The dominant discourse on development presents poverty as an economic problem. It posits the existence of a poverty sector in the economy whose problems can be alleviated through economic growth, increased investment, creation of jobs, and higher income. We can call this the axiom of economic development. There are three major paradigms in the discourse on development: neoclassical economics, Marxism, and sustainable development. Despite profound differences in philosophy, they all regard development as the solution to the poverty problem. Contrary to that position, I have argued that conditions of deprivation experienced by poor people in the Third World are a form of socially constructed scarcity induced by the process of economic development. Scarcity experienced by the poor in the so-called poverty sector is manufactured outside this sector, within a nexus of relations–technical, social, ecological, cultural, political, and academic–diffused throughout the larger society. Each realtion of the nexus consitutes a site at which scarcity is constructed through an interplay of discursive and nondiscursive practices. The dominant discourse on development poses an obstacle to the eradication of poverty because it contributes to the creation of scarcity and conceals how those mechanisms function, thereby disempowering the poor and misleading people of goodwill. Several themes from the writings of postmodern discourse theorists such as Lyotard and Foucault have helped in formulating these arguments. The following are some of the themes: development as a grand narrative, the subject/object binary in the conceptualization of a poverty sector, development and undervelopment as a dividing practice, reductionism and the nexus of production relations, and a substantive view of poverty and power.