Volume 4: Number 1, May 1 2000
Progressive, but Problematic:
by Vamsicharan Vakulabharanam and Sripad Motiram
In October 1998, Amartya Sen became the first Asian to win the Nobel Prize in economics. Over the course of his career, Sen has displayed an amazing breadth of knowledge, contributing not just to the discipline of economics, but also to philosophy, history, and the study of culture. In our reading of Sen’s work, his contribution lies mainly in broadening the scope of the mainstream economic tradition dominant for the most part since the late nineteenth century: neoclassical economics. His important theoretical contributions lie in the areas of development economics and social choice theory. While far from Marxist, his political leanings are definitely left of the mainstream economic tradition. Thus, though he has never explicitly rejected the capitalist mode of production, in many of his writings he mocks at a vulgar extension of market logic and egoistic behavior into every aspect of human existence. In this manner of being an “internal” critic of the mainstream tradition he has brought issues of starvation, famines, poverty and human development into the very heart of a remarkably callous economic tradition. In this essay, we will locate his interventions within his chosen context, and also critique the context he has chosen from a Marxist standpoint.
Within economic thought, a broad distinction exists between classical political economy and neoclassical economics. Classical economists like Adam Smith, David Ricardo and Karl Marx employed labor theories of value in order to explain the value of commodities and the distribution of income to different classes of people like workers, capitalists and landlords in the context of capitalism. In this tradition, workers were the actual producers of commodities. The other classes lived off the productive labor of workers. But there was an awareness among these economists that capitalism was a historically specific system of production that grew out of feudal and petty commodity systems of production. Some of them hailed the arrival of a new epoch while seeing the possibility of further reform. They espoused a liberal worldview about the political system that accompanied capitalism. Others, like Marx, bitterly denounced both the economic system as well as the liberal political system and argued for radical change. The neoclassical tradition emerged in the late nineteenth century to neutralize the radical interpretations of labor theories of value that potentially threatened the capitalist system itself. The important difference between the classical and the neoclassical traditions is that the latter replaced the labor theory of value with a utility theory of value, which postulated that the value of a commodity is derived from the utility achieved in consumption. Different factors of production like labor, capital, and land got returns according to their respective contributions to production. Labor was dislodged from its exalted position and relegated to the status of being merely one among the factors of production.
When Amartya Sen went to Cambridge for his graduate studies, an academic battle over the very notion of “capital” was going on between the economists in the classical tradition at Cambridge, UK, led by Piero Sraffa; and neoclassical economists of Cambridge, USA, led by Paul Samuelson. While the debate itself proved to be inconclusive, both traditions significantly influenced Sen. He chose to intervene in the neoclassical tradition while at the same time internalizing the vision of the classical economists. In this sense, Sen’s work is very much in the tradition of great classical economists like Adam Smith, David Ricardo, and John Stuart Mill. Like the classical economists, he did not concern himself with narrow technical questions, but with questions of a broad interdisciplinary nature. Some of his works, especially Poverty and Famines (Sen 1981), show the strong influence of Marx, especially as regards the class basis of suffering and the historical specificity of capitalism. Yet, with other classical economists like Smith and Mill, he shares the belief that while there are important problems with capitalism, it can be reformed.
Neoclassical economists postulate that most human beings are utility (loosely, satisfaction or self-interest) maximizers. Sen has offered influential critiques (Sen 1977) of the behavioral assumptions of neoclassical economists, arguing that apart from unadulterated egoism and utilitarianism (greatest good of the greatest number), individuals could be operating with notions of moral commitment to multiple groups like family, church or class, that go against their own narrow self-interest. Thus he has intervened into a debate that has occupied economists for the last two centuries: whether a concept similar to utility can be applied to a collective of individuals. Broadly speaking, this is the problem that social choice theory is occupied with. Although this problem was of interest to philosophers like Bentham, as a formal subdiscipline in economics, social choice largely owes its origin to the work of the American economist Kenneth Arrow (another Nobel winner) in the 1950s. Arrow concluded in his work that under the standard assumptions about human behavior, a scheme cannot be devised that can democratically translate what individuals prefer into what the society wants as a whole, i.e. it is not possible to theorize collective preference. Since the appearance of this “impossibility theorem” in the early 1950s, social choice theory has been occupied with trying to find conditions under which Arrow’s conclusion might be overriden. Sen's contributions here include questioning some assumptions and thereby opening the door to the theorization of collective choice; and more importantly, questioning the very basic notions of justice and fairness that underlie neoclassical economics. The most widely accepted notion of fairness in neoclassical economics is that of pareto-optimality, which asserts that any form of redistribution of income is fairer than the status quo if and only if noone’s situation worsens as a result of this redistribution. It is obvious that a poor person with no property cannot take solace from the idea that he fits into a pareto-optimal society. Taking a cue from John Stuart Mill, Sen demonstrated how this notion of fairness could lead to perverse consequences and be inconsistent with even the most minimal libertarian notions (Sen 1970). Expanding on these ideas, Sen has enhanced the neoclassical notion of welfare by including rights and liberties, and more egalitarian notions of fairness.
In the area of development economics, Sen made several important contributions beginning with his dissertation, Choice of Techniques (Sen 1960), which dealt with the problem of choosing the right techniques for production in an “underdeveloped” economy. The importance of this work was that it was one of the first applications of analytical techniques used in other areas of economics to development economics, which was till then a descriptive field. He applied much of his theoretical work in empirical analyses of developing economies and the poor in developed regions. In his work on the measurement of poverty and income inequality, he pointed out the lacunae in the prevalent Head-Count measure of poverty, which could only capture the number of people below a poverty line, but could not capture the relative inequality among those below the poverty line. Any policy which takes into account this relative inequality will produce better results for the poorest. His most prominent empirical work (the work cited in the Nobel announcement) was on famines. Sen reversed the conventional wisdom on famines, i.e. that they are caused by a drastic decline in the availability of food. His work on specific famines like the Great Bengal Famine and the Irish Potato Blight have shown that a human-made inequitable distribution system could very well cause famines.
Thus, if Sen’s chosen space of intervention is neoclassical economics, he has clearly made successful efforts to broaden the scope of this tradition. There is no doubt that he is considerably left of the mainstream—this is also reflected in his active promotion of land reform in India. However, we have the following critiques to offer of Sen’s work.
Although Sen’s method is richer than the standard neoclassical one, he generally uses the individual as the basic unit of analysis and the notion of class is for the most part absent in his writings. As a result, we believe that his analysis cannot provide several insights that class-analysis can give into power and exploitation that prevails under capitalism, and that are crucial in understanding the capitalist economic system and capitalist society as such. Also, his analysis largely leaves unquestioned the basic unit of economic analysis—the atomized individual—even if the individual is not simply a self-interested utility maximizer in his writings. Advocates of class struggle and other forms of collective liberation—including along lines of gender, race, sexuality, or caste—are thus likely to find themselves at odds with Sen’s methodology.
As Marxists, we also find Sen’s conceptualization of the state problematic. Sen’s notion of the capitalist state is neither neoclassical nor Marxist, in their extreme versions—that is to say, for him the state is neither a facilitator of corruption, lobbying, and other forms of unproductive “rent-seeking”; nor is it a mere tool in the hands of the ruling class. He has what might be loosely called a “developmentalist” notion of the state. In simplified terms, in his view, the capitalist state is neither congenitally good nor evil and could be shaped by public action in any direction. The state has an important role in providing infrastructure, health, and education, and also in providing public goods (such as roads or a clean environment) that are shared by the entire society and cannot be provided efficiently by markets. Sen seems to have an understanding of a state that is infinitely malleable through public action. But in a capitalist context, wherein there is an asymmetric distribution of power among different classes, how does the state escape class dominance as long as classes exist? Moreover, we have seen the resurgence of neo-liberalism and the concomitant demolition of welfare states in Europe and other parts of the world. The welfare state is the epitome of Sen’s own theories of social welfare. In that sense, we wonder if Sen is not too optimistic about the flexibility and durability of the capitalist welfare state.
Of late, many critiques have been leveled against the very notion of development (see, for instance, Escobar 1995). In these critiques, “development” is seen as a continuation of the way in which the colonizing nations perpetuated a worldview that emanated from the West and that tried to alter the cultural priorities of people living in colonized (and now nominally independent) societies. These critiques problematize the notion that there is a linear progression that all nations have to go through and also problematize the relationship between social change and development. Since he has not questioned the fundamental tenets of development, Sen is certainly “pro-development,” and is open to critiques along these lines. In the recent past, while he has been an articulate critic of neo-liberal policies, he has nevertheless asserted a faith in the possibility of an equitable participation of different nations in globalization, so long as these different nations accumulate enough human capital like education and human skills. As Marxists, if not as postcolonial subjects, we doubt that an “equitable” process of globalization, wherein the terrain of this process is set democratically by all participating nations, can ever occur while we live under capitalism.
The authors are both students of political economy—Vamsi at the University of Massachusetts at Amherst, Sripad at the University of Southern California. Their article was written before the publication of Sen’s Development as Freedom (1999).
Escobar, Arturo (1995), Encountering Development: The Making and Unmaking of the Third World (Princeton: Princeton University Press).
Sen, Amartya (1960), Choice of Techniques (Oxford: Blackwell).
_____ (1970), “The Impossibility of a Paretian Liberal,” Journal of Political Economy 78; reprinted in Sen 1982, pp. 285-90.
_____ (1977), “Rational Fools: A Critique of the Behavioural Foundations of Economic Theory,” Philosophy and Public Affairs 6; reprinted in Sen 1982, pp. 84-106.
_____ (1981), Poverty and Famines: An Essay on Entitlement and Deprivation (Oxford: Clarendon).