by Sen, Amartya
30. For general analyses of the role of trust, see the essays included in Diego Gambetta, ed., Trust and Agency (Oxford: Blackwell, 1987).
31. On this see my “Isolation, Assurance and the Social Rate of Discount,” Quarterly Journal of Economics 81 (1967), reprinted in Resources, Values and Development (Cambridge, Mass.: Harvard University Press, 1984; reprinted 1997); and On Ethics and Economics (Oxford: Blackwell, 1987).
32. On the nature and importance of this interconnection in general, see Alan Hamlin, Ethics, Economics and the State (Brighton: Wheatsheaf Books, 1986).
33. Wealth of Nations, volume 1, book 2, chapter 4.
34. Jeremy Bentham, Defense of Usury. To Which Is Added a Letter to Adam Smith, Esq., LL.D. (London: Payne, 1790).
35. I have discussed the distinction more fully in “Rational Fools: A Critique of the Behavioural Foundations of Economic Theory,” Philosophy and Public Affairs 6 (summer 1977); reprinted in Philosophy and Economic Theory, edited by Frank Hahn and Martin Hollis (Oxford: Oxford University Press, 1979); in my Choice, Welfare and Measurement (1982), and in Beyond Self-Interest, edited by Jane Mansbridge (Chicago: Chicago University Press, 1990). See also my “Goals, Commitment and Identity,” Journal of Law, Economics and Organization 1 (fall 1985); and On Ethics and Economics (1987).
36. In Gary Becker’s important and influential “economic approach to human behaviour,” adequate room is made for sympathy, rather than for commitment (The Economic Approach to Human Behaviour, Chicago: Chicago University Press, 1976). The maximand that the rational person pursues can include concern for others; this is quite a significant and momentous broadening from the standard neoclassical assumption of self-centered individuals. (Some further broadening of the framework of behavioral analysis can be found in Becker’s later book, Accounting for Tastes [Cambridge, Mass.: Harvard University Press, 1996].) But the maximand is also seen in this Beckerian framework as reflecting the person’s self-interest; this is a characteristic feature of sympathy—not of commitment. It is, however, possible to retain the maximizing framework and still accommodate, entirely within the discipline of maximization, values other than the pursuit of self-interest (by broadening the objective function beyond the notion of self-interest); on this and related issues, see my “Maximization and the Act of Choice” (1997).
37. Smith, The Theory of Moral Sentiments (revised edition, 1790; republished, 1975), p. 191.
38. Smith, The Theory of Moral Sentiments, p. 191.
39. Smith, The Theory of Moral Sentiments, p. 190.
40. George J. Stigler, “Smith’s Travel on the Ship of the State,” in Essays on Adam Smith, edited by A. S. Skinner and T. Wilson (Oxford: Clarendon Press, 1975).
41. Smith, Wealth of Nations (1776; republished 1976), pp. 26–7.
42. Smith, The Theory of Moral Sentiments, p. 189.
43. See my “Adam Smith’s Prudence,” in Theory and Reality in Development, edited by Sanjay Lal and Francis Stewart (London: Macmillan, 1986). On the history of misinterpretations of Adam Smith, see Emma Rothschild, “Adam Smith and Conservative Economics,” Economic History Review 45 (February 1992).
44. John Rawls, Political Liberalism (New York: Columbia University Press, 1993), pp. 18–9.
45. For examples of different types of reasoned connections, see Drew Fudenberg and Jean Tirole, Game Theory (Cambridge, Mass.: MIT Press, 1992); Ken Binmore, Playing Fair (Cambridge, Mass.: MIT Press, 1994); Jörgen Weibull, Evolutionary Game Theory (Cambridge, Mass.: MIT Press, 1995). See also Becker, Accounting for Tastes (1996); and Avner Ben-Ner and Louis Putterman, eds., Economics, Values, and Organization (Cambridge: Cambridge University Press, 1998).
46. Immanuel Kant, Critique of Practical Reason (1788), translated by L. W. Beck (New York: Bobbs-Merrill, 1956); Smith, The Theory of Moral Sentiments and Wealth of Nations (1776; republished, 1976).
47. See Thomas Nagel, The Possibility of Altruism (Oxford: Clarendon Press, 1970); John Rawls, A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971); John C. Harsanyi, Essays in Ethics, Social Behaviour, and Scientific Explanation (Dordrecht: Reidel, 1976); Mark Granovetter, “Economic Action and Social Structure: The Problem of Embeddedness,” American Journal of Sociology 91 (1985); Amartya Sen, On Ethics and Economics (1987); Robert Frank, Passions within Reason (New York: Norton, 1988); Vivian Walsh, Rationality, Allocation, and Reproduction (Oxford: Clarendon Press, 1996), among other contributions. See also the collection of papers in Hahn and Hollis, Philosophy and Economic Theory (1979); Jon Elster, Rational Choice (Oxford: Blackwell, 1986); Mansbridge, Beyond Self-Interest (1990); Mark Granovetter and Richard Swedberg, eds., The Sociology of Economic Life (Boulder, Colo.: Westview Press, 1992); Zamagni, The Economics of Altruism (1995). For the rich history of psychological literature on this subject, see particularly Shira Lewin, “Economics and Psychology: Lessons for Our Own Day from the Early Twentieth Century,” Journal of Economic Literature 34 (1996).
48. On this see my On Ethics and Economics (1987), and my foreword to Ben-Ner and Putterman, eds., Economics, Values and Organization (1998).
49. On this, see Smith, The Theory of Moral Sentiments, p. 162.
50. We can, however, also be led astray by “herd behaviour,” on which see Abhijit Banerjee, “A Simple Model of Herd Behaviour,” Quarterly Journal of Economics 107 (1992).
51. Frank H. Knight, Freedom and Reform: Essays in Economic and Social Philosophy (New York: Harper & Brothers, 1947; republished, Indianapolis: Liberty, 1982), p. 280.
52. Buchanan, “Social Choice, Democracy and Free Markets” (1954), p. 120. See also his Liberty, Market, and the State (Brighton: Wheatsheaf Books, 1986).
53. Kautilya, Arthashastra, part 2, chapter 8; English translation, R. P. Kangle, The Kautilya Arthashastra (Bombay: University of Bombay, 1972), part 2, pp. 86–8.
54. See Syed Hussein Alatas, The Sociology of Corruption (Singapore: Times Books, 1980); also Robert Klitgaard, Controlling Corruption (Berkeley: University of California Press, 1988), p. 7. A payment system of this kind can help to reduce corruption through its “income effect”: the officer may be less in need of making a quick buck. But there will also be a “substitution effect”: the officer would know that corrupt behavior may involve serious loss of a high-salary employment if things were to “go wrong” (that is, go right).
55. See Economica e criminalità, the report of the Italian Parliament’s Anti-Mafia Commission, chaired by Luciano Violante.
56. Smith, The Theory of Moral Sentiments, p. 162; emphasis added. Skillful use of social norms can be a major ally of nonprofit enterprises that call for committed behavior. This is well illustrated by active NGOs in Bangladesh, such as Muhammed Yunus’s Grameen Bank, Fazle Hasan Abed’s BRAC and Zafurullah Chowdhury’s Gonoshashthaya Kendra (Center for People’s Health). See also the analysis of governmental efficiency in Latin America by Judith Tendler, Good Government in the Tropics (1997).
57. English translation from Alatas, The Sociology of Corruption (1980); see also Klitgaard, Controlling Corruption (1988).
58. I have tried to discuss these diverse issues in a number of papers included in the collection Resources, Values and Development (1984; 1997).
Chapter 12: Individual Freedom as a Social Commitment
1. I heard this account from Isaiah Berlin. Since these lectures were delivered, we have lost Berlin, and I take this opportunity of paying tribute to his memory and recollecting how very much I have benefited over the years from his gentle critique of my rudimentary ideas on freedom and its implications.
2. On this subject, see also my “The Right Not to Be Hungry,” in Contemporary Philosophy 2, edited by G. Floistad (The Hague: Martinus Nijhoff, 1982); “Well-Being, Agency and Freedom: The Dewey Lectures 1984,” Journal of Philosophy 82 April 1985); “Individual Freedom as a Social Commitment,” New York Review of Books, June 16, 1990.
3. See my “Equality of What?,” in Tanner Lectures on Human Values, volume 1, edited by S. McMurrin (Cambrid
ge: Cambridge University Press, 1980), reprinted in my Choice, Welfare and Measurement (Oxford: Blackwell; Cambridge, Mass.: MIT Press, 1982; republished, Cambridge, Mass.: Harvard University Press, 1997); “Well-Being, Agency and Freedom” (1985); “Justice: Means versus Freedoms,” Philosophy and Public Affairs 19 (1990); Inequality Reexamined (Oxford: Clarendon Press; Cambridge, Mass.: Harvard University Press, 1992).
4. The principal issues in characterizing and evaluating freedom—including some technical problems—are considered in my Kenneth Arrow Lectures, included in Freedom, Social Choice and Responsibility: Arrow Lectures and Other Essays (Oxford: Clarendon Press, forthcoming).
5. Development is seen here as the removal of shortfalls of substantive freedoms from what they can potentially achieve. While this provides a general perspective—enough to characterize the nature of development in broad terms—there are a number of contentious issues that yield a class of somewhat different exact specifications of the criteria of judgment. On this, see my Commodities and Capabilities (Amsterdam: North-Holland, 1985); Inequality Reexamined (1992); and also Freedom, Rationality and Social Choice (forthcoming). The concentration on the removal of shortfalls in some specific dimensions has also been used in UNDP’s annual Human Development Reports, pioneered in 1990 by Mahbub ul Haq. See also some far-reaching questions raised by Ian Hacking in his review article on Inequality Reexamined: “In Pursuit of Fairness,” New York Review of Books, September 19, 1996. See also Charles Tilly, Durable Inequality (Berkeley, Calif.: University of California Press, 1998).
6. On this see my Commodities and Capabilities (1985); Inequality Reexamined (1992); and “Capability and Well-Being,” in The Quality of Life, edited by Martha Nussbaum and Amartya Sen (Oxford: Clarendon Press, 1993).
7. See John Rawls, A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971); John Harsanyi, Essays in Ethics, Social Behaviour and Scientific Explanation (Dordrecht: Reidel, 1976); and Ronald Dworkin, “What Is Equality? Part 2: Equality of Resources,” Philosophy and Public Affairs 10 (1981). See also John Roemer, Theories of Distributive Justice (Cambridge, Mass.: Harvard University Press, 1996).
8. This is discussed in my Inequality Reexamined (Oxford: Clarendon Press, 1992; Cambridge, Mass.: Harvard University Press, 1992), and more fully in my “Justice and Assertive Incompleteness,” mimeographed, Harvard University, 1997, which is a part of my Rosenthal lectures at Northwestern University Law School, given in September 1998.
9. There is a similar issue relating to competing ways of judging individual advantage when our preferences and priorities diverge, and there is an inescapable “social choice problem” here too, which calls for a shared resolution (discussed in chapter 11).
10. On this see my paper “Gender Inequality and Theories of Justice,” in Women, Culture and Development: A Study of Human Capabilities, edited by Martha Nussbaum and Jonathan Glover (Oxford: Clarendon Press, 1995). There are a number of other papers in this Nussbaum-Glover collection that bear on this issue.
11. Aristotle, The Nicomachean Ethics, translated by D. Ross (Oxford: Oxford University Press, revised edition 1980), book 1, section 6, p. 7.
12. On the relevance of freedom in the writings of pioneering political economists, see my The Standard of Living, edited by Geoffrey Hawthorn (Cambridge: Cambridge University Press, 1987).
13. This applies to Wealth of Nations (1776) as well as to The Theory of Moral Sentiments (revised edition, 1790).
14. This particular statement is from The German Ideology, jointly written with Friedrich Engels (1846); English translation in D. McLellan, Karl Marx: Selected Writings (Oxford: Oxford University Press, 1977), p. 190. See also Marx’s The Economic and Philosophical Manuscript of 1844 (1844) and Critique of the Gotha Programme (1875).
15. John Stuart Mill, On Liberty (1859; republished: Harmondsworth: Penguin Books, 1974); The Subjection of Women (1869).
16. Friedrich Hayek, The Constitution of Liberty (London: Routledge and Kegan Paul, 1960), p. 35.
17. Peter Bauer, Economic Analysis and Policy in Underdeveloped Countries (Durham, N.C.: Duke University Press, 1957), pp. 113–4. See also Dissent on Development (London: Weidenfeld & Nicolson, 1971).
18. W Arthur Lewis, The Theory of Economic Growth (London: Allen & Unwin, 1955), pp. 9–10, 420–1.
19. Hayek, The Constitution of Liberty (1960), p. 31.
20. These and related issues in “the evaluation of freedom” are discussed in my Kenneth Arrow Lectures included in Freedom, Rationality and Social Choice (forthcoming). Among the questions that are addressed there is the relation between freedom, on the one hand, and preferences and choices, on the other.
21. On this and related issues, see Robert J. Barro and Jong-Wha Lee, “Losers and Winners in Economic Growth,” Working Paper 4341, National Bureau of Economic Research (1993); Xavier Sala-i-Martin, “Regional Cohesion: Evidence and Theories of Regional Growth and Convergence,” Discussion Paper 1075, CEPR, London, 1994; Robert J. Barro and Xavier Sala-i-Martin, Economic Growth (New York: McGraw-Hill, 1995); Robert J. Barro, Getting It Right: Markets and Choices in a Free Society (Cambridge, Mass.: MIT Press, 1996).
22. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), republished, edited by R. H. Campbell and A. S. Skinner (Oxford: Clarendon Press, 1976), pp. 28–9.
23. See Emma Rothschild, “Condorcet and Adam Smith on Education and Instruction,” in Philosophers on Education, edited by Amélie O. Rorty (London: Routledge, 1998).
24. See, for example, Felton Earls and Maya Carlson, “Toward Sustainable Development for the American Family,” Daedalus 122 (1993), and “Promoting Human Capability as an Alternative to Early Crime,” Harvard School of Public Health and Harvard Medical School, 1996.
25. I have tried to discuss this issue in “Development: Which Way Now?” Economic Journal 93 (1983), reprinted in Resources, Values and Development (Cambridge, Mass.: Harvard University Press, 1984; 1997), and also in Commodities and Capabilities (1985).
26. To a considerable extent the annual Human Development Reports of the United Nations Development Programme, published since 1990, have been motivated by the need to take a broader view of this kind. My friend Mahbub ul Haq, who died last year, played a major leadership role in this, of which I and his other friends are most proud.
27. Smith, The Theory of Moral Sentiments (1759; revised edition, 1790), republished, edited by D. D. Raphael and A. L. Macfie (Oxford: Clarendon Press, 1976), book 4, chapter 24, p. 188.