Listener 20 November 2000

Keywords Growth & Innovation; History of Ideas, Methodology & Philosophy; Social Policy

Nineteenth century economists tended to focus on material output, assessing how well off someone was by the amount they could consume. That notion dominates today’s economics. Pushed, an economist might say it is better to have more material goods than less or, perhaps more humbly, that economics was only good at analyzing materialism, so all the other things which make up human happiness are assumed as given, or that they correlate with material consumption. To acknowledge so would, of course, downgrade the importance of economics, and of economists, which might be no bad thing.

An uneasy consequence of this emphasis on material output, is that authoritarian regimes justify their repression of personal liberties on the basis that they can maximize economic growth. It turns out that the claim is not true. Certainly some dictatorships have had impressive growth records, but others have had stagnant or declining ones. The same is true of democracies.

Would people be better off if an authoritarian regime significantly raised their material standard of living? No, says Nobel prize-winner Amartya Sen, whose just published Development as Freedom, based on a lecture series to the World Bank, provides an exceptionally accessible account of one of economics’ most sophisticated thinkers. The book ranges over a wide range of issues – many women will be delighted by the sensitivity Sen shows towards their role in development. Its core notion, which his treatment of women well illustrates, is not what you consume (“opulence” as Sen calls it) but the choices (or “capabilities”) the individual has.

One might think that Sen aligns himself with the New Right which argues that minimizing the state gives freedom (and material prosperity too). However Sen has more subtlety in a little finger that a room full of revivalist Rogernomes. He is an admirer of the market and sees it as an integral part of a liberal democracy. But he sees an active role for the state. Overall freedom, he argues, arise from the contributions of five instrumental freedoms:
(1) Political freedoms: “the opportunities that people have to determine who should govern, and on what principles, and also include the possibility to scrutinize and criticize authorities, to have freedom of political expression and an uncensored press, to enjoy the freedom to choose between different political parties, and so on.”
(2) Economic facilities: “the opportunities that individuals enjoy to utilize economic resources for the purpose of consumption or production or exchange.”
(3) Social opportunities: “the arrangements that society makes for education, health care and so on.”
(4) Transparency guarantees: “the need for openness that people can expect: the freedom to deal with one another under guarantees of disclosure and lucidity.”
(5) Protective security: “needed to provide a social safety net for preventing the population from being reduced to abject misery, and in some cases even starvation and death. Its domain includes fixed institutional arrangements such as unemployment benefits and statutory income supplements to the indigent as well as ad hoc arrangements such as famine relief or emergency public employment to generate income for destitute.”

Sen is a citizen of the world, continually illustrating his themes from India, where he was born, and China, as well as America and Britain where he has held prestigious academic positions. His illustrations continually evoke surprises. Kerala, one of the poorest states of India, nonetheless has a life expectancy of over 73 years, not too different from the New Zealand expectancy of 76.9 years. In contrast, African Americans, living in some of the richest cities in the world, have a shorter life expectancy than those in Kerala. Despite its material limitations, Kerala has organized itself – including its education and health systems – to give its residents substantial freedoms, including that of longevity.

He is also a master of the classics, not just great economists like Adam Smith and John Stuart Mill, but also ancient Indian, Chinese, and Islamic writers. He uses them to ridicule the notion that the Asian values need be despotic. Indeed some ancient Asian writers appear to have been considerably more politically enlightened than Westerners writing at the same time.

I have read a lot of Sen, much of which is painfully dense as he pursues the logic of a closely reasoned case. This book is instead, very readable, with delightful flashes of humour, often deployed to deflate Western pretensions. Writing on the nineteenth century Irish famine, he cites a head of the British Treasury who wrote, “there is scarcely a woman of peasant class in Western Ireland whose culinary art exceeds the boiling of a potato.” Sen adds dryly, “the remark is of interest not just because it is rare for an Englishman to find a suitable occasion for making international criticism of culinary art.” (His substantive point is that the writer has misunderstood the nature of famines, instead blaming the victims. While Ireland starved, it exported food to England.)

I leave Sen’s contributions to economic ethics for a later column. Meanwhile, Development as Freedom is a wonderful book, worth reading, and rereading.