Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries
A perusal of professional economics journals today would make it difficult to appreciate the long and rich connection between economic discourse and moral philosophy. Adam Smith is usually credited with founding the discipline of economics in his remarkable Wealth of Nations, published in 1776. The book persuasively sketched the general equilibrium characteristics of a market economy, showing that pursuit of private gain can be socially productive under conditions of competition. But Smith was also a professor of moral philosophy at Glasgow University whose publications included The Theory of Moral Sentiments. In fact, most of the celebrated nineteenth-century economists, from Thomas Malthus through John Stuart Mill to Francis Edgeworth and Alfred Marshall, took moral considerations seriously and made important contributions to the subject.
Most economists these days eschew moral philosophy -- namely, the consideration of social justice -- because they consider it too "soft" for rigorous analytical treatment. But Amartya Sen harks back to the older and richer tradition of evaluating the considerations of economic efficiency -- which dominate most modern economic analyses -- with respect to their general social consequences. Such judgments require an ethical framework.
Sen was born in 1933 in Bengal, then part of British India, and studied there until he went to Cambridge University for postgraduate work. After teaching in India, he held various posts at Cambridge, the London School of Economics, and Oxford University. He went to Harvard University in 1989, where he held joint appointments in economics and philosophy before heading back to Cambridge in 1998 to become Master of Trinity College. That same year he won the Nobel Prize for his cumulative contributions to welfare economics -- especially his technical work on aggregating individual preferences into collective choices and assessing theoretically appropriate measures of poverty -- as well as his empirical work on the causes of famines, especially in South Asia and Africa.
Development as Freedom attempts to map out Sen's thoughts on economic development for a broad, nonspecialist audience, drawing extensively on his more technical work as well as that of others. Although the book avoids jargon, it is closely argued and requires attentive reading, despite the many repetitions and recapitulations. Its central idea is relatively straightforward, even though it radically recasts how concerned individuals should think about economic development -- not only professional economists but also development planners, public officials in developing countries, aid agency workers, international civil servants, and members of the general public, insofar as they think about economic development at all.
FREE TO BE
Over the past 50 years, "development" has generally been defined in terms of industrialization. Most economists define it as growth in real (i.e., inflation-adjusted) output on a per capita basis -- perhaps with a nod, especially in the 1990s, to the need for some legal and institutional development, particularly to protect property rights and settle disputes. Sen, in contrast, argues that such conceptions of development are far too narrow. While not denying the importance of raising output and per capita income, especially in very poor countries, he argues for a broader goal for development: increasing the capability of all human beings to achieve those things that they most value. Higher income, of course, increases such capabilities in important ways, so it is a significant component of development. But it is not the only part. It does not assure good health, adequate education, greater longevity, the ability to influence the political decisions that affect one's life, or the freedom to choose alternative lifestyles -- or even goods and services beyond those that are immediately on offer. One can concede that all these valuable attributes are more likely to be accessible to people with higher incomes while still insisting, as Sen does, that higher income is not sufficient to assure development -- only necessary.
This point may seem obvious. Indeed, the entire tone of the book is so modest and unassuming that Sen's arguments generally seem obvious once he has made them. Nonetheless, his thesis has radical implications. Development should be seen, Sen begins, "as a process of expanding the real freedoms that people enjoy." Hence, "development requires the removal of major sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as systematic social deprivation, neglect of public facilities as well as intolerance or overactivity of repressive states."
The remainder of the book expands on and elaborates this simple thesis: development is not merely an economic process but a political one as well. It therefore ultimately requires a "democratization" of political communities to give citizens a voice in important decisions made for the community. To fail in this regard, Sen argues, is to limit human freedom -- and, by extension, the possibility for full human development.
This perspective leads Sen to place special emphasis on basic health care, especially for children, and basic education, especially for women. Not only are these factors desirable for their instrumental value in helping to achieve higher income and (in the case of women's education) control fertility; they are also beneficial in their own right. People cannot develop their capabilities if they are chronically ill or woefully ignorant.
Sen also examines three philosophical traditions that have laid claim to the proper basis for social justice. First is utilitarianism, going back to Jeremy Bentham, with its emphasis on maximizing the total "utility" of a community by achieving "the greatest good for the greatest number." The second school is libertarianism, which emphasizes both the natural and the inherited rights of all individual members of the community and holds them as inviolable (except insofar as they must be limited to protect the rights of others). Finally, there is the "maximin" principle, as proposed by the Harvard philosopher John Rawls, which insists on choosing those social arrangements that maximize the well-being of the poorest member of a community, subject to the preservation of liberty.
Sen's training as an economist serves him well here. He argues that each perspective holds merit, but that if pushed to the extreme each also can lead to results that defy commonsense justice; for example, if a village's utility is maximized by tormenting its ugliest, or dumbest, or most eccentric member; or if Rawls' scheme involves a great reduction in the material well-being of large numbers of people compared with an alternative that leaves the poorest not quite so well off; or if the uncompromising pursuit of liberty has grotesque consequences. Compromises must sometimes be made among perfectly valid but sometimes conflicting perspectives. These tradeoffs and moral decisions, Sen argues, should be exposed to public debate, should use fully available information, and should resolve each particular case in some democratic way.
SEN AND SENSIBILITY
Sen is a genuine world citizen. Implicit throughout his book is the notion that all humanity is connected and that human suffering anywhere holds relevance everywhere. Given the strong sense of social justice that he espouses, however, he does not address some hard practical questions. How should, say, wealthy Bostonians allocate their energies and resources among their relatively deprived inner-city neighbors, the indigent and often poorly educated agricultural workers in California and Texas, and the seriously malnourished and undereducated peoples of South Asia and sub-Saharan Africa? Each person cannot carry a burden of responsibility for every ill, missed opportunity, or obvious injustice. To which relevant "community" should people chiefly belong, and which one should command the most attention? Whatever answer one chooses holds profound implications both for the private activities of individuals and for the foreign policies of the United States and other well-off countries. Sen offers no help here.
Sen's position does, however, have a great deal to offer to groups -- nongovernmental organizations, national foreign-aid agencies, and international organizations -- that promote economic development. He argues strongly and convincingly that economists' post-1950 focus on economic growth alone has been far too narrow. Moreover, everyone knows that the record of accomplishment of foreign assistance is spotty at best, even when focused narrowly on raising material well-being. As the record suggests, foreign assistance promotes development only if the recipient pursues appropriate macroeconomic and pricing policies and, above all, genuinely and enthusiastically embraces development objectives.
Even though Sen is a philosopher-economist, not a practicing politician, he is intensely interested in the real world of human well-being. As such, he must be aware of the practical implications of his general thesis. He does not expand on them for his readers; the main thesis is subversive enough. But what might some of these implications entail? Sen would greatly applaud, for example, the explicit emphasis in recent years on public health and primary and secondary schooling. Indeed, he would go much further and take on authoritarianism and serious discrimination against women wherever they exist, encouraging leaders to reduce political and civil repression and to promote public discussion about government decisions. In this respect, Sen implicitly attacks the grand bargain built into the post-1945 system of the United Nations: external aggression anywhere is a matter for legitimate global concern and potential action, but internal matters are left entirely to member states, except possibly in cases of extreme violations of human rights.
It is noteworthy that Sen presumes throughout his discussion a peaceful and stable society in which his framework can operate -- having in mind, perhaps, his native India, from which he draws many illustrations. But he fails to note that many poor countries are either not peaceful and stable or are stable only because political or civil freedoms have been suppressed. Although he does not emphasize it, Sen's analysis includes among the primary freedoms such stability: the security of the individual against physical assault or depredation, necessary for developing human capabilities to enjoy the kinds of life that are valued. A well-ordered society assures physical security for its residents from both internal and external threats. But actual and potential conflicts abound. During periods of turmoil, freedoms are often suppressed in the name of stability.
Historically, political leadership has often been determined, over resistance, by force. As stability takes root, other freedoms can flourish. But leaders are never sure when stability is securely established, and they typically err in the direction of suppressing potential dissenters who do not threaten the regime in the interests of catching all who do. A stable society such as the United States can protect the rights of innocent individuals even at the expense of missing some who would, if they could, threaten society. But in recently stabilized societies, that freedom may be a luxury, since physical security could be undermined if regime-threatening dissidents are not suppressed. And some (if not most) political leaders have a tendency to prolong the period in which they use internal security as a plausible excuse, rather than a real reason, for suppressing dissent.
Regrettably, Sen does not tackle the vital question of balancing freedoms against security and stability. Yet he does take on a different but related issue: the so-called Asian values debate. Sen unambiguously dismisses the notion that there are values specific to Asia, markedly different from those of European civilization. Challenging Singapore's Senior Minister Lee Kuan Yew, a vocal exponent of this school, Sen documents that Asia's scholars and leaders have historically expressed a wide diversity of values. Furthermore, some of these moral principles closely track Western values -- which have themselves evolved over time, increasingly but only gradually covering more and more people, such as women and slaves. And exponents of Asian values cite that great authority, Confucius, very selectively. As Sen notes, Confucius' views were more complex and sophisticated than his modern-day supporters acknowledge.
It is also noteworthy that the main contemporary exponents of Asian values enjoy great political authority, which gives them a self-interested perspective. The Asian publics would very likely demonstrate much less enthusiasm for authoritarian rule if given the chance. Alas, Sen notes, leaders rarely consult their citizens on such matters. On one major occasion when the public was consulted, the Indian elections of 1977, the authoritarianism of Indira Gandhi's "emergency" was decisively rejected.
Sen punctuates his discussion of principles with numerous pertinent illustrations, drawing on a broad range of social-scientific research. Within his framework for development, he chides India for its slighting of primary education -- a decision resulting in illiteracy rates of nearly 50 percent, and even higher among women. China does much better on this score and gets good marks for bringing basic public health to rural villages. But Sen criticizes China for repressing public dissent and discussion of issues of public policy -- a form of liberty central to Sen's framework of development that cannot be fully compensated by rapid growth in per capita income. India, with its free press and contentious democracy, is much further along in this dimension of development.
Development as Freedom provides a framework for thought rather than a formula for reform. It urges readers to ask what the ultimate aims of development should be, arguing that the appropriate aim is enlarging the capabilities of all human beings. In the process, Sen skillfully emphasizes the many dimensions -- including freedom of expression -- needed to attain that goal. But he is quietly revolutionary in insisting that we keep our eye on the ultimate objectives rather than on the intervening instrumental variables.