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This article focuses on the distributive issue in Latin America. According to economic theory, the capitalist system functions on the basis of economic equilibrium. Economic equilibrium was defined as a set of prices and quantities in the market which individuals, in view of restrictions with which they have to contend, cannot, or do not wish to, alter. This equilibrium is of a quantitative nature. Accordingly, economic equilibrium may also be said to entail a social equilibrium or social order. A theory of distributive equilibrium can be constructed by adding two postulates or axioms to the micro-economic premises of existing economic theories. Equity function contains the individual's absolute and relative incomes. The equity function of individuals can be extended to the group or social class to which they belong. Distributive equilibrium is the set of values that can be assumed by an income distribution that is regarded as socially acceptable. It is a limited set of values. The hypothesis the several countries in Latin America experienced distributive crisis in the 1980s and 1990s, was considered. As a result of the debt crisis, inflation and hyperinflation and stabilization and structural adjustment programmes, the masses in most of the countries of the region have suffered significant pauperization. The issue of democracy and inequality was also discussed.

The purpose of this survey of the literature on poverty in Peru is to contribute to universal and interdisciplinary understanding, while at the same time giving due weight to discipline-specific contributions. The first three sections review relevant literature on Peru by economists, social anthropologists and sociologists. The strict positivism of much economic literature renders it susceptible to neglect power relations and assume a benign and universal process of modernization. Anthropologists have revealed the importance of local cultural identity, but at the risk of downplaying universal dimensions of well-being. Sociologists struggle to reconcile a universal analysis of class structure with renewed emphasis on individual and collective agency in adversity The last section puts forward an integrating theoretical framework centred on the concepts of inclusion and exclusion. In contrast to the 'tragic optimism' of Sender this theory of social exclusion can best be summed up as 'constructive pessimism'. [ABSTRACT FROM AUTHOR]