Basic Understanding of Livelihoods1

1. Defining and Describing Livelihoods

What is Livelihoods?

Livelihoods is a System of making a living where different members of a Household as a

whole, and not just an individual, engages in a Set of Activities, some social some
political, and some economic, which often together builds up and gets influenced by
their culture, Performing Diverse Functions, like production, exchange, conservation,
and managing relationships with others in the society, for a means of living. They adopt
different Strategies to best utilize their Capabilities and various Resources they have
access to, Mitigating the Risks faced by them, especially of those who are Vulnerable.
This way of looking at livelihoods of people, recognize that the various factors affecting
their livelihoods, including the resources, their capabilities which are formed on the
basis of their Aspirations and the needs that what they produce caters to (or the
Demand for them), are Dynamic and is changing over time.

1. 1.1 Earlier Ways of Understanding How People Made a Living

At the early stages of economy people lived their own

lives producing whatever they could to make a living.

People concerned with lives of human beings,

scientists and policy makers had constructed an
image of an economic man, Homo economicus, who
rationally maximized his or her own interest. It was
assumed that there were some resources around
people and they had their capabilities, by which they
changed these resources to make them more useful, to
themselves (for self-consumption) or for some others
(marketing them).

But with the discovery of machine power and industrial revolution setting in, especially
in Western Europe, in the 17th century a new phenomenon started. There emerged a
class of people who owned those machines that were the means of production. This
group of people started employing others, who did not own any of these, to work on
these machines. Over time people started observing that livelihoods, of those who owned
these means of production, like the land, the machinery, became very different from
those who were employed by them. Being a socially sensitive animal, many people
started getting concerned by this increasing disparity between these two groups of
people.

1 A note developed for classroom discussion only by Sankar Datta and Annapurna Neti for MA
(Development) students in Azim Premji University 2013
1.2 Geography Influenced How People make their Living: Scholars from different
walks of life started recognizing that economic choices were embedded in a social reality.
Around the turn of the century, French geographer, Paul Vidal de la Blache (1911)
observed that people within a geographical region have some unique commonality in
their behavior, which does not always conform to the rationalist image of man. An
anthropologist, Evans-Pritchard (1940), when describing the African tribe, Nuer’s
strategies for making a living, observed that communities undertook many activities,
which were popularly known as social or cultural activities, as an integral part of making
their living. They often did not respond the way normal economic analysis has predicted
them to. Though some people argued that the resources available in a geographical area
led to such patterns, many thought it went beyond the availability of resources.

1.3 Culture Influenced How People make their Living: George Kimble in his book
‘Tropical Africa: Land and Livelihoods’ (1960) proposed that ‘livelihood’ is used in a rather
concrete manner to describe the ways in which people make a living, and mainly
pointing to the economic resource base people have at their disposal for doing this. A
German economist, Karl Polanyi
(1886-1964) gave the concept of
livelihood a theoretical foundation in
some of his works in 1940’s2 He
emphasized that the economics is
historically embedded in a social and
cultural reality, as opposed to
mainstream economics that is merely
concerned with individual maximizing
benefit for self. In his substantive
definition of the economy, the term
‘livelihood’ was central. Polanyi is
credited with giving the first formal
conceptualization of livelihoods. He
pointed to the fact that in order to live, people need a material base to satisfy their needs
and wants. But the means they used to meet these needs depended on the social,
political and culture of the place. He stressed that ‘the means, not the wants are
material and formed the basis of their livelihoods’.

Excerpt from ‘The Family Universe: Towards a Practical Concept of Rural Livelihood Systems’ by
Ruedi Hogger; A Working Paper, November 1994
As a student of European Economic and Social History, I find it helpful to start with a reference to early 19th-Century England.
At this time, the situation of the rural poor of Europe was in many ways similar to what it is today in India. The following
quotation from one of E.P. Thompson's works might serve as an illustration:

2 Karl Polanyi’s book ‘The Livelihood of Man’ written based on his field work in 1940’s and written in
early 1960’s that was only published posthumously in 1977 edited by Harry W. Pearson.
1.4 People Made a Living for the Family and not only for Self: In a contrast to the
mainstream understanding of “Those petty rights of the villagers, such as gleaning, access to fuel, and
an economic agent being an the tethering of stock in the lanes or on the stubble, which are irrelevant
individual, another German to the historian of economic growth, might be of crucial importance to
the subsistence of the poor. ... If one looks at the scene again from the
economist Friedrich Baerwald standpoint of the villager, one finds a dense cluster of claims and
(1955) recognized that in usages, which stretch from the common to the market-place and which,
matters of making a living it was taken together, made up the economic and cultural universe of the rural
poor.
a Family that was the decision
making unit, trying to optimize It seems to me that this short description brings out at least two
important aspects of low class rural livelihood systems. First: Such
the wellbeing of the whole systems are made up of almost innumerable elements which -taken
household, and not maximizing together- constitute the economic, but also the cultural (and I would
individual goods for all its add: the social) "Universe", wherein rural families are bound to make
their living. A livelihood system, therefore, is much more than the
members. But this recognition economic precondition for physical subsistence. It is a
also led to an understanding multidimensional "whole", indeed a universe, embracing all forces and
that different persons were constraints, which determine a family's life in its entirety. It is the life-
context within which people feel and physically are at home.
engaged in different activities,
and their resources, especially Cont…
their time, was allocated between these activities, to maximize wellbeing for all in the
family.

1.5 Means of Living have to

Sustain over Time: The 1970’s also
Second: For outsiders, it is not easily discernible, what exactly are
the most crucial elements of a specific livelihood system. The petty
witnessed growing concern about the
rights of the villagers, e.g., may seem to be irrelevant to a historian
of the twentieth Century, and they will often be overlooked by degrading ecological resources. In the
modern development planners. Similarly, the unwritten contracts zeal of increasing production in the
between the landless or the small tenants on the one hand,
landowners and Government officials on the other hand, might 50’s and 60’s, which also included the
Green Revolution, people had started
make all the difference for the poor in their efforts to balance out
their livelihood systems, although such relations are nowhere adopting many technologies that were
codified or documented. Petty rights have no legal character and are
leaving their mark on the
subject to interpretation, misuse and gradual change. Classical data
gathering alone will therefore hardly lead to an adequate environment. In the 1970’s the
understanding of the inner dynamics of livelihood systems. In the
society across the world raised its
last run, it is only the concerned people themselves, those living
within a given system, we can provide relevant insights into the voice against such indiscriminate
more subtle consistencies their "universe" exploitation of natural resources and
Thus, in the perspective of European economic history, a livelihood adoption of technologies which
system appears as a family-centred universe, the dynamics of which focused only on increasing
can only be sensed by (or in close contact with) its inhabitants. production. Concerned world leaders
through the UN Council resolved that ‘Sustainable development is development
that meets the needs of the present without compromising the ability of future
generations to meet their own needs.3

Some of the leaders of this movement, like Schumacher, endorsed ways of making a
living that had been suggested by Mohandas Karamchand Gandhi way back in 1930’s,
but which did not get primacy in development thinking. Gandhi had recognized that
growth could not be unlimited. Therefore, instead of pursuing to produce more and
more, using more and more of resources, people must produce what they can consume,
and limit their consumption to what they need. He also observed that diversity is

3 From A/42/427. Our Common Future: Report of the World Commission on Environment and
Development; Brundtland Commission
natural, equality is not. All people are not born with equal endowments or equal
abilities. Any efforts to enforce equality would not be sustained for long. Therefore, he
proposed that those have more, need not and must not be deprived of their possession.
But they must be educated to care for the others, and hold all the resources as a trustee
of the community they live in. And this form of a care based support to all is feasible
only when people lived in a community, where they can know each other as persons. He
argued that only if everybody together produced only how much they as a community
need, there will be no over-exploitation of natural resources. All transactions should be
limited within the community itself. As production will not exceed what they can
consume, there will be no need to ‘market’ the products, in which the ‘haves’ hold an
advantage over the ‘have-nots’.

1.5 People make their Living Not-Only from a Job: The word ‘Livelihood’ started
gathering momentum in 1970s. As the predominant thinking on development in the
preceding period was around growth, modernization, and industrialization, the
livelihoods concept was used to offset the urban and industrial biases of the dominant
development discourse. Concepts such as employment, jobs, workplace and income in
cash as the basis for livelihoods started getting replaced with a holistic multi-
dimensional understanding of poverty. Livelihood, in contrast, could encompass the
multifarious activities and sources of support typical especially of poor rural and
agricultural households.

1.6 Multi-dimensionality of Poverty & Well Being

Amartya Sen (1976)4 and many others started recognizing that for making a living people
worked towards well-being of the family. This well-being is a multidimensional
phenomenon and not one-dimensional income poverty. They recognised that measuring
development using common yardsticks of economic growth obscures the problem of
poverty and suggested a ‘basic needs’ approach to help poor overcome poverty. Along
with efforts to increase the productivity of the poor, they suggest supplementing these
efforts to provide unmet basic needs of the poor in (i) education and health, (ii) human
resource development, (iii) wage goods and public services, along with short term
subsidy programs to enable them to afford at least a minimum bundle of basic needs till
the time their productivity levels are enhanced.
1.7 People made their Living Using their Capabilities: Though initially people
looked at capability as the sum total of all the skill and knowledge of the people, with
this understanding that people made a living for the family as the whole, it was
recognized that the capability also was also dynamic. When the son of the house got
married with the bride coming into the family the capability of the household changed.
Not only addition to the family or death in family changed their capabilities, but also
status of their health affected their capabilities. It was also observed that people
responded to changing contexts of resource availability, demands in the markets and
changed their Capabilities. Amartya Sen brought to attention that people changed their
capabilities based on what they aspired to do in life which were influenced by these
changing contexts.

4 Sen, Amartya, 1976. Poverty: An ordinal approach to measurement. Econometrica, Vol 44 (2),
March 1976
1.8 Vulnerable Poor Adopt Livelihood Strategies to Manage Risk and Not
Maximize Earning: Some scholars like Conway and Chambers also observed that
weaker sections of the society were much more vulnerable to risks and shocks than their
not-so-poor counterparts. The poor often could not take up livelihood activities, which
apparently could give them a far higher return. If the activity did not work out for them,
due to some unexpected reason, it could mean life or death for them. They often chose a
mix of activities, which did not give them the highest return, but even if one of the
activities failed, they had something else to ensure basic survival. Therefore, they argued
that the strategy for the most vulnerable poor was not to maximize return, but to ensure
survival by optimizing risk.

2 Sustainable Livelihood Approach (SLA)

With these changes in the perspective, which were further strengthened by Indian
economist Amartya Sen’s work on various non-economic factors affecting economic
choices and consequences, the United Nation set up a World Commission on
Environment and Development in 1985 to review the development experiences in
different parts of the world and suggest a future course of action. The entire member
nations agreed that at all levels of development, it is essential for people to lead a long
and healthy life, to acquire knowledge and to have access to resources needed for a
decent standard of living and remain sustainable in terms of meeting the needs of the
present generation without compromising the options of future generations.

In response to this appeal by the World Commission on Environment and Development,

Chambers and Conway (1992) in their paper the ‘Sustainable Rural Livelihoods: Practical
concepts for the 21st century’ observed that the thinking about ‘how man made a living’
had evolved substantially since the beginning of the 20th Century. By 1980’s it was well
recognized that people perform some economic activities to make their both ends meet.
They proposed the Sustainable Livelihood Approach (SLA) that since the 1990s has
become the dominant approach of development interventions.

This approach, refined the earlier thinking of people making their living by transforming
some assets that they have access to into some useful goods and services, using their
capabilities, by adding five additional dimensions.
t.
First. It clarified that people utilize five different forms of Resources in forms of Assets or
Capitals for their livelihoods. These like any other form of capital are convertible
and can be accumulated. These included:
a. Natural Capital like land, water, livestock, forests among others
b. Physical Capital made by man, like roads, dams, canals;
c. Human Capital in forms of their own skills, knowledge, abilities;
d. Social Capital in form of their social relationships, caste, clan; and
e. Financial Capital, not only in forms of the money they hold, but also informs of
various other assets like jewellery, which could be liquidated to generate funds.
Second. It added that as most people, especially the poor, are vulnerable to risks and
shocks, they chose a livelihood strategy to help them manage uncertainties, and not
only maximize returns. The choice also includes multiple activities pursued by
different members of the family, at different times.
Third. All economic choices are made within an Institutional Context, which define the
‘rules of the game’. These include not only the large institutional mechanisms, like
the state policies, institutional arrangements made by the state to regulate trade
and commerce, or build their capacities, but also many smaller local institutions,
like widely adopted practices of a caste.
Fourth. In line with Amartya Sen’s understanding of Capabilities, it does not look at
capability as only a sum of skills and knowledge that people have, but as a set of
abilities of a family to achieve what they aspire to, influenced by their health,
education and number of members in the family.
Fifth. This approach also treats all on these elements, including the Capitals, Capacities,
as dynamic.

A team of scholars from IDS, Sussex, under the leadership of Scoones (1997) working on
the initial concept proposed by Conway and Chambers proposed that livelihoods of the
poor are built around livelihood resources, but their access and utilization is determined
by the local Context and by Institutional Frame which governs its use. Different
households adopt different livelihood strategies to use these resources with their own
Capabilities, which are influenced by what they aspire to do.

They also argued that livelihood outcomes need to be seen from two perspectives.
First. of augmenting the livelihoods by
a. Increasing income by either enhancing production, or increasing the
number of days of wage employment;
b. Effect this increase has on different dimensions of poverty, not just
income poverty;
c. This increased income or asset base leading to enhanced well-being of
the household and
d. Increasing the capability of the household, to make better choices for
themselves and better utilize the resources sustainably.
Second. From the perspective of sustainability, paying special attention to:
a. Adaptation of the livelihood intervention to suit the local context
b. Reduction of risk in face of the vulnerability faced by the people;
c. Enhanced resilience to shocks and risks and
d. Sustainable use of resources.
They argued that a sustainable development intervention must affect all these
dimensions for them to impact the livelihoods of the people. In other words, an
intervention which increased income while enhancing risk, or did not improve the health
conditions of the members of the household would remain an income generation
program, and could not be considered as a livelihood intervention.
Sustainable Livelihoods provides a new perspective for development of the people. As
Farrington, 2001, puts it, SLA is

1. A set of principles guiding development interventions (whether community-led or

otherwise). The fundamental issue here is the notion that an intervention has to
be evidence-based rather than instigated in top-down fashion without adequate
knowledge of the community.
2. An analytical framework to help understand what is and what can be done. Thus
the logic as set out here is to appreciate the capitals which are present, the
household’s vulnerability and the involvement of institutions. The logic provides a
framework that can serve as the basis for an analysis.
3. An overall developmental objective. In this case development is the
improvement of livelihood sustainability, perhaps by making capital less
vulnerable or by enhancing the contributions that some capitals can make or even
by improving the institutional context.
This approach necessitates expanding our vision on three dimensions: form an
individual to a household, from an activity to a set of activities, and from being only
economic to include social, political and cultural activities.

Household as a unit

Individual

Economic One activity

Multiple activities both

Economic, Political,
economic and non-
Social, Cultural economic

A group of scholars working with Swiss Agency for Development Cooperation (SDC)
observed that though SLA captured lot of the physical reality of livelihoods, it was
shaped by the orientation of the people, their family and the community. They proposed
an alternate framework for analysis livelihood opportunities, which popularly came to be
known as the Nine-Square Mandala framework.
The mandala conceptualizes different aspects of livelihoods in nine squares. For
conceptual clarity each of the squares is treated as denoting one aspect of the livelihood
system; however, all are in reality interlinked and cannot really be viewed in isolation.
The Mandala is depicted in the diagram below (Hogger, 2000):

9. Individual Orientation 8. Family Orientation 7. Collective Orientation

• Visions • Ancestors • Subsistence agriculture

• Hopes • Caste, social status • Food security
• Aspirations • Aspirations to leadership, • Religion, traditions
• Fears education, jobs • CPRs, state laws
• Self image/respects • Aspiration to power, wealth, • World views, school
• “Gurus”, models social mobility • Capitalistic values, city
new prosperity

6. Inner Human Space 5. Family Space 4. Socio-Economic Space

• Integrity, identity • Gender relations • Production relations

• Awareness • Nutrition distribution • Systems of co-operation,
• Selfishness, compassion • Health Community organisations
• Responsibility • Family planning • Govt. institutions
• Affection • Distribution of work • Markets of goods, land
Curiosity, courage • Solidarity labour and capital

3. Emotional Basis 2. Knowledge & Activity 1. Physical Base

• Memories • Technology • Natural environment

• Attachments • Agriculture patterns (topography, climate)
• Feelings • Experiences, skills • Natural resources
• Anxieties • Traditional knowledge • Animals habitat
• Boredom • Labour, crafts, services, • Accumulated wealth
• Modern professions
Emergence of Livelihoods Perspective

• Elwin (1964)
• Hart (1973)
• Hogger (1994)
• Ellis (2001)

Mul ple
economic • Gandhi (1920s)
• Brundtland ac vi es • Pritchard (1940),
Commi ee (1987) Polanyi (1944)
Social,
Mul - poli cal and
disciplinary economic
interrela ons
Livelihoods
Chambers &
Conway 1992;
De Haan
(2000)
• Vidal de la Blache Geography / Household / • Baerwald (1955)
(1911) Globalisa on family • De Haan &
• de Haan (2000) Zoomers (2003)
• de Haan &
Zoomers (2003) Risks and
vulnerability

• Chambers (1989)

Why are many people facing a challenge in managing their livelihoods?

There are several causes of creating a serious livelihood challenge for a large number of
people. Without getting into details, briefly these include:
1. Increasing population depending on the resources not expanding at a matching
rate.
2. With increasing population, not only the needs for food, clothing and shelter
increased. With progress in civilization needs for industry and other non-food
production also became stronger. There is severe competition for the same set of
resources between Man-Animal-Trees. Need of the man is also spurred by the
competition for resources between Agriculture-Industry-Domestic needs.
3. Uneven distribution of ownership/ control of resources leave some people not
having adequate resources to make both ends meet.
4. Development of technologies which replace labour, which are capital intensive.
Capital is owned and controlled by a few.
5. With increasing population and increasing knowledge many people can produce
the same goods and services, increasing competition.
6. Social systems of accumulation of wealth and property rights to transfer them
from generation to generation and people’s desire leading to some people Wanting
to consume/ accumulate much more than what they Need.