Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Tuesday, January 26, 2016

Development As Freedom by Amartya Sen

Perhaps not many people regularly read non-fiction, especially when it might appear to emanate from academic sources. Thus a title such as Development As Freedom by Amartya Sen, if encountered on a book browse, might suffer immediate and regrettable rejection. Subjects such as international politics, economic change and human development considered via the writings of a Nobel Prize winning economist might not suggest bedtime reading. But read again! And preferably read many times, for this book surely places the word ‘human’ at the heart of the development process and, because of that, is not only readable, it is an absolute joy.

Sen’s argument is simply encapsulated in the book’s title. As human beings change and as the societies in which they live transform, development can be measured, certainly perceived, and possibly achieved via greater life expectancy, access to education, improved gender and social equality, increasing population, technological progress, access to health care and a host of other life enhancing and enriching phenomena that all of us now seem to take for granted, bur, perhaps paradoxically, few societies actually achieve.

But for Sen, and this is the truly optimistic core of the book’s message, is that all of these identifiable and measurable phenomena are mere effects of a more fundamental cause. Development, for Amartya Sen, is about increasing human freedom. The concept includes freedom of choice, freedom to participate, freedom to express and in fact any freedom that might be exercised by an individual or community in the context of enhancing, not undermining, the wider social groups or societies in which the people live. There is undeniably something wider called society and it is thus society’s role to evaluate policy and practice to ensure that social and economic change enhance the sum of freedoms that people can claim.

But let it also be clear that this is no neo-liberal, individuality-is-God, markets-know-best diatribe. Development As Freedom is a concise, sometimes intense, but always sympathetic look at various aspects of economic and social change and the generality of development policy that can stimulate it. The point is that the human race and the societies in which it lives make progress for the common good when participation is widened, when inclusion rather than exclusion is the goal, when the whole range of human potential, rather than that of an elite in restricted roles, is allowed to blossom. And it is this overall message that makes the book such a positive and enriching experience.

Early on in the book, Sen sums up his approach by saying that “Poverty can be sensibly defined as capability deprivation…” and thus that the alleviation of poverty, in all its manifestations, allows human beings to develop whatever capabilities they might have, capabilities that would otherwise never be realised. Furthermore, greater social equality is more likely to provide opportunity for the development of this human potential than any other route.

In making his case, Amartya Sen deals the occasional body blow to a few nostrums. Reassessing Adam Smith from the original, Sen identifies that the original intellectual arguments on markets were at least partly aimed at countering the power and influence entrenched interests of the time. Now those would have certainly arisen out of the previous century’s tendency to grant and support monopolies. Sen thus casts Smith as least partly as a moderniser, who wanted to transform economic structures in order to transform society as he knew it. He also finds in Smith an admission that opportunity might have more to do with birthright than ability, or even availability of educational facilities. The champion of the market principle, as we now know him, is here not seen to claim that markets in themselves will always provide the most effective or efficient basis for economic interaction.

Sen also illustrates how so-called free markets might not work to the advantage of the majority. He cites an example of a Pareto-efficient system in which 1000 people each give up one dollar, without caring too much about the transaction. One person pockets the thousand dollars as profit and will clearly fight hard to retain such privileged status. When opinion about how the society transacts, it is likely that the individual who profits will speak loudly to maintain the status quo and, given the status of economic success, the person will also have access to the modes of expression needed. The thousand do, however, have the right to vote and so democracy is at the core of any approach to enhance freedom, but to be effective it has to function. Sen reminds us that there has never in human history been a famine in any democratic society with a free press.

Since development, in Sen’s vision, is about developing the capabilities of all people, it is clear that human development as a goal is first and foremost an ally of the poor, rather than the rich and powerful. Modernisation theory is thus merely a starting point for the process as Sen envisages it. But beyond this beginning it must continue until participation is increased and real democracy is achieved. Policy and practice should be continually evaluated to ensure the proper spread and effectiveness of their goals. Development As Freedom is much more than a description of what we are and from where we have come. It is nothing less than a far-sighted and clear prescription for political practice and provides a yardstick we might use to evaluate it.

Thursday, January 26, 2012

History Repeated - Globalization and its Discontents by Joseph Stiglitz


Globalization and its Discontents has now been around for ten years. In 2002 the book was published as the tech bubble burst. It was five years since the Asian financial crisis in 1997. It was the better part of two decades since the Third World debt crisis of the 1980s effectively removed the livelihoods of masses in Latin America and Africa. And it was also ten years since the demise of the Soviet Union and its bloc. Joseph Stiglitz’s book analyses the response of the world’s major financial institutions, especially the World Bank and the International Monetary fund, to these crises.

National aid programmes and commercial banks also figure in the discussion. His conclusions were clear at the time – and remain so today. The ideologically-driven policy orthodoxy promoted by these bodies has repeatedly proved to be counter-productive. I lived in Asia at the time of the crisis.

I remember arguing with a Malaysian colleague about the need to take the medicine, as the IMF’s prescriptions were described. Integrate fully, open your markets, remove controls and accommodate foreign interests: this was the orthodoxy. When Malaysia did the opposite, I scoffed. The Malaysian economy subsequently contracted less than others, its people suffered less pain and recovery came quicker.

Thailand in particular swallowed the prescribed pills and continued to suffer. And, by the way, during the debt crisis of the 1980s, a number of Western banks became insolvent and had to be rescued. In that era, however, most measures were put in place behind closed doors so we never got to know the lurid details. We did, however, notice the recession.

Joseph Stiglitz illustrates how the right-wing ideology of perfect, self-regulating markets, liberalisation and privatisation failed to deliver in the past. He repeatedly shows how ensuing liquidity crises were treated with adjustment loans that undermined their own goals. He repeatedly shows how a range of measures calculated to address several angles of the problem simultaneously tended to produce better results. The evidence he presents is compelling.

So why, in 2012, do we again seem to be in the same tightening trap? Wherever lack of regulation or deregulation has been applied, it seems to produce the same results. Couple that with the reality of imperfect markets where no-one feels they will ever have to answer for either greed or risk and, it seems, you finish with a crash and then recession. And those who suffer are rarely those who created the problems. Those who ignore history are condemned to repeat it. And what about those who ignore advice? Why use again a treatment that kills the patient? Here we go again.