Read Development as Freedom Online
Authors: Amartya Sen
Tags: #Non Fiction, #Economics, #Politics, #Democracy
Development as Freedom (6 page)
Indeed, the origin of economics was significantly motivated by the need to study the assessment of, and causal influences on, the opportunities that people have for good living. Aside from Aristotle’s classic use of this idea, similar notions were much used in the early writings on national accounts and economic prosperity, pioneered by William Petty in the seventeenth century, and followed by Gregory
King, François Quesnay, Antoine-Laurent Lavoisier, Joseph-Louis Lagrange and others. While the national accounts devised by these leaders of economic analysis established the foundations of the modern concept of income, their attention was never confined to this one concept. They also saw the importance of income to be instrumental and circumstantially contingent.
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For example, while William Petty had pioneered both “the income method” and “the expenditure method” of estimating national income (the modern methods of estimation directly follow from these early attempts), he was explicitly concerned with “the Common Safety” and “each Man’s particular Happiness.” Petty’s stated objective for undertaking his study related directly to the assessment of people’s living conditions. He managed to combine scientific investigation with a significant dose of seventeenth-century politics (“to show” that “the King’s subjects are not in so bad a condition as discontented Men would make them”). The impact of commodity consumption on the various functionings of people also received attention from others. For example, Joseph-Louis Lagrange, the great mathematician, was particularly innovative in converting commodities into their function-related characteristics: amounts of wheat and other grains into their nourishment equivalent, amounts of all meat into equivalent units of beef (in terms of their nutritional qualities) and amounts of all beverages into units of wine (remember, Lagrange was French).
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In concentrating attention on resulting functionings rather than commodities only, we reclaim some of the old heritage of professional economics.
The role of the market mechanism is another subject that calls for some reclaiming of old heritage. The relation of the market mechanism to freedom and thus to economic development raises questions of at least two quite distinct types, which need to be clearly distinguished. First, a denial of opportunities of transaction, through arbitrary controls, can be a source of unfreedom in itself. People are then prevented from doing what can be taken to be—in the absence of compelling reasons to the contrary—something that is within their right to do. This point does not depend on the efficiency of the
market mechanism or on any extensive analysis of the consequences of having or not having a market system; it turns simply on the importance of freedom of exchange and transaction without let or hindrance.
This argument for the market has to be distinguished from a second argument, which is very popular right now: that markets typically work to expand income and wealth and economic opportunities that people have. Arbitrary restrictions of the market mechanism can lead to a reduction of freedoms because of the consequential effects of the absence of markets. Deprivations can result when people are denied the economic opportunities and favorable consequences that markets offer and support.
These two arguments in favor of the market mechanism, both relevant to the perspective of substantive freedoms, have to be separated out. In the contemporary economic literature, it is the latter argument—based on the effective working and favorable results of the market mechanism—that receives virtually all the attention.
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That argument is certainly strong, in general, and there is plenty of empirical evidence that the market system can be an engine of fast economic growth and expansion of living standards. Policies that restrict market opportunities can have the effect of restraining the expansion of substantive freedoms that would have been generated through the market system, mainly through overall economic prosperity. This is not to deny that markets can sometimes be counterproductive (as Adam Smith himself pointed out, in supporting in particular the need for control in the financial market.
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There are serious arguments for regulation in some cases. But by and large the positive effects of the market system are now much more widely recognized than they were even a few decades ago.
However, this case for the use of markets is altogether different from the argument that people have the right to undertake transactions and exchange. Even if such rights are not accepted as being inviolable—and entirely independent of their consequences—it can still be argued that there is some social loss involved in denying people the right to interact economically with each other. If it so happens that the effects of such transactions are so bad for others that this prima facie presumption in favor of allowing people to transact as they like may be sensibly restricted, there is still something
directly lost in imposing this restriction (even if it is outweighed by the alternative loss of the indirect effects of these transactions on
others
).
The discipline of economics has tended to move away from focusing on the value of freedoms to that of utilities, incomes and wealth. This narrowing of focus leads to an underappreciation of the full role of the market mechanism, even though economics as a profession can hardly be accused of not praising the markets enough. The issue, however, is not the amount of praise, but the reasons for it.
Take for example the well-known argument in economics that a competitive market mechanism can achieve a type of efficiency that a centralized system cannot plausibly achieve both because of the economy of information (each person acting in the market does not have to know very much) and the compatibility of incentives (each person’s canny actions can merge nicely with those of others). Consider now, contrary to what is generally assumed, a case in which the same economic result is brought about by a fully centralized system with all the decisions of everyone regarding production and allocation being made by a dictator. Would that have been just as good an achievement?
It is not hard to argue that something would be missing in such a scenario, to wit, the freedom of people to act as they like in deciding on where to work, what to produce, what to consume and so on. Even if in both the scenarios (involving, respectively, free choice and compliance to dictatorial order) a person produces the same commodities in the same way and ends up with the same income and buys the same goods, she may still have very good reason to prefer the scenario of free choice over that of submission to order. There is a distinction between “culmination outcomes” (that is, only final outcomes without taking any note of the process of getting there, including the exercise of freedom) and “comprehensive outcomes” (taking note of the processes through which the culmination outcomes come about)—a distinction the central relevance of which I have tried to analyze more fully elsewhere.
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The merit of the market system does not lie only in its capacity to generate more efficient culmination outcomes.
The shift in the focus of attention of pro-market economics from freedom to utility has been achieved at some cost: the neglect of the
central value of freedom itself. John Hicks, one of the leading economists of this century, who himself was far more utility-oriented than freedom-oriented, did put the issue with admirable clarity in a passage on this subject:
The liberal, or non-interference, principles of the classical (Smithian or Ricardian) economists were not, in the first place, economic principles; they were an application to economics of principles that were thought to apply to a much wider field. The contention that economic freedom made for economic efficiency was no more than a secondary support.… What I do question is whether we are justified in forgetting, as completely as most of us have done, the other side of the argument.
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This point may look somewhat esoteric in the context of economic development in view of the priority that the development literature tends to give to generating high incomes, a bigger basket of consumer goods and other culmination results. But it is far from esoteric. One of the biggest changes in the process of development in many economies involves the replacement of bonded labor and forced work, which characterize parts of many traditional agricultures, with a system of free labor contract and unrestrained physical movement. A freedom-based perspective on development picks up this issue immediately in a way that an evaluative system that focuses only on culmination outcomes may not.
The point can be illustrated with the debates surrounding the nature of slave labor in the southern United States before its abolition. The classic study on this subject by Robert Fogel and Stanley Engerman (
Time on the Cross: The Economics of American Negro Slavery
) includes a remarkable finding about the relatively high “pecuniary incomes” of the slaves. (Controversies on some issues covered in this book did not seriously undermine this finding.) The commodity baskets of consumption of slaves compared favorably—certainly not unfavorably—with the incomes of free agricultural laborers. And the slaves’ life expectancy too was, relatively speaking, not especially low—“nearly identical with the life expectation of countries as advanced as France and Holland,” and “much longer
[than] life expectations [of] free urban industrial workers in both the United States and Europe.”
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And yet slaves did run away, and there were excellent reasons for presuming that the interest of the slaves was not well served by the system of slavery. In fact, even the attempts, after the abolition of slavery, to get the slaves back, to make them work like slaves (particularly in the form of “gang work”), but at high wages, were not successful.
After the slaves were freed many planters attempted to reconstruct their work gangs on the basis of wage payments. But such attempts generally foundered, despite the fact that the wages offered to freedmen exceeded the incomes they had received as slaves by more than 100 percent. Even at this premium planters found it impossible to maintain the gang system once they were deprived of the right to apply force.
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The importance of freedom of employment and that in working practice is crucial to understanding the valuations involved.
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In fact, Karl Marx’s favorable remarks on capitalism as against the unfreedom of precapitalist labor arrangements related exactly to this question, which also produced Marx’s characterization of the American Civil War as “the one great event of contemporary history.”
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Indeed, this issue of market-based freedom is quite central to the analysis of bonded labor—common in many developing countries—and the transition to free-contract labor arrangements. This, in fact, is one of the cases in which Marxian analysis has tended to have an affinity with libertarian concentration on freedom as opposed to utility.
For example, in his major study of transition from bonded labor to wage labor in India, V. K. Ramachandran provides an illuminating picture of the empirical importance of this question in the contemporary agrarian situation in southern India:
Marx distinguishes between (to use the term used by Jon Elster) the
formal freedom
of the worker under capitalism and the
real unfreedom
of workers in pre-capitalist systems: “the freedom of workers to change employers makes him free in a way not found in earlier modes of production.” The study of
the development of wage labour in agriculture is important from another perspective as well. The extension of the freedom of workers in a society to sell their labour power is an enhancement of their positive freedom, which is, in turn, an important measure of how well that society is doing.
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The linked presence of labor bondage with indebtedness yields a particularly tenacious form of unfreedom in many precapitalist agricultures.
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Seeing development as freedom permits a direct approach to this issue that is not parasitic on having to show that labor markets also raise productivity of agriculture—a serious issue on its own but quite different from the question of freedom of contract and employment.
Some of the debates surrounding the terrible issue of child labor also relate to this question of freedom of choice. The worst violations of the norm against child labor come typically from the virtual slavery of children in disadvantaged families and from their being forced into exploitative employment (as opposed to being free and possibly going to school).
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This direct issue of freedom is an integral part of this vexed question.
I return now to
evaluation
. Since our freedoms are diverse, there is room for explicit valuation in determining the relative weights of different types of freedoms in assessing individual advantages and social progress. Valuations are, of course, involved in all such approaches (including utilitarianism, libertarianism, and other approaches, to be discussed in
chapter 3
), even though they are often made implicitly. Those who prefer a mechanical index, without the need to be explicit about what values are being used and why, have a tendency to grumble that the freedom-based approach requires that valuations be explicitly made. Such complaints have frequently been aired. But explicitness, I shall argue, is an important asset for a valuational exercise, especially for it to be open to public scrutiny and criticism. Indeed, one of the strongest arguments in favor of political freedom lies precisely in the opportunity it gives citizens to discuss and debate—and to participate in the selection of—values in the choice of priorities (to be discussed in chapters 6 through 11).
Individual freedom is quintessentially a social product, and there is a two-way relation between (1) social arrangements to expand individual freedoms and (2) the use of individual freedoms not only to improve the respective lives but also to make the social arrangements more appropriate and effective. Also, individual conceptions of justice and propriety, which influence the specific uses that individuals make of their freedoms, depend on social associations—particularly on the interactive formation of public perceptions and on collaborative comprehension of problems and remedies. The analysis and assessment of public policies have to be sensitive to these diverse connections.