Book review: Collective Choice and Social Welfare

The Nobel Prize winning economist Amartya Sen is a keen student of Adam Smith he tells JP O’Malley. But that doesn’t make him a blind follower of free market thinking

Book review: Collective Choice and Social Welfare

Collective Choice and Social Welfare

(Expanded Edition)

Amartya Sen

Penguin, €15.99

THE growth of far-right populism in the west over the last year or so has taught us many things. But principally, that we now live in an age where individualism, fear, and self interest is attempting to replace pluralism, tolerance, and common decency.

Trying to find a sober and rational voice amidst all of the nationalistic-inward-breast-beating-hysteria is getting increasingly more difficult.

Thankfully, though, the Indian economist, Amartya Sen, is someone who has been providing a voice of reason — to think about how to build a fairer and more just society — for decades.

In the introduction to a recently updated and republished version of his classic 1970 economic text, Collective Choice and Social Welfare Sen defines society as a group of people with a variety of preferences and priorities.

This is task that social choice theory — the subject of his latest book — must address, says Sen: “The interests and values of different people have to be combined to form a coherent idea of what a society wants,” the 83-year-old economist explains from a hotel lounge in central London.

This is my second meeting with Sen. The last time we met — four years ago in Cambridge — he had just published a book with fellow economist, Jean Drèze, called An Uncertain Glory: India and its Contradictions. It argued that, despite huge economic growth rates in India over the last three decades, there has been a serious lack of attention paid to other areas of Indian society: most notably the inadequate use of public resources.

That book also looked into reasons why famines had occurred in India historically: pointing out that during the period of British rule in India, famines occurred on a regular basis.

When the British Raj ended, however, the new democratic system made sure that famines stopped.

Sen’s other books include titles like Development as Freedom; Rationality and Freedom; The Argumentative Indian; Identity and Violence, and The Idea of Justice.

All of them predominately put a strong emphases on ways to measure poverty, so that more effective social programmes can be designed to prevent it.

“Poverty can be seen as deprivation of our capability to do things that we have reason to value as essential for a minimally decent life,” says Sen.

Given how we now live in a post-fact society — where far right governments have a penchant to rule with visceral emotions, rather than solid data or reason — public policy makers in the west would do well to read the work of this award-winning economist.

“Economics has to be about truth,” Sen insists.

In 1998 Sen won the Nobel Prize in Economics for his contribution to welfare economics. Like the late Sir Tony Atkinson, Paul Krugman, Thomas Piketty, and a host of other progressive economists and academics, Sen toes a fine line between respecting free market values, while also understanding that there is need to not let them run riot either.

Sen’s go-to-guy on this subject is the18th century Scottish economist, and political thinker, Adam Smith.

In The Wealth of Nations published in 1776, Smith famously coined the phrase the “invisible hand”: a metaphor for how in a free market economy self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.

However, to just associate Smith with the invisible hand of the market economy, Sen believes, would be a crucial mistake.

“Smith used the analogy of the invisible hand only three or four times, and in a couple of occasions as an unattractive idea,” Sen points out.

What Smith did understand, Sen posits, is that when the market operates with numerous people pursuing disparate goals, things can emerge through the market equilibrium with coherence and cogency.

After all, Sen insists, at a fundamental level, a market is only a transaction between one person and another.

“Smith didn’t take the view that what emerges in the market is [always] invariably good,” Sen insists:”And he took special note of the impact of economic systems on the poor and the workers, who were often treated badly by both the government and by the market.

“So philosophically, Smith was probably as radical as Karl Marx was,” Smith adds.

This then brings us onto an intriguing conversation about the German-born scientist, philosopher, economist, sociologist, journalist, revolutionary socialist, and author of Das Kapital: the first volume of which was published in German in 1867.

As Sen recalls, Marx drew heavily from Smith and the political economy of the Scottish Enlightenment.

Moreover, Marx even referred to Smith in his own writings as a genius, Sen points out.

Sen claims Marx’s ideas have contributed a great deal to his own economic theories.

“Marx had many insights and arguments, some of which still remain very relevant today,” he says.

“Take the general idea of the dialectics, for example.

“This invites people to think about events not in terms only of linear implications, but also the opposite and opposition,”Sen adds.

Is it possible, though, to apply 19th century Marxian ideas to today’s political and social discourse in the west: especially when free market capitalism seems to be the only game in town?

Sen certainly believes so.

He talks about Donald Trump’s victory in last year’s US presidential election as an interesting set of events to view through the prism of a Marxian dialectic.

Trump’s victory has no doubt made things far easier for right-wing thinkers and policy makers; while also disheartening those with left-wing convictions.

However, Sen claims that this drift to right in recent US political history has stimulated the left to act, and consolidate its actions in response.

Think of the mass protest movements since January we’ve already seen from the left, progressives, and liberals, in Washington, London, and further afield, Sen points out.

“Dialectical analysis can be helpful in pointing to contrary impacts in the opposite direction to the simple linear extrapolation of the celebration of Trump enthusiasts,”says Sen.

But back to Marx himself for just a moment though. He did have one serious philosophical flaw, Sen is keen to point out: “The need for opposition for the functioning of a democracy did not really interest him. And that is where the fault line proved to be in the Marx-inspired communist governments.” That said, Sen points out that, unlike the Bolsheviks, “Marx remained loyal to the goals of democracy.”

Before we part ways, I point out to Sen an interesting observation he makes in his latest book: where he argues that certain members of society often live within rules they may not necessarily agree with.

Does this imply, I ask him, that most people will simply live within whatever political structure that is put in front of them from a small minority of elites?

Be it, say, social democracy, fascism, communism, extreme capitalism, liberalism, or any other number of political ideologies?

Given the rapid drift towards far right populism in recent times, this question seems like an apt note to conclude our conversation on.

“That may inescapably happen,” Sen answers, before taking a long pause to reflect.

“We may not be able to reorganise the entire society in which we live,” he insists.

“But we have to keep questioning what we have reason to reject. When uncomfortable questions are not asked, people continue to follow a given tradition uncritically. And unreasonable practices may survive in a way that does not make sense.”

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