; sell moveable and reproducible assets (livestock); sell or abandon fixed assets (land, buildings etc.).

Adaptation: responses to longer term trends, threats and opportunities, which result in greater capacity to resist shocks and adverse trends (improve resilience). A diversified asset base, and portfolio of activities [apparently in direct contrast to the superficial edict of  the market -> specialisation] is typically more  robust in the face of uncertainty and risk of crisis.

SLF in Practice
This Framework is not an operational manual, it is only a conceptual framework to organise constructive thought.  The data requirements to make it operational are enormous, and  typically beyond reason. Scoones (op cit.) suggests an 'optimal ignorance' approach: "seeking out only what is necessary to know in order for informed action to proceed" - [what to we need to know; economical approach - does the cost and effort of gathering more information actually improve the analysis and decision by enough to warrant the extra effort?  Is what we already have near enough for farm work?] 
Participatory Rural Appraisal methods "can quite quickly establish, at the village level, the priority areas of community-wide concern, and, from there, a phased approach can zero in on the particular problems and constraints of sub-groups within the village." (p 47/8) (also known as Participatory Learning and Action (Pretty
Abstract of Chambers, R, The origins and practice of participatory rural appraisal, World Development, 22,  7, 953 - 1102.
Participatory Rural Appraisal (PRA) describes a growing family of approaches and methods to enable local people to share, enhance and analyze their knowledge of life and conditions, to plan and to act. PRA has sources in activist participatory research, agroecosystem analysis, applied anthropology, field research on farming systems, and rapid rural appraisal (RRA). In RRA information is more elicited and extracted by outsiders; in PRA it is more shared and owned by local people. Participatory methods include mapping and modeling, transect walks, matrix scoring, seasonal calendars, trend and change analysis, well-being and wealth ranking and grouping, and analytical diagramming. PRA applications include natural resources management, agriculture, poverty and social programs, and health and food security. Dominant behavior by outsiders may explain why it has taken until the 1990s for the analytical capabilities of local people to be better recognized and for PRA to emerge, grow and spread.

The key to this is empowerment of the local community - PRA will raise expectations about what can be done, which can easily be frustrated if power to act is not also devolved to local communities. If the process is to be used simply to gather  data (elicitive), then expectations of the participants needs careful management.  See, also, Community Adaptation and Sustainable Livelihoods (International Institute for Sustainable Development, IISD), and the CASL guidebook.

The approach focuses on the Asset Status of the household or community,  which can be represented in qualitative terms as follows:


[The access which this community has to each of these fundamental capital stocks is measured (at least conceptually) along an axis from the centre of the pentagon - which produces a web profile of the community's STRENGTHS and WEAKNESSES (household, group, region, parish, village etc.).  Generally, the further any group lies from the central point of the pentagon ("The Black Hole?"), the more robust is it likely to be in the face of shocks and stresses.  However, this is only a snap-shot of the current status of the community. It does not obviously identify the OPPORTUNITIES or THREATS which this community faces.]  It is important to add the activities portfolios and behaviours to this asset structure to get the whole picture. "While assets focus on the potential to achieve sustainable livelihoods, activities focus on the realisation of that potential in the shape of a viable portfolio of income-generating activities.   If that potential cannot be realised, then assets remain unemployed or underemployed, and an apparently robust asset portfolio becomes unable to generate a sufficient livelihood." (Ellis, p 50).

A Suggested Revision (DRH):
The  DfID Framework  is typically illustrated slightly differently, as follows.



The general argument and logic is identical to that suggested by Ellis, but the feedback linkages and inter-relationships are made more explicit in this representation.  

[Here, a possible modification is suggested by DRH, as follows.  It is suggested that Spatial Capital is missing from the conventional representation. Where a household or community is in relation to its neighbours, potential trading partners, governors etc. is an important aspect of its potential.  At the scale of countries, for instance, UNCTAD notes (Globalisation & Development: Facts and Figures, section 1.1):

Nearly all of the 31 landlocked developing countries (LLDCs) have a low per capita GDP, reflecting a wide range of development constraints, including small domestic markets, high vulnerability to economic shocks and natural disasters, low levels of human resources development, and limited domestic savings capacity.
The economic development of most LLDCs is adversely affected by remoteness from world markets. Four LLDCs in Central Asia are located at least 3,500 kilometres from the nearest maritime port. Another seven LLDCs face more than 1,500 kilometres of overland transport for merchandise, while the remaining LLDCs – with the exception of Ethiopia, Macedonia TFYR, Malawi, Moldova, Paraguay and Swaziland – are situated more than 1,000 kilometres from maritime ports. Given the long distances and the structure of these countries’ exports, which are dominated by low-value bulk commodities, freight and related transit costs are especially burdensome and significantly reduce the potential for export-led growth in LLDCs. These countries are also negatively affected by the high costs of their imports.
In addition, inadequate infrastructure, poor transport organization and a proliferation of official and non-official controls of transported goods make it difficult for these countries to compete in markets where just-in-time production, flexibility, speed and reliability in delivery of products have become crucial. However, the example of prosperous developed landlocked countries in Europe suggests that geographical disadvantages can be overcome.

The notion of Spatial Capital (the geography and context of the community) as a separate category of asset allows for the ideas of peripherality and remoteness to be separated from other aspects of social and physical capital, and  includes the state and quality of communications and transport linkages, as well as the institutional and social relations which govern the use of and access to these routes, to the rest of the world (country, regional centres etc.). As such, it offers the possibility of more appropriate conceptualisation of the remaining assets. However, this leads to a second suggestion:

The fifth major asset category in the conventional picture - Financial -  is especially  problematic. The potentially critical importance of fungibility and substitution between assets has already been mentioned above, and  leads to the obvious power of organised and reliable capital (financial) markets and processes (often a major differentiating feature of developed versus less developed countries and regions). The transformation and more flexible accumulation and improvement of real assets is frequently strongly assisted by financial capital markets (transfers and transactions), which allow others (more distant and richer) to take a stake in the development of a region or community.  Of course, such opportunities also bring threats of exploitation, asset-stripping and loss of control and power over local assets (financed by external capital). Of interest here, perhaps, is the effect of WalMart® on rural poverty in North America.

Consider the essence of financial markets: to transfer ownership  of part or the whole of real physical and natural assets,  as the right to receive income from the asset and benefit (or not) from any change in the value of the asset.  Loans and credit are provided by other (richer) people to those that need additional real capital (or income supplements) on the basis of collateral - either as explicit transfers of ownership (prior claim) on existing real capital (land, buildings, factories etc.) or as claims on human or social capital (lenders' rights to claim interest and repayment from kith and kin, or expectations of repayment from future earnings streams). The point is, both credit access and savings are based on existing (possibly new) real physical, natural, social or human capital somewhere. 

Credit involves mortgaging existing owned assets to lever additional resources from those better placed, either within or outside the community. Savings involve lending own income to someone else in return  for  periodic interest or dividend returns, with the security of these savings depending on the continued ability and willingness of the  borrower to service and repay the loan.  These transactions and transfers are better thought of as part of the structures and processes within which the household or community exists, rather than as local assets in their own right. Removal of the financial category from the asset structure of the household focuses attention on the critically important aspects of location, ownership and control (and hence of hazard) of the real assets of the community. Indeed, one possible way of measuring the potential to mobilise the real natural, physical, human, social and spatial capital is to measure the extent to which these can be mortgaged in return for finance (borrowed future income) to enhance existing assets.  In short, finance is really a combination of process and of social, institutional and organisational structure, rather than an asset in its own right.

This revision of the conceptual framework is designed to both help a more realistic picture of livelihoods, and enrich the concept by separating processes and surrounding socio-economic environments (social relations, institutions and organisations) from the indigenous asset or resource base.]

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Determinants of Livelihood Diversification
Ellis (Chapter 3) examines the reasons why households might diversify their activities and income sources. The most obvious (but not necessarily the most illuminating) classification of reasons is the distinction between necessity and choice (forced or involuntary versus desired or voluntary). Although attractive - choice implies that at least the basic necessities of survival have been achieved -  the distinction can be superficial. As Ellis points out, many potentially desirable options from a household's point of view may be prevented or  heavily constrained by social relations or institutions or organisations.

Ellis suggests that the distinction between Household Strategies and Trends / Processes may be more useful: the strategies are the responses to the conditions generated through the trends and processes. The simple farm household economic model illustrates the point: 
Ellis (Chapter 3) identifies six major Trends and Processes which are likely to be critical in determining the extent of  diversification responses (all of which will be conditioned by the asset base, especially Social Capital):

Trends & Processes
 Responses
Seasonality: continuous consumption needs mismatched with uneven income flows
 Occupations change with seasons, depending on labour markets and risks; seasonal migration - especially important in droughts as family sizes are reduced; food (or cash) stocks required to "fund" heavy labour use during planting or harvest.
Risk: variability in income streams for different occupations and activities - behaviours in response to anticipated variability ex ante
 Diversify income sources, so that peaks in one stream coincide with troughs in others (find activities whose riskiness depends on different factors). The higher the risk of one stream, the greater the incentive to find contingency or fall-back occupations and activities, which may be other crops or farm activities.
Coping Behaviours: how households deal with un-anticipated disasters or difficulties after they have happened ex post. Often associated with ideas of vulnerability (to shocks) and resilience (ability to cope) and sensitivity (extent of effect of shock).
 Often a consumption management strategy, rather than an income management strategy - survival strategies (through necessity rather than choice),  often exhibiting a progression from distress actions (seeking alternative incomes, migration etc.) through to crisis actions (killing livestock, realising assets for consumption).
Adaptation:  may be positive or negative (forced, involuntary; irreversible; reduces security and asset status). - retreat to subsistence farming
Labour Markets: modified by Social Rules and Institutions, and the extent of compatible Human Capital assets.
 Lack of well-established and reliable local markets and strong local economies leads to temporary (or permanent) migration, and the importance of remittances.
Local markets and labour opportunities may suffer supervision and moral hazard problems - incentive compatibilities can be problematic; as can job search and travel time and effort  -> small farms more suitable than large farms?
Migration:  seasonal; temporary (circular, non domiciliary); permanent (rural-urban); international.  Individual choice or family (household) contracts? Remittance income often valuable in risk terms, even if not actual  level. Push and  pull factors identified as reasons.
Credit Markets: The lack of these, their unreliability and their costs often advanced as major reasons for lack of development.
 May be a reflection, rather than cause, of low asset status (lack of collateral) and low incomes (lack of ability to service loans), and associated lack of institutions, organisations and  associated social capital.  Diversification of income sources can be a substitute for lack of working capital sources.
Asset Strategies: investing for the future.
 Diversification to improve asset status, but many assets depend on public infrastructure (roads and communications) and institutions.

2.    A PERSONAL VIEW

A    The Essential Logic

Human systems are living systems - they follow a Darwinian logic - making the best possible use of available resources according to the socio-economic and political pressures ruling at the time (which determine the best fit of allocation of scarce resources to best uses), and making use of such technologies and techniques as are available, tried, tested and trusted.  The best-fitted systems and organisms (families, clans, firms, organisations etc.) grow better and replicate faster than those which do not fit.

In such systems, specialisation of function and trade between entities (people, communities, localities, regions, sectors and states) are necessary characteristics.

In this sense, Economics is very largely simply a re-specification of the principles of darwinian evolution and the survival of the fittest - not, notice, the winner taking all, nor, by and large, domination by single species (except in the most malign, sparse and poor environments).  Economic development, then, should lead to richer environments and greater diversity.  How does this happen in evolutionary systems?

The development process happens as a result of experiments and innovations - new ways of doing things, both technical and institutional (the human rules and habits governing how we do things and for what purpose).  Natural development is the result of historical accidents - most of which fail, and only a few succeed - and are then able to replicate, breed, multiply and succeed.  Arguably, most human (socio-economic) development has also happened by accident - most favourable innovations surviving and replicating while less favourable developments tend not to be able to compete and hence die out. 

As with natural ecologies, development status is necessarily context and circumstance specific (where you are and where you come from matter).  The richer the habitats (the more resources) the more extensive and diverse will be the ecologies (economies), but these will differ from one another if they are isolated - the Galapagos and Australasia for example, though available niches will tend to be filled with similar organisms in the sense of filling the same place and role in the food chains and cycles.  Isolated ecologies, though, tend to be vulnerable to invasion and invasive species, which are better fitted to the environment than the natives.

Furthermore, naturally developing ecologies tend to develop their own resource base - making soil from rock etc. - via re-cycling their food stuffs - the socio-economic counterparts being the circular flow of income and the flows of information and knowledge, habits and rules.  In this sense, living systems accumulate resources and capacities.

But human systems are different from natural systems - human systems self-select, whereas natural systems are naturally selected.  Humans think they can make the rules about who lives and who dies, who prospers and who does not. It is the self-selection systems which are critical in human development processes - what signals, incentives and penalties are attached to certain forms of behaviour and activity?

The market system provides one set of incentives and penalties - through explicit or implicit prices on goods, services and factors of production, and thus on the returns and incomes to be made from various activities and the choices made about what to consume and how much to save.  This system - the competitive market place - operates largely according to natural principles - survival, prosperity and replication of the fittest - leading to obvious inequality, but limited accumulation of power over the natural selection process - the large are necessarily most vulnerable to disruption of their food chains, and are frequently indicator species - a signal of the richness and diversity of the whole surrounding ecology. 

However, the market system has evolved into capitalism, which differs from the survival of the fittest by establishing the ability to trade ownership of assets and resources between people. Because assets can be traded (exchanged), accumulation of assets amongst a few becomes possible, and the system can become the survival of the richest rather than the fittest.

Market power (the ability of producers to dictate what and for whom) is regarded as a market failure, which needs social governance (typically formal government) to offset and overcome. Similarly, the power of the rich over the poor can onlybe sustained if the poor remain sufficiently content or cowered to put up with it.  If not, they rebel and revolt - they develop a new governance system.  Our governance systems - from local habits and customs to formal government rules and regulations - provide the other major set of incentives and penalties - which does admit of power, and the fundamental exercise of self-selection rather than natural selection.  Power, then, is the ability to choose and the associated ability to persuade or require others to make particular choices.

The implication is that development is a reflection of the interaction of all these constituent parts and mechanisms - no one part is inherently more or less important than ay other - it is fit which counts, what will fit with what in any particular context and circumstance?  If we change the context and circumstance, we will get a different (not necessarily better or worse) development pattern.  If we change one part (such as substituting democratic control for autocratic control) this will have different consequences depending on what other systems we have in place and what resource base we have.

Trade and specialisation (market systems) naturally evolve in human systems through and from barter as the most efficient and effective ways of making the best use of available resources.  All other forms of human interaction associated with doing things will tend to involve higher transactions costs (be less efficient or effective) except in special circumstances, such as small and highly cohesive communities and families (the human organisation equivalent of single organism)  - when different organisations or communities (different species) compete for use of the same resources, then the market system - natural selection - tends to take over as the most efficient form of transaction/transformation.  Ecologies do this through the transmission and transformation of food and energy (the various biological and bio-physical cycles), while economies do it through economic cycles, like the circular flow of income and the interactions between markets, especially through information and communication (as necessary parts of trade).

However, markets and natural selection require that the final arbiter of who lives and dies is external, as a given outside determinant (g.o.d.) - in the natural selection case, as the laws of bio-physics governing the nature of the transactions and transformations of food and energy, and the possibilities for improvement or adjustment/adaptation of practice within these laws.  In the human case, governance takes over from the bio-physical laws as the final arbiter.  Markets exist and are allowed to thrive only insofar as their societies will let them and encourage them.  Hence, it is these governance systems (our habits and rules of social organisation - called institutions by North) which are the key elements of the development process.

Prudent and sensible macroeconomic management (requiring stable and legitimate (legitimised) government) is generally a necessary precursor, as are the major elements of a functioning market system.  However, neither of these is sufficient to ensure sensible development, and both could, perhaps, be overcome by socio-political governance of the 'right' type - i.e. the type which best fits existing contexts and circumstances.

B   Some Implications

Which is why I am trying (off and on, or even most of the time) to develop an outline logic of what such a common framework might look like - which would allow us to trade and exchange ideas and concepts and perspectives, and thus learn both from each other, and also from the very process of trade in ideas.  The present state of this ridiculously ambitious research agenda is outlined on my research web-site. For the present, the sustainable livelihoods framework, as an increasingly widely used tool for understanding and promoting sustainable development, seems to fit.

C.    Some other evidence?
Jared Diamond: Guns, Germs and Steel, a short history of everybody for the last 13,000 years., Vintage, London, 1998, (Robinson Student Texts Collection, 303.4 DIA) addresses the question of why some societies (especially the north west), seem to have made different progress than other societies, which, furthermore, appear to have become the dominant societies in the present world.  His underlying rationale is: "History followed different course for different people because of differences among people's environments, not because of biological differences among people themselves" (p 25).  The germ of his argument (thesis, story), which is a good read, is as follows:

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