Wednesday, March 13, 2013
There is little room for the realities of economic life - faced by the majority of the world’s people - within the scope of widely accepted and conventional economic theory. There is a particular exception to this general tendency and that is embodied in the theoretical framework of Amartya Sen who has clearly brought human compassion into the realm of economics.
Amartya Kumar Sen was born on November 3, 1933 and was the sole recipient of the 1998 Nobel Memorial Prize in Economic Sciences for his work on welfare economics. He is currently a Professor of Economics and Philosophy at Harvard University and is also a fellow of Trinity College at the University of Cambridge. He is known for his astute analysis of economic theory as it relates to the actual realities that haunt the underprivileged in the world. He examined, in detail, the economic conditions that result in famine, homelessness and unemployment.
Sen was born in East Bengal, India in the region that is now called Bangladesh. His family is very distinguished with strong roots in academia and government. As a nine-year-old boy, he witnessed the horrendous famine that devastated Bengal in 1943, in which three million people perished. He would later conclude that this terrible loss of life was unnecessary. This experience seemed to have exerted a powerful influence upon where his future career would take him.
In his seminal work entitled, Development as Freedom, Amartya Sen claims that, “Enhancement of human freedom is both the main object and the primary means of development.” In his view, freedom encompasses economic facilities, political freedoms, social opportunities, transparency guarantees and protective security. Within this context, freedom is not simply a political attribute, but has very practical manifestations such as accessibility to adequate health care, housing, etc.
Sen proposed a model for economic development that is substantively different from the conventional paradigm. While obviously a proponent of free trade, he envisions a very different approach to its implementation. He identifies the traditional ethics, exemplified in the policies of the International Monetary Fund (IMF) and the World Bank, as focusing on the primacy of income and wealth. Furthermore, he defines poverty as a “deprivation of elementary capabilities which can lead to premature mortality, illiteracy and other consequences.”
He has postulated a freedom-based orientation to policies geared towards economic development. The author states that, “With adequate social opportunities, individuals can effectively shape their own destiny and help each other. They need not be seen primarily as passive recipients of cunning development programs.”
This unique perspective allows application of this economic model not only to developing countries but also to the developed world. The fact that tens of millions of Americans lack access to adequate health care provides a striking example. A link between income and mortality can also be readily established. For example, the life expectancy of African-Americans compare to poor countries such as China, Sri Lanka, Jamaica and Costa Rica.
In this view of development, a consideration of personal liberties cannot be divorced from economic consequences. The link between income and poverty is, of course, self evident. Freedom can be seen not only as residing in so-called political freedoms, i.e. freedom of speech and freedom of assembly, but also dependent upon those aspects of economic life that are fundamental to living successfully, i.e. adequate health care, housing and food, referred to as substantive freedoms. What good are political freedoms to those who expend all their energy simply trying to survive?
From this economic perspective, development is seen in terms of substantive freedoms and requires an analysis of the unfreedoms that people may suffer. This differs substantially from the current operational approach of the traditional institutions. The IMF’s approach to economic development often exacerbates, or, in extreme cases, creates the very inequities that make the plight of the poor even more devastating.
Sen has devoted much of his attention to the idea of justice and from this idea he has evolved his economic theory. He has detailed his analysis of justice in his work entitled, The Idea of Justice. He has approached the theory of justice through the diagnosis of injustice. From his analysis, understanding involves reasoning and critical examination. He stresses the roles of rationality and reasonableness in understanding the demands of justice. Coming from this orientation, he has concluded that the implementation or evaluation of social change should focus on whether or not such change would enhance justice.
In his view, injustice may either arise systemically or stem from individual behavioral transgressions. In Sen’s mind, injustice must be evaluated at the level of the individual as well as the institutions. For example, a society that prides itself on the democratic nature of its institutions may quietly condone and neglect the poverty and hunger that is a fundamental part of the lives of some of its people. Within the paradigm that Sen has proposed, this reality is an injustice in part because it is readily open to remedy. This practical consideration of the real impact that social institutions and public policy have on the lives of individuals represents a radical departure in regards to the analysis of the institutions themselves. Within this point of view, the emphasis is on reasoned and rational arguments rather than relying on articles of faith and unreasoned convictions; reasoning and justice are, therefore, regarded as interdependent factors.
In his writing, Sen claims that the age of European Enlightenment in the 18th and 19th centuries has had a marked influence on his thinking. He describes the idea of justice from two historic perspectives. The first he refers to as “transcendental institutionalism.” This represents the point of view taken by such notable philosophers as Thomas Hobbes and Rousseau. They envisioned a perfect justice that could be realized if the institutions themselves were perfected. This approach does not, however, take into account the behaviors of ordinary people and their social interactions. Sen believes this to be a major flaw, and, in many ways, an impediment to real justice.
The other perspective he refers to as “realization-focused comparisons.” This idea examines actual realizations and accomplishments. In defense of this approach, he cites such well-known thinkers as Adam Smith, Jeremy Bentham and John Stuart Mill. As far as Sen is concerned, “The rules may be right, but what does emerge in society – the kinds of lives that people actually live.” This particular focus lies at the heart of Sen’s thinking. This point of view can be readily summarized in Sen’s own words, “The need for an accomplishment-based understanding of justice is linked with the argument that justice cannot be indifferent to the lives that people can actually live.”
Sen proposed that reason needs to be balanced by an instinctive revulsion to cruelty and to insensitive behavior and that the remedy for bad reasoning is better reasoning. Sen was strongly influenced by John Rawls in regards to formulating his theory of justice. In Sen’s scheme, justice must include the fundamental property of fairness and the application of reasoned judgment. He strongly asserts that individuals have a deeply held inner sense of justice and a conception of the good. The following statement provides some insights into his thinking, “Why should we regard hunger, starvation and medical neglect to be invariably less important than the violation of any kind of personal liberty.” In his mind, justice must encompass an actual assessment of real freedoms and capabilities.
Amartya Sen applied his conceptions of justice, freedom and the use of reason to economics in his seminal work entitled, On Economic Inequality, and formulated an economic paradigm that continues to challenge the conventional approaches to economic development. His sensitivity to the plight of many of the world’s people lies at the very heart of his conclusions.